SFO wary of cor­rup­tion risk to growth fund

Rotorua Daily Post - - Opinion -

The Se­ri­ous Fraud Of­fice is right to be wary about some­one rip­ping off Shane Jones’ re­gional growth fund.

Fraud­sters fol­low the money — and by the next elec­tion, $3 bil­lion will have been in­vested as part of Jones’ scheme to boost eco­nomic ac­tiv­ity out­side New Zealand’s main cen­tres.

Many Ki­wis pride them­selves on liv­ing in a na­tion free of cor­rup­tion, but with so much money in­volved in the Pro­vin­cial Growth Fund (PGF) there’s a high chance some­one will be tempted to en­rich them­selves at the ex­pense of the New Zealand tax­payer.

And as Se­ri­ous Fraud Of­fice (SFO) chief ex­ec­u­tive Julie Read told the NZ Her­ald, pub­lic or­gan­i­sa­tions around the world have be­come a prime tar­get of crooks. Us­ing an in­ter­na­tional yard­stick, Read es­ti­mates that any­where be­tween $500 mil­lion and $5b of New Zealand gov­ern­ment spend­ing could be vic­tim to fraud each year.

It’s naive to think cor­rup­tion hap­pens only in de­vel­op­ing coun­tries or in places reel­ing from war, dis­as­ter or wide­spread eco­nomic pre­car­ity.

New Zealand is not im­mune to the greed that en­cour­ages pub­lic malfea­sance.

More spend­ing on big in­fra­struc­ture projects and other pub­lic schemes — like the pro­vin­cial growth fund — only serves to am­plify the risks.

“Pre­vent­ing fraud in the pub­lic sec­tor is re­ally im­por­tant be­cause it di­verts money away from crit­i­cal pub­lic ser­vice and dis­pro­por­tion­ately dis­ad­van­tages those who are the most vul­ner­a­ble be­cause they are peo­ple that rely on pub­lic ser­vices the most,” Read said.

But per­haps even more im­por­tant than the fi­nan­cial cost is the dam­age pub­lic sec­tor fraud would do to New Zealand’s rep­u­ta­tion. This coun­try is ranked by Trans­parency In­ter­na­tional as be­ing the least cor­rupt in the world and any scan­dal with the PGF would threaten that en­vi­able po­si­tion.

Our cor­rup­tion-free rep­u­ta­tion means New Zealand is an at­trac­tive place for peo­ple to come to do busi­ness and equally means Kiwi firms are trusted when do­ing deals around the world.

It’s vi­tal for the sake of our econ­omy that New Zealand holds on to this good char­ac­ter so we can con­tinue to take ad­van­tage of that pos­i­tive per­cep­tion.

The SFO has long been wary of the risk of fraud around pub­lic sec­tor projects — it al­lo­cated sig­nif­i­cant re­sources in 2012 to pro­tect Christchurch from be­ing ripped off in the wake of the re­gion’s earthquakes. De­spite ini­tial fears, the $40b re­build has so far avoided a cor­rup­tion scan­dal — al­though the SFO has an in­quiry into al­le­ga­tions two for­mer Can­ter­bury Earth­quake Re­cov­ery Au­thor­ity em­ploy­ees had con­flicts of in­ter­ests.

Jones will be hop­ing his PGF spend-up re­mains sim­i­larly clean and tax­pay­ers should take some re­as­sur­ance that the SFO and the Gov­ern­ment ap­pear to be tak­ing the risk of fraud se­ri­ously.

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