New Zealand: Bribery & Corruption (2nd edition)

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This country-specific Q&A provides an overview to bribery and corruption laws and regulations that may occur in New Zealand.

This Q&A is part of the global guide to Bribery & Corruption. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/bribery-and-corruption-second-edition/

  1. What is the legal framework (legislation/regulations) governing bribery and corruption in your jurisdiction?

    New Zealand law treats bribery and corruption as criminal matters and there are two principal statutes that apply; the Crimes Act 1961 (Crimes Act) and the Secret Commissions Act 1910 (Secret Commissions Act).

    The Crimes Act (Part 6, sections 99 – 106) applies principally to corruption in the public sector. It includes criminal offences such as the corrupt use of official information and the corruption and bribery of the Judiciary, Ministers of the Crown, and Members of Parliament, law enforcement officers and public officials.

    The Secret Commissions Act contains bribery and corruption-style offences relevant to the private sector.

    New Zealand law also contains many other offences covering corruption-style crimes such as money laundering, fraud, insider trading and market manipulation and disclosure of donor support to politicians.

    New Zealand is a signatory to and has ratified certain international treaties, which impose obligations on New Zealand to assist other nations in criminal and non-criminal investigations and proceedings.

  2. Which authorities have jurisdiction to investigate and prosecute bribery in your jurisdiction?

    Bribery and corruption offences will be investigated and prosecuted by either the New Zealand Police (if it is a low level of criminal behaviour) or the Serious Fraud Office (for more serious, complex or high profile matters). The Office of the Ombudsman can also look into complaints about corrupt behaviour. The Office of the Controller and Auditor General will also report any corrupt use of public money to Parliament. The Electoral Office can investigate any allegations relevant to political party or candidate donations.

  3. How is bribery defined?

    Under the Crimes Act 1961, ‘bribe’ is defined to mean ‘any money, valuable consideration, office, or employment, or any benefit, whether direct or indirect.’

    In order for a ‘bribe’ to give rise to a crime, however, it must be given or offered ‘corruptly’ with a view to influencing the recipient to do something that they might not otherwise do and therefore receiving some improper gain. So for there to be criminal conduct there must be a corrupt payment and receipt of some financial or other benefit, or at least the prospect of this, accompanied by an intent to influence the recipient of the bribe.

  4. Does the law distinguish between bribery of a public official and bribery of private persons? If so, how is ‘public official’ defined? Are there different definitions for bribery of a public official and bribery of a private person?

    Yes, the two principal statutes distinguish between the bribery of public officials and bribery of private persons. The Crimes Act regulates bribery of public officials, as well as judges, parliamentarians and foreign officials. The Secret Commissions Act regulates the bribery of any other legal persons, including individuals and corporations.

    An ‘official’ is defined under the Crimes Act (section 99), to mean ‘any person in the service of the Sovereign in right of New Zealand (whether that service is honorary or within or outside New Zealand) or any member or employee of any local authority or public body or any person employed in the education service.'

    There are different bribery offences for public official and private persons, although the necessary elements of the offences are essentially the same (see answer to question 3).

    Bribery of public officials is defined in the Crimes Act as when a person corruptly gives, receives, accepts or obtains a bribe for himself, herself, or any other person, with intent to influence that person to act or refrain from acting in their official capacity.

    Bribery in the private sector is defined in the Secret Commissions Act as when a person corruptly gives, agrees, or offers to give an agent (who works on behalf of the principal) a gift or other consideration to induce or reward an agent’s action with respect to their principal’s affairs or business.

  5. What are the civil consequences of bribery in your jurisdiction?

    There is no recognised civil cause of action of corruption or bribery itself, although there may be civil consequences that result from a corrupt payment. For example:

    • A contract that has been procured as a result of a corrupt payment is likely to be voidable.
    • There may be available claims by an employer against a corrupt employee. Such claims could seek damages or orders enabling the tracing of the proceeds of the employee’s wrongdoing as a means of recovering the employer’s money that was used to pay a bribe.
    • There may be available claims for damages based on deceit or misrepresentation.

    The primary action against a corrupt individual, however, will be under the criminal statutes. Sentences handed down for such offences can involve reparation payments ordered against the offender and payable to any identified victims. Such reparation may be available if the offender’s conduct has created proceeds of crime, which can be liquidated and available to identified victims.

  6. What are the criminal consequences of bribery in your jurisdiction?

    Under the Crimes Act, offences for corruption in the public sector can include penalties such as terms of imprisonment of up to 14 years for the most serious cases. Foreign bribery offences can carry fines up to the greater of NZ$5 million or three times the value of the commercial gain obtained.

    Under the Secret Commissions Act, penalties range from seven years’ imprisonment to unlimited fines for individuals and corporations, for offences in the private sector.

  7. Does the law place any restrictions on hospitality, travel and entertainment expenses? Are there specific regulations restricting such expenses for foreign public officials?

    Hospitality, travel and entertainment expenses are only permissible where they are of token value, such as a thank you gift for an appearance or attendance at an event. In this case, they are considered de minimus and just a normal courtesy (Field v R [2011] NZSC 129).

    Specifically in the case of foreign pubic officials, benefits can be given or offered but only when ‘committed for the sole or primary purpose of ensuring or expediting the performance by a foreign public official of a routine government action and the value of the benefit is small.’ (Crimes Act, section 105C(3)). A ‘routine government action’ is defined to include any decision about whether to award new business or whether to continue existing business, or the terms of new or existing business. The exception does not apply, however, to any action that provides either an undue material benefit to the person offering the benefit, or an undue material disadvantage to any other person.

    Note that the above exception does not apply to New Zealand public officials, although the common law de minimus defence will.

  8. Are political contributions regulated?

    Electoral laws require the disclosure of donor support to politicians and the Electoral Office can investigate any allegations relevant to political party or candidate donations.

  9. Are facilitation payments regulated? If not, what is the general approach to such payments?

    The Crimes Act permits facilitation payments to foreign public officials where there is a provision of small or nominal benefits, even if they are responsible for determining the award or continuation of business (see question 7 above). This rule has been criticised by the Organisation for Economic Co-operation and Development (OECD) and the New Zealand Government has highlighted the risks of making such payments and generally advises against the making or offering of any facilitation payments.

    The facilitation payment exception in respect of foreign officials does not apply to New Zealand public officials. The de minimus defence (discussed in question 7) will apply however.

  10. Are there any defences available?

    Yes. The New Zealand Supreme Court case of Field v R [2011] NZSC 129 established the common law de minimus defence. In circumstances where ‘gifts of token value which are just part of the usual courtesies of life’ or some ‘unexceptional… other benefit’ are received, the transaction is ‘innocent’ and therefore not corrupt. The Courts have successfully applied this defence to certain gifts of a low cost or nominal value, although there has been criticism of the defence by the OECD.

  11. Are compliance programs a mitigating factor to reduce/eliminate liability for bribery offences in your jurisdiction? Please identify any guidance indicating what features a compliance program should have in order to provide an effective defence/mitigation.

    Prosecutions for corruption usually focus on individuals rather than corporates, although under New Zealand law it would be possible to prosecute a corporation for a corruption offence. The existence of a corruption programme within a corporation would not eliminate or reduce the risk of a successful conviction. It may be a relevant consideration in sentencing, although it a compliance programme has been ignored within a corporation, then this is likely to be an aggravating factor for the defendant concerned. See further in question 12 below.

  12. Who may be held liable for bribery? Only individuals, or also corporate entities?

    Both individuals and corporate entities can be liable for bribery. A ‘person’ under the Crimes Act includes both incorporated and unincorporated bodies of persons. It has to be expected that where very senior levels of management or directors are involved in bribery, a company might also be charged. Recent reforms have also clarified that where an employee commits and offence under the foreign public official provisions, his corporate employer can be liable if the offence fell within the employee’s scope of authority, the employer benefitted, and the employer did not take reasonable steps to prevent the offence.

  13. Has the government published any guidance advising how to comply with anti-corruption and bribery laws in your jurisdiction? If so, what are the elements of an effective corporate compliance program?

    Yes, the New Zealand Government has published Saying No to Bribery and Corruption – A Guide for New Zealand Business (2015).

    The following guiding principles for effective anti-corruption compliance procedures are outlined within this publication:

    • Proportionality to the individual risk faced by a business
    • Top level commitment to combatting corruption
    • Clearly articulated anti-corruption policies and internal procedures
    • Risk assessment
    • Awareness raising and training
    • Due diligence on third parties
    • Reporting and investigating without fear of retaliatory action
    • Monitoring and review to adapt to accommodate changes to the business and the environment in which it operates.
  14. Does the law provide protection to whistle-blowers?

    In New Zealand, the Protected Disclosures Act 2000 exists to provide protection to employees who report serious wrongdoings of their employer, including unlawful or corrupt use of public money or resources, gross negligence and mismanagement by public officials. The purpose of this Act is to encourage ‘blowing the whistle’ when it is appropriate.

  15. How common are government authority investigations into allegations of bribery?

    There are no up-to-date statistics in this area. New Zealand is a small country (c.4.6 million people) and has a reputation for a very low level of corruption. It is invariably ranked as one of the least corrupt countries in the world by Transparency International. It follows that prosecutions in New Zealand for bribery are low. Having said that a 2016 OECD report suggested that there may be under-reporting of bribery in New Zealand. Particularly in relation to foreign bribery. A Deloitte survey of New Zealand business in 2017 also suggested that 1 in 5 large businesses in New Zealand had experienced one or more instances of domestic corruption within the prior 5 years.

  16. What are the recent trends in investigations and enforcement in your jurisdiction?

    Recent government focus has been on actively raising awareness in the public and private sectors of bribery and corruption in general.

    There has been no perceived increase in prosecutions for bribery or corruption offences over the past 12 months, although the level of police and Serious Fraud Office activity in this area is not reported on publically.

  17. Is there a process of judicial review for challenging government authority action and decisions?

    Yes, in New Zealand any decision of a public nature can be subject to judicial review, including government authority action or decisions where there are issues of legality.

  18. Are there any planned developments or reforms of bribery and anti-corruption laws in your jurisdiction?

    There is no planned reform within the coming year. The New Zealand Government has signalled possible reform in the area of mutual assistance in criminal matters and extradition law, although this project is likely to take considerable time and work and this area has not been the subject of any public consultation.

  19. To which international anti-corruption conventions is your country party?

    New Zealand is party to the following international conventions:

    • OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions (signed 1997: ratified 2001).
    • United Nations Convention Against Corruption (signed 2003: ratified 2015).
    • United Nations Convention Against Transnational Organized Crime (signed 2000: ratified 2002).
  20. Do you have a concept of legal privilege in your jurisdiction which applies to lawyer-led investigations? If so, please provide details on the extent of that protection.

    New Zealand law provides statutory (Evidence Act 2006) and common law protection to communications involving the provision of legal advice by lawyers to their clients (legal advice privilege) and to communications when litigation is in contemplation (litigation privilege).

    These protections are likely to apply in the course of lawyer-led investigations into corrupt activity.

    Communications between lawyers and clients concerning the commission of any corrupt activity by either or both of them will not be protected. The common law fraud exception applies.

  21. How much importance does your government place on tackling bribery and corruption? How do you think your jurisdiction’s approach to anti-bribery and corruption compares on an international scale?

    New Zealand has a low level of bribery and corruption and there is a strong wish for the country to remain that way. Particularly as New Zealand is a small nation that depends on exports and trade to succeed economically.

    Given that the problem is not thought to be significant, there will be a comparatively low resource and expenditure in this area.

    A 2016 OECD report did remark that while New Zealand has made some progress in its detection and investigation of foreign bribery, there was a significant need for New Zealand to strengthen enforcement of its foreign bribery offence.

    More effort and resource is likely to be required in this area as a result.

  22. Generally how serious are organisations in your country about preventing bribery and corruption?

    Large organisations will take the matter seriously, particularly if involved in the import or export of goods or where there is a significant amount of interaction with overseas businesses or government officials.

    China is now one of, if not, New Zealand’s largest trading partner and Asia is an area where there has been a significant amount of concern around corruption and bribery.

    Many companies have made an effort to implement bribery policies and related policies about employees accepting gifts from clients and service providers.

  23. What are the biggest challenges enforcement agencies/regulators face when investigating and prosecuting cases of bribery and corruption in your jurisdiction?

    The principal challenges will be resource and expertise. The criminal standard of proof (beyond a reasonable doubt) is high and so successful prosecutions will invariably require significant investigative resource to succeed. Prosecutorial guidelines also require that prosecutors only initiate criminal proceedings where the evidence adduced provides a reasonable prospect of a conviction or where prosecution is required in the public interest. This means that only cases that have a high prospect of success will tend to be thoroughly investigated and prosecuted.

  24. What do you consider will be the most significant corruption-related challenges posed to businesses in your jurisdiction over the next 18 months?

    Increased trade with China and Asia and the greater integration of Chinese and other Asian businesses in the supply chain will likely increase the risk of corruption.

  25. How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?

    The removal of the ‘facilitation payment’ exception in the case of foreign public officials would assist. This leads to too many potential grey areas as to what is permissible and what is not. There is also inconsistency. It is not a defence in respect of domestic officials, yet is available in the case of foreign officials.

    The ‘de minimus’ common law defence is also confusing. The approach ought to be for the judge to determine that the thing given or offered did not influence or was, by its nature, incapable of influencing the recipient. This would lead to a ruling that the mens rea of the offence is not made out. It is a misnomer to address the issue as a positive defence to the charge.