Part 1: Background

1.1
In late 2010, questions were asked about the use of parliamentary travel entitlements by Hon Pansy Wong and her husband, Sammy Wong. The particular entitlements enable members of Parliament (MPs) and their spouses to claim a rebate for the cost of international travel, unless the travel is for private business purposes.

1.2
The Parliamentary Service administers these entitlements, which are funded through Vote Parliamentary Service and governed by the rules set out in formal Directions issued by the Speaker.

1.3
Information suggesting that Mr and Mrs Wong had been involved in private business activities on one of their trips to China became public in late 2010. On 12 November 2010, Mrs Wong resigned from her roles as Minister of Ethnic Affairs and Minister of Women’s Affairs and asked the Speaker to review her use of the travel entitlements. The Parliamentary Service commissioned an immediate investigation into the use of the entitlements by Mr and Mrs Wong, and into other related matters.

1.4
The report from that investigation was released on 3 December 2010. It concluded that one leg of one trip had involved an element of private business activity, and the rebate of $237.06 each should not have been claimed for that part of the trip. It found that all other claims during Mrs Wong’s 14 years as an MP had been for parliamentary and personal travel and the relevant entitlements had been properly claimed.

1.5
Questions about the use of the entitlements by Mr and Mrs Wong continued after the release of the Parliamentary Service report, and there was public comment suggesting that the Auditor-General needed to carry out an inquiry.

1.6
On 14 December 2010, Mrs Wong resigned from Parliament.

1.7
On the same day, we published a report on our inquiry into the administration of expenditure in Vote Ministerial Services.¹ That report supported wholesale change to the systems for funding the salaries, allowances, and expenses of MPs and Ministers. Some changes had already been made or announced, including:

• The Speaker had announced in late November 2010 that the entitlements to rebates on international travel would be abolished. This decision was supported by all parties in Parliament.
• The Prime Minister had announced in early December 2010, in response to a Law Commission report on the Civil List Act,² that the Government would introduce legislation to move decision-making on parliamentary and ministerial expenses to an enhanced Remuneration Authority.

1.8
On 14 December 2010, the Auditor-General also issued a statement advising that she did not consider that further investigation into the Wongs was warranted at that point. We saw more benefit in working to implement the changes to the systems that would clarify the rules and their administration for the future.

1.9
In late December 2010, Hon Pete Hodgson MP wrote to the Auditor-General with further information and asked for another investigation. We were considering this request when a television channel screened an interview with Mr Steven Preest, a business associate of Mr Wong, who claimed to have documents and photographs showing that Mr Wong had been engaged in business activity on another trip for which the parliamentary rebate had been claimed.

1.10
We met with Mr Hodgson to ensure that we understood his concerns. We also met with Mr Preest, and confirmed that his information appeared to directly contradict some findings in the Parliamentary Service report. We decided that we needed to re-investigate whether public funds had been used inappropriately.

The scope of our work

1.11
We have looked at issues relating to international travel and other matters that were raised with us for the period 2005-10. Our aim has been to establish whether public funds were used appropriately and, in particular, whether any private business activity was carried out on trips for which a rebate was claimed from Parliamentary Service.

1.12
The Parliamentary Service investigation based its conclusions on explanations given by the Wongs for their Parliamentary Service-subsidised travel and the investigator’s judgements about the reasonableness of those explanations given the other information available. The Parliamentary Service investigation was completed in about two weeks.

1.13
By contrast, our investigation was able to take a slower and more thorough approach. We did not rely solely on the Wongs’ explanations. We also looked for evidence that would confirm or refute their explanations. Mr and Mrs Wong provided us with extensive information, including business and personal bank records, tax records, and credit card statements. We examined these to independently determine the extent of their business activities and sources of income. We then attempted to establish whether there was any indication that business revenue was connected to, or business expenses were incurred during, travel that attracted a Parliamentary Services rebate.

1.14
We also took a wider interpretation than the Parliamentary Service investigation of what constitutes travel for business purposes. The Parliamentary Service investigation concentrated on Mr Wong’s existing business interests, primarily some named companies and existing sales and consultancy activity.

1.15
By contrast, we looked for evidence of any activity that incurred business expenses or which was undertaken with the intention of generating income, whether or not income actually resulted. That activity did not need to be linked to existing business interests or companies.

1.16
Our approach broadly aligned with that of Mr Wong. He explained to us that he defined business activities as undertakings that either directly generated fees and revenue or that were intended to generate future business opportunities and revenue. He did not consider general discussions relating to, or about, business opportunities or conversations of general business to be business activities.

1.17
We acknowledge that the lines between networking, discussing business generally, speculating about business opportunities, and actively marketing a business or service are not clear-cut. We concentrated on whether there was evidence of any activity by Mr Wong that was related to his known business interests, or was otherwise clearly carried out for the purpose of generating business income, while he was on trips subsidised by the parliamentary rebate. In particular, we checked Mr and Mrs Wong’s business and personal financial records against their explanations for their travel to see whether there were any inconsistencies.

1.18
As well as Mr and Mrs Wong providing us with comprehensive personal financial information and their recollection of the various trips they had taken, the Parliamentary Service provided us with all documents that had been gathered for the initial investigation. We also met with and questioned Mr and Mrs Wong.

1.19
Our review of documents, discussions with Mr and Mrs Wong, and confirmation of facts through our own research, provided us with sufficient information to form conclusions. We did not see a need to go further and interview other people or gather information from overseas.

The financial information we reviewed

1.20
Our request for detailed information about Mr and Mrs Wong’s travel and for comprehensive financial records led Mr and Mrs Wong to carefully review their financial information for this whole period. Mr Wong told us that he had identified a small number of instances where he had incorrectly recorded some private expenses as business expenses. He has taken steps to reverse these errors.

1.21
We also found a number of other book-keeping errors, gaps, and inconsistencies in the financial information we reviewed. These deficiencies were not significant for our work. The state of the financial records, and the volume and value of the transactions, was consistent with the finding in the Parliamentary Service report that Mr Wong’s primary role has been to support his wife in her political career, and that his business activity over the years has been limited. The financial information we have reviewed confirms that business activity was not a significant focus for Mr Wong during these years.

1: Controller and Auditor-General, How the Department of Internal Affairs manages spending that could give personal benefit to Ministers.

2: Law Commission, Review of the Civil List Act 1979 – Members of Parliament and Ministers, NZLC R119, December 2010.