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Century-old corruption law carries wrist-slap penalties

Last updated 09:58 01/12/2013

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A private eye who has helped two clients lay bribery charges under the Secret Commissions Act in the past month says the penalties need updating as they haven't changed in more than a 100 years.

Danny Toreson of Thompson and Toreson Investigations would not name the clients, but said: "One is a commercial organisation and the other is a government body".

The Secret Commissions Act is the main law outlawing staff taking backhanders for awarding work and contracts without their employer's knowledge. For example, a government worker could give a contract to a company in return for a secret payment or benefit.

But despite a rising tide of secret commissions charges being laid, an update of the act is long overdue.

"We have had an increase in dealing with matters concerning allegations of corruption and bribery," Toreson said.

Maximum penalties under the act amount to only a $2000 fine for a company and up to two years prison for a person, which Toreson says is a "bit light".

"It needs a massive overhaul."

The Secret Commission Act passed into law on December 3, 1910, when Joseph Ward was New Zealand's prime minister, just months after George V ascended to the throne of England. It hasn't been touched since.

Fines under the act were a big deterrent in their day, but in today's terms that $2000 equates to just shy of $320,000, according to the Reserve Bank's inflation calculator.

Earlier this year the Serious Fraud Office's general manager of fraud and corruption, Nick Paterson, said he was "hopeful" the act would be beefed up this year with more substantial penalties.

Paterson said a sentence of that level was likely to result only in home detention.

"You may as well be fining someone a peppercorn and sending them off on their horse." he said.

Toreson said the act also required the assent of the Attorney-General, the principal law officer of the Crown, which was an anachronism.

But there was also a national reputation issue as well.

Though it is perceived as one of the least corrupt countries in the world, New Zealand is among only a handful of countries including North Korea, Germany and Japan not to ratify the 2003 United Nations Convention on Corruption.

That's something the Government is now focused on.

But much of the anti- corruption focus has been on cross-border money laundering, prompted by the US attempt to stifle the flow of funds to terrorist organisations, as well as bribery of overseas officials.

The Organised Crime and Anti- Corruption Legislation Bill, to be introduced to Parliament this year, will also make it a crime to offer bribes overseas.

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Non-government organisation Transparency International's most recent corruption perceptions index placed New Zealand as tied for first as the least-corrupt country in the world, along with Denmark and Finland.

But Suzanne Snively, who chairs Transparency International New Zealand, recently warned our culture of non-corruption was "coming under increased pressure".

The Ministry of Justice said updating the Secret Commissions Act was not yet on the legislative timetable, but acknowledged the need for it to happen. Recent prosecutions under the act include Christopher Green being sentenced to five months home detention in June after pleading guilty to receiving secret commissions totalling approximately $220,000 for referring insurance business to an insurer. Late last year Paul Normington pleaded guilty to 17 Crimes Act and Secret Commissions Act charges laid by the Serious Fraud Office (SFO).

Also last year, the former owner and director of HIG, Grant Herbert faced Crimes Act and Secret Commissions Act charges. His case has not yet concluded.

- Sunday Star Times

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