A trickle of corruption cases being investigated by authorities shows the New Zealand business community has evolved a culture of inducements and kickbacks, according to Simon Everett, former managing director of roading contractor Blacktop Construction.
Everett’s company collapsed in September, and Everett said at the time that his company wouldn’t pay inducements and paid the price (read earlier story HERE).
Everett told the Sunday Star-Times that he was now in a position to call for a debate on business practices that had become increasingly sharp.
He says that consolidation in industries meant larger contracts – and higher stakes – for remaining players, and increased the pressure for more and more lavish inducements to win or maintain business.
“You shouldn’t be buying a client a car and you shouldn’t be sending your customers to the Hong Kong Sevens,” Everett says.
Everett’s concerns are echoed by Jeremy Sole, chief executive of the New Zealand Contractors Federation, who told the Sunday Star-Times that recent public-sector contracting changes raised risks.
Everett believes the line between positive relationship-building and inducement wasn’t clear, nor openly discussed.
“I’m conscious that having a culture of strong relationship between clients and suppliers is a positive thing. There’s nothing wrong with a ham and a bottle of wine at Christmas or tickets to a game of rugby. Everyone wants to celebrate things and enjoy one another’s company and build a relationship,” he says.
Everett says Blacktop gave gifts “pretty infrequently . . . If you asked around I’m sure you would be told we were considered pretty cheapskate. Right or wrong, we took a moral high ground position.”
Sole says the game is changing dramatically, and the incentives are there to do whatever it takes. “We might start to see an increase in corruption as a result.”
Dealings between private and public-sector bodies needed to be policed more thoroughly, Sole says. “Most of our interactions are with central or local government agencies, and we would be very upset if anything above a Christmas card was exchanged.”
Meanwhile, the Serious Fraud Office is investigating individuals at Auckland Transport over alleged irregularities in the procurement of roading maintenance contracts. The council-controlled company fired a senior manager in September following an internal investigation into corruption allegations dating back to 2010.
Sole says the Auckland Transport investigation is concerning for the industry, as it posed reputational risks for everyone involved, and also penalised players who operated above board.
“Not only does it cast a darkness over our industry, but it’s also fundamentally unfair,” he says.
Despite the light being shone on his industry, problems raised were probably present elsewhere in the economy, Sole warned.
“I don’t think anyone’s immune from corruption. As the auditors will tell you, most people are honest most of the time. But when life conditions change, and opportunity and motivation meet, corruption occurs,” Sole told the Sunday Star-Times.
Everett said New Zealand’s high ranking in the Transparency International rankings for least-corrupt country on earth had resulted in naivety.
“I’ve worked extensively offshore in a couple of environments and countries where corruption is more openly discussed, and I’ve been into that environment without exposure to it and had my eyes wide open. Whereas in New Zealand I think my observation is that there is activity along those lines but it’s much more subtle,” he says.
