Part 3: Secondment of Officer 1, and preparing a policy for secondments

Inquiry into New Zealand Defence Force payments to officers seconded to the United Nations.

3.1
In this Part, we discuss the events that occurred during 2001 when Officer 1 started his secondment to the UN. NZDF developed a policy for seconded officers in 2001 that was incorporated into Defence Force Orders in December 2001. Until then, NZDF made case-by-case decisions about Officer 1's secondment when he raised issues with them. We discuss:

  • arrangements made for Officer 1's secondment;
  • the Personnel branch's draft policy of May 2001;
  • comments and advice about the draft policy; and
  • the draft policy becoming a Defence Force Order.

Officer 1's secondment

NZDF made decisions about Officer 1's secondment as issues arose, as there was no policy or Defence Force Order in place to determine conditions of service or entitlements for seconded officers. People also had different views as to who if anyone had command responsibility for Officer 1 during his secondment. Officer 1 made a false declaration to the UN when applying for his UN rental subsidy, as he believed that he was required to obtain the UN's rental subsidy to offset the accommodation assistance that NZDF was providing.

Finalising entitlements during the secondment

3.2
When Officer 1 arrived in New York, NZDF still had not finalised his conditions of service or entitlements. An example of this was insurance cover. Because officers seconded to the UN Department of Peacekeeping Operations could be sent into conflict zones, providing insurance cover was a significant issue for seconded officers. Personnel branch had not worked out how it would provide any necessary insurance cover for Officer 1 before he started at the UN, or what cover the UN might provide.

3.3
Initially, Personnel branch staff proposed to continue paying Officer 1 his NZDF salary (as well as his UN salary) during his secondment to ensure that he had Accident Compensation Corporation (ACC) cover. Personnel branch staff recognised that this would create a large tax liability for Officer 1, so they proposed to reduce his accommodation assistance to offset this. This proposal was put to Officer 1 in February 2001. He advised Personnel branch staff in February 2001 that the UN rules prohibited the payment of a salary by the home state. He stated:

If possible, I should continue to comply with the UN Rules that require payment by the UN. To do otherwise, and be caught out, would be to create a situation that would force the UN to return me to New Zealand and risk bringing the country into disrepute.

3.4
At this point, it appears that Personnel branch staff were unaware that the UN also provided compensation for workplace injuries. Officer 1, with his Minute of February 2001, sent information on the UN's compensation provisions to Personnel branch. The compensation provisions did not provide any cover for non-work injuries or illnesses.

3.5
On 23 March 2001, the Assistant Chief PersonnelA, in a Minute to the Chief of Defence ForceA, recommended continuing to pay Officer 1's salary during his secondment to the UN to maintain ACC cover.

3.6
Under the ACC legislation at the time, unless Officer 1 was a New Zealand taxpayer or was overseas for fewer than 183 days, he would not be eligible for ACC cover. The Assistant Chief PersonnelA, in the same Minute to the Chief of Defence ForceA, recognised that Officer 1 did not fit either of those criteria and would not be covered by ACC. Therefore, Personnel branch's proposal would not have complied with the ACC legislation.

3.7
It appears that Officer 1 was never paid his NZDF salary after the start of his UN secondment, because his service stopped the salary payment into his account. It also appears that, after receiving advice from the Chief Financial Officer, the Chief of Defence ForceA decided that NZDF would obtain private insurance cover for Officer 1.

3.8
We discussed the issue of insurance cover with the officer who held the role of Assistant Chief Personnel at that time. He commented that the practical reality of the situation was that Officer 1 was in New York and needed cover immediately, and that putting in place a scheme that gave him ACC cover was the best way to do it.

3.9
It was important for NZDF to provide Officer 1 with insurance cover for non-work injuries from the start of his secondment. Personnel branch had known since October 2000 that Officer 1 was going to be seconded. They nonetheless failed to determine how it could provide that insurance cover for Officer 1 before he left New Zealand.

Officer 1 applies for the UN's rental subsidy

3.10
Officer 1 applied for the UN's rental subsidy in late January 2001, once he had found an apartment. He declared to the UN that he was not receiving any NZDF accommodation assistance.

Why Officer 1 did not declare his NZDF accommodation assistance

Officer 1's comments

3.11
As we discussed in Part 2, Officer 1 received information from Personnel branch before going to New York which showed that NZDF officers seconded to the UN would be significantly worse off financially than NZDF officers posted to New York.

3.12
Officer 1 told us that it was his understanding that NZDF expected him to obtain the UN's rental subsidy, which would then be used to offset the accommodation assistance that NZDF paid. The only way he could do this was to not disclose to the UN that he was receiving NZDF accommodation assistance.

3.13
Officer 1 told us that the tenor of conversations and email discussions he had with Services directorate staff and the Military AdviserA, before he applied for the UN's rental subsidy, led him to believe that he was required to obtain the UN's rental subsidy, which meant that he had to fill out a false declaration. He felt that not signing the declaration would have had implications for New Zealand's relationship with the UN.

3.14
Officer 1 had no formal commanding officer while he was seconded to the UN. He regarded the Military AdviserA as the person who had some administrative responsibilities for him. He liaised with the Military AdviserA about his conditions of service and entitlements, and the Military AdviserA reimbursed him for payments he made (for example, for rent).

3.15
The advice given to Officer 1 needs to be seen in the light of the unique culture that exists within NZDF. Officer 1 told us that he considered the advice he received from the Military AdviserA and Services directorate staff about claiming the UN's rental subsidy to be orders, and that he needed to comply with those orders. As we set out below, others had a different view.

Services directorate staff comments

3.16
Services directorate staff told us that they did not see a copy of the General Information until May 2001 (when they commented on the draft 2001 policy) and were not aware of the UN's requirements until then. That is, Services directorate staff did not understand in January 2001 that Officer 1 was required to declare his accommodation assistance to the UN, or that the UN may make deductions from his salary and may not pay him the rental subsidy.

The Military Adviser's comments

3.17
The Military AdviserA acknowledged that he sent copies of the Administrative Instruction and the General Information to NZDF in 2000. He told us that he does not recall whether he read all of those documents. However, it is clear from the documents he sent to NZDF in 2000, which we discussed in Part 2, that he understood at the time he wrote those documents that the UN may make salary deductions if the home state provided accommodation assistance.

3.18
He also told us that he was not Officer 1's commanding officer and had no oversight of Officer 1's employment – he merely administered Officer 1's reimbursement, which he paid after clearance from NZDF headquarters. He did not regard himself as conveying orders. He also advised us that he saw no risk of sanction if Officer 1 had questioned the advice that he was being given.

3.19
In late December 2000, the Military AdviserA sought advice from Services directorate and Personnel branch staff about the arrangements made for him to provide assistance to Officer 1. Services directorate staff told the Military AdviserA on 10 January 2001 that NZDF would fund the accommodation costs of Officer 1 up to a rental ceiling of US$3,500 each month. He was also told that the UN's rental subsidy that Officer 1 would receive was to be used to offset the monthly rent.

3.20
As discussed in paragraph 3.3, in February 2001, Personnel branch staff sent a proposal to Officer 1 for his comment. The proposal was to reduce Officer 1's accommodation assistance and to continue to pay him his NZDF salary to ensure that he had ACC cover. Officer 1 sent his draft comments on the proposal to the Military AdviserA. In his draft comments, he included statements about his need to comply with the UN rules, including being paid by the UN, and that to do otherwise could risk bringing New Zealand into disrepute.

3.21
Officer 1 also noted that:

Following removal of gratis officers from UN service in February 1999 the fundamental position of the UN is that officers serving in the UN must be paid by the UN rather than their own Governments.

3.22
He also stated that some form of option that meant that he was being paid by the UN needed to be put in place.

3.23
The Military AdviserA sent an email to Officer 1 and stated that officers seconded from different countries had different arrangements with their home states, not all of which complied with the UN's requirements. The Military AdviserA stated:

Your comment re travel is probably spurious as whatever arrangement is finally agreed to the UN will look after that as you will be under their care (either fully as they state, supplemented as you seem to be (housing, medical provided etc) or paid and supported by NZ with the UN pay spending little time in your account en route to the Govt account). To the UN you will be following their rules because that is what they will be told.

This would all have been simpler if the matter had been dealt with either honestly (as the UN requirements say whilst protecting your service issues, super etc or earlier (ie before you accepted the position). Once again whatever arrangement is agreed, the UN does not need to know.

3.24
Officer 1 was unable to recall whether this email exchange occurred after he had applied for the UN's rental subsidy. We asked the Military AdviserA whether he was telling Officer 1 not to declare his accommodation assistance to the UN in that email. He told us that what he meant in the email was that, in his view, some of the arrangements for seconded officers (such as superannuation and medical entitlements) were between the seconded officer and the Chief of Defence Force, and that the UN did not need to know the finer details of those service arrangements.

Personnel branch's draft policy of May 2001

The policy drafted by Personnel branch in May 2001 did not comply with the UN's requirements. Some senior staff within NZDF knew this.

3.25
On 22 May 2001, the Assistant Chief PersonnelA circulated a Minute that set out a draft policy on conditions of service and entitlements for personnel seconded to the UN. This Minute was circulated to several people for comment, including the General Manager Defence Force Services, people within the individual services, and the Assistant Chief Operations.

3.26
The draft policy provided that NZDF would pay accommodation assistance to seconded officers less any rental subsidies provided by the UN. The draft policy did not refer to the UN's requirements for paying a rental subsidy or whether seconded officers were required to declare their NZDF accommodation assistance to the UN. It appears that the rationale for paying accommodation assistance was the Personnel branch advice in May 2000 that seconded officers would be significantly worse off financially than an NZDF posted officer if they were not paid accommodation assistance.

3.27
As we explained in Part 2, the UN's requirements were that, if a home state was providing accommodation assistance, then the UN may have reduced the rental subsidy it paid, or not paid the subsidy, and may have made deductions from the employee's salary. There is no evidence that Personnel branch had determined from the UN's requirements whether the amount they were proposing to pay seconded officers would mean that the UN would still pay any rental subsidy, or whether the UN would make any salary deductions. However, the draft policy assumed that a seconded person would receive the UN's rental subsidy and be paid the NZDF accommodation assistance.

3.28
We note that the draft policy did not provide that officers would receive the full amount of both the UN rental subsidy and the NZDF accommodation assistance, rather it provided that NZDF would top up the amount paid by the UN, up to a rental limit set by the General Manager Defence Force Services. However, the draft policy did not acknowledge the possibility that the UN payments would be reduced if NZDF provided accommodation assistance, and was silent about whether the seconded officer was required to declare their accommodation assistance to the UN.

3.29
Shortly after the draft policy was circulated for comment, the Deputy Chief of Defence Staff (the most senior of the Chief of Defence Force's staff officers within NZDF headquarters) became aware, partly through material sent to him by the Military AdviserA, that the arrangements made for Officer 1 did not comply with the UN's requirements. He wrote to the Chief of the Air Force (because Officer 1 was in the Air Force) and stated:

Pers Branch have instituted a plan whereby [Officer 1] receives his UN salary and also housing support from the NZDF. His salary is actually tailored to enable him to live in New York and create no cost to the member state. The NZDF is in reality breaking the UN contract which states that a member state cannot support an employee under contract to the UN.

3.30
He also noted that:

Whilst outside the purview of DCDS, I felt you should be appraised of the situation as I know that this matter would give you some cause for concern.

3.31
The Deputy Chief of Defence Staff advised us that he had no knowledge of the specific details. Rather, he understood that there was a problem and regarded himself as passing it on to the appropriate person.

3.32
We were unable to determine what, if anything, the Chief of Air Force did in response to this information.

Comments and advice about the draft policy

When reviewing the draft policy, staff in the Services directorate told Personnel branch that there were UN requirements that affected what assistance NZDF could provide to a seconded officer. In particular, they advised Personnel branch that a seconded officer would have to declare any accommodation assistance to the UN. Personnel branch did not change the draft policy accordingly, nor seek the documents that would have explained the UN's requirements.

Services directorate's advice on the draft policy

3.33
The General Manager Defence Force Services referred the draft policy to Services directorate staff for comment. The Services directorate staff asked the Military AdviserA for advice about the draft policy.

3.34
The Military AdviserA advised the Services directorate staff that a home state could provide a seconded person with accommodation assistance, but the assistance had to be reported to the UN. He also sent a copy of the General Information as well as copies of the earlier faxes and letter he had sent to the Operations branch in 2000.

3.35
The Military AdviserA noted in his memo to Services directorate staff:

It would seem that little notice has been taken of the UN guidelines when determining how these contracted personnel would be provided for. These guidelines were sent to HQNZDF on 25 April 2000, when further advice was requested by [the Deputy Assistant Chief PersonnelA].

3.36
The Military AdviserA included in the information he sent to Services directorate staff some information stating that the UN may make salary deductions if a seconded person were receiving accommodation assistance from their home state.

3.37
Based on the information received from the Military AdviserA, a Services directorate staff member prepared a Minute for the Director of Services. The Director of Services then prepared a Minute for his manager, the General Manager Defence Force Services. In this Minute, the Director of Services stated that:

The UN salary contains a component for property rental, and if the NZDF provides housing assistance (as in the case of [Officer 1]), there is a requirement for this to be reported to the UN.

3.38
The Director of Services also advised that, if the UN became aware that NZDF was paying Officer 1 accommodation assistance, it would probably stop paying the rental subsidy. However, the Minute did not refer to the salary deductions that the UN may have made if the seconded officer declared their NZDF accommodation assistance to the UN. The Minute also referred to the fact that the Military AdviserA had provided them with a copy of the UN's General Information and that he had also provided a copy of this document to Personnel branch staff in April 2000.

3.39
The Minute also stated:

In appreciating that NZDF wishes to be fair to its personnel, it must also ensure that there is no form of ‘double-dipping', as UN salaries and the Post Adjustment are set based on the area of service, and contain elements to cover the likes of rents and other costs (maybe utilities).

3.40
The Director of Services suggested that NZDF, in determining the entitlements for officers, should review what components the UN provided for in the post adjustment. He also suggested that the conditions for Officer 1 should be similarly reviewed.

3.41
The General Manager Defence Force Services then sent this Minute to the Assistant Chief PersonnelA. There is a handwritten note dated 13 June 2001, on top of the Minute from the Director of Services, from the General Manager Defence Force Services. The note states:

AC Pers: I hate to have another bite but there is some good stuff to consider.

3.42
The Director of Military Personnel Policy DevelopmentA, who was responsible for developing the policy within Personnel branch, saw the Director of Services' Minute on the draft policy. He told us that, at the time, he considered that the draft policy covered the matters that were raised in the Director of Services' Minute. He believed that the need for seconded personnel to make a declaration was not a matter that needed to be included in the policy. Rather, he saw it as a matter for whoever in NZDF was administering the seconded person. He also considered that it was an individual's responsibility to make the declaration.

3.43
The Director of Military Personnel Policy DevelopmentA also advised us that the policy did not intend or state that any form of assistance provided by NZDF was not to be declared to the UN. He told us that he did not see copies of either the Administrative Instruction or the General Information. However, he considered that the policy as drafted would have enabled NZDF to achieve fair relativity between seconded and posted officers if the seconded officers had made declarations and their UN rental subsidy been reduced. The policy enabled NZDF to pay more of the accommodation costs, depending on the amount of UN rental subsidy paid.

3.44
The Director of Military Personnel Policy DevelopmentA advised us that the overriding requirement in developing the arrangements for Officer 1 and for the later policy was to ensure fair relativity under section 45 of the Defence Act. The Chief of Defence ForceA had also required that the arrangements for Officer 1 be such as to maintain parity with NZDF officers posted to New York. He further advised that, if the arrangements or policy had done otherwise, then this would have left the Chief of Defence Force open to complaint by Officer 1 under section 49 of the Defence Act, if Officer 1 considered that he had been unfairly treated in the setting of his conditions of service.

3.45
Personnel branch files for this period did not include a copy of the Administrative Instruction or the General Information. It appears that staff preparing the policy did not refer to these documents – even though Services directorate staff had referred to them in their Minute to the Personnel branch, and even though the General Information had been sent to the Deputy Assistant Chief PersonnelA in 2000.

3.46
The Assistant Chief PersonnelA told us that he does not recall whether he saw the Minute from the Director of Services, which had been copied to him by the General Manager Defence Force Services. He told us that he usually put a line through his name on documents where he was the addressee and signed the document. The copy of the Minute of 13 June 2001 that we obtained from NZDF was not signed by the Assistant Chief PersonnelA.

Other comments on the draft policy

3.47
Personnel branch staff received other comments on the draft policy from the individual services and other branches of NZDF. No one else commented on whether the proposed draft policy complied with the UN's requirements.

3.48
On 16 October 2001, the Assistant Chief PersonnelA sought advice from the Directorate of Legal Services on the proposed draft policy. A staff member from the Directorate of Legal Services provided that advice on 2 November 2001. The legal advice did not discuss the UN's requirements for the payment of rental subsidies, nor did it discuss whether NZDF could pay accommodation assistance to seconded officers.

Senior officers' awareness that arrangements for Officer 1 did not comply with the UN's requirements

3.49
As we discuss in paragraphs 3.29-3.32, it is clear that the Deputy Chief of Defence Staff and the Chief of Air Force knew by May 2001 that the arrangements that had been put in place for Officer 1 did not comply with the UN's requirements. However, the Deputy Chief of Defence Staff was not aware that Officer 1 had made a false declaration to the UN and had no knowledge of the specific arrangements put in place for Officer 1.

3.50
Services directorate staff understood by the end of May 2001 that Officer 1 would have had to make a declaration to the UN to receive the UN's rental subsidy.

3.51
The Military AdviserA, in his fax to Services directorate staff at the end of May 2001, notes that housing assistance can be provided but has to be declared to the UN. He also states that he was not aware whether Officer 1 had advised the UN of his NZDF accommodation assistance.

3.52
By June 2001, Personnel branch staff were also aware that, if NZDF paid accommodation assistance to Officer 1, then Officer 1 had to declare this to the UN.

3.53
While different individuals had different levels of awareness of these matters and not all of them understood that a declaration was required, it is clear that a number of these people were aware that Officer 1 needed to declare his NZDF accommodation assistance to the UN. It appears that no one within NZDF sought to determine whether Officer 1 was in fact declaring it, and whether a declaration was having any effect on his overall financial position.

Policy becomes part of Defence Force Orders

Staff in the Services directorate were not provided with a further copy of the draft policy before it was incorporated in Defence Force Orders.

3.54
On 26 November 2001, the Assistant Chief PersonnelA sent a Minute to the Chief of Defence ForceA, seeking approval for the draft policy and consequent amendments to the Defence Force Orders.

3.55
The draft policy included the payment by NZDF of accommodation assistance to seconded personnel, less any rental subsidies paid by the UN. The Chief of Defence ForceA approved the policy on 27 November 2001. A new section, section 15, was included in chapter 2 of Defence Force Order 4. It set out the conditions of service and entitlements for service members seconded to the UN.

3.56
As part of the process of amending the Defence Force Orders, the draft amendments were circulated for comment to several of the people who had provided comments on the draft policy. They were not circulated to Services directorate staff.

3.57
Officer 1's secondment to the UN ended in July 2003. NZDF paid him accommodation assistance during his secondment. He received the UN's rental subsidy during his secondment, and did not declare his NZDF accommodation assistance to the UN.

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