Part 1: Introduction

Inquiry into decision by Hon Shane Jones to grant citizenship to Mr Yang Liu.

Reason for the inquiry

1.1
Mr Yang Liu applied for citizenship in May 2005. His application was approved in August 2008 by the then Associate Minister of Immigration, Hon Shane Jones. Mr Jones was acting in place of the Minister of Internal Affairs, Hon Rick Barker, who had decided he should not make the decision because he had connections to Mr Liu. The day after his application for citizenship was approved, Mr Liu applied for an urgent private citizenship ceremony, which took place at Parliament four days later.

1.2
Shortly after Mr Liu was granted citizenship, documents were leaked to the media showing that officials in the Department of Internal Affairs (the Department) had recommended that the Minister decline Mr Liu's application because there were concerns about whether he satisfied the "good character" requirement of the Citizenship Act 1977.

1.3
A particular concern was that, at the time he was granted citizenship, Mr Liu was being investigated by Immigration New Zealand (Immigration) for alleged identity fraud. Allegations were made that he had used his influence with politicians to gain citizenship and that there had been improper political interference in the decision by a number of members of Parliament (MPs) and other associates who either knew Mr Liu or were connected to the citizenship decision in some way.

1.4
In May 2012, Mr Liu appeared before the High Court, having been charged with fraudulently using documents to obtain permanent residency and with making a false statement for the purpose of procuring citizenship. He was found not guilty of those charges on grounds that they had not been proven to the required standard. During the Court case, the allegations that Mr Liu had used his political influence to gain citizenship resurfaced in the media.

1.5
On 23 May 2012, the Leader of the Labour Party, Mr David Shearer, wrote to the Auditor-General asking her to inquire into the probity of the decision to grant citizenship to Mr Liu. We agreed to do so because we considered that the matter raised significant questions about the strength and effectiveness of the systems supporting this area of government decision-making. We carried out the inquiry with the agreement of Mr Jones.

What our inquiry covered

1.6
Our inquiry examined how and why the Minister decided to authorise the grant of citizenship to Mr Liu. The purpose of our inquiry was to determine whether Mr Liu received any form of preferential treatment and, if so, whether that was the result of his association with MPs or their associates.

1.7
A relevant factor in this case was that, shortly after Mr Liu applied for citizenship in May 2005, Immigration began investigating whether to revoke Mr Liu's permanent residency status. We took account of Immigration's investigation into Mr Liu as part of the background to this inquiry. However, the focus of our inquiry was Mr Jones' decision to authorise the grant of citizenship to Mr Liu, rather than the Immigration investigation and matters relating to his permanent residency status.

1.8
In carrying out our inquiry, we considered:

  • the requirements of the Citizenship Act in relation to the grant of citizenship and the scope of ministerial discretion to authorise the grant of citizenship;
  • how the Department administers the system for checking and processing applications for citizenship and supports ministerial decision-making;
  • the relationship between permanent residency and citizenship, and the communication protocols between Immigration and the Department, in particular where the permanent residency status of a citizenship applicant is under investigation;
  • the reasons for the decision of the Minister of Immigration (Hon David Cunliffe), in September 2007, not to revoke Mr Liu's permanent residency permit at that time, although he did not discount the possibility of reconsidering the matter again in the future;
  • the Department's management of Mr Liu's application and the allegations of political interference;
  • the rules applicable to ministerial conflicts of interest, and when and why the decision on Mr Liu's application was transferred from the Minister of Internal Affairs, Hon Rick Barker, to Mr Jones; and
  • the information and advice given to Mr Jones by Department officials about Mr Liu's application, and Mr Jones' reasons for authorising the grant of citizenship to Mr Liu.

1.9
Our inquiry did not consider the substance of any of the allegations made against Mr Liu, whether in China, Australia, or New Zealand.

Investigation process

1.10
We reviewed documents about Mr Liu provided by the Department, Immigration, and the Department of the Prime Minister and Cabinet.

1.11
We also interviewed:

  • Hon Shane Jones, his Political Adviser, and his Senior Private Secretary, Mr Daniel Phillips;
  • Hon Rick Barker, his Political Adviser, and his Private Secretary for citizenship matters;
  • Hon David Cunliffe, who was supported at the interview by Hon Lianne Dalziel;
  • Department officials who were involved in processing Mr Liu's application for citizenship and providing advice to the Minister;
  • officials from Immigration;
  • Hon Dover Samuels;
  • Mr Shane Te Pou; and
  • the Secretary to the Cabinet.

1.12
We provided a copy of our draft report, or relevant sections of it, to the individuals or organisations named in it, and to the Department officials involved in processing Mr Liu's citizenship application and providing advice to the Minister on it. This step is necessary to allow for comment on the factual accuracy and reasonableness of our draft findings and to enable us to provide natural justice to those affected by our work.

1.13
We did not interview Mr Liu, but we provided him with a copy of our draft report for comment.

Structure of report

1.14
In Part 2, we provide a timeline of the main events and decisions in relation to Mr Liu's permanent residency permit and citizenship application.

1.15
In Part 3, we provide background information that is relevant to the citizenship decision, including a summary of the main provisions of the Citizenship Act and an explanation of the relationship between citizenship and permanent residency. We also explain the "good character" requirement in the Citizenship Act, which was the central concern in Mr Liu's application.

1.16
In Part 4, we explain Immigration's consideration of Mr Liu's permanent residency status and the reasons for Mr Cunliffe's decision, in September 2007, not to revoke his permanent residency permit at that time, although he did not discount reconsidering the matter in the future.

1.17
In Part 5, we explain the Department's management of Mr Liu's application up to when it was referred to Mr Jones for his decision.

1.18
In Part 6, we address the processes and advice leading to the Mr Jones' decision to authorise the grant of citizenship to Mr Liu, and the decision itself.

1.19
In Part 7, we explain Mr Barker's involvement in Mr Liu's citizenship application, and when and how the decision was transferred to Mr Jones.

1.20
In Part 8, we address other matters that arose during our inquiry.

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