Part 7: Mr Barker's involvement in Mr Liu's application

7.1
In this Part, we explain the involvement of Hon Rick Barker in Mr Liu's application for citizenship and the process by which the decision was transferred to Mr Jones.

7.2
We begin by outlining the Cabinet office guidelines on conflicts of interest.

Cabinet Office guidelines on conflicts of interest

7.3
The "rules" that apply to ministerial conflicts of interest are set out in the Cabinet Manual.

7.4
The Cabinet Manual recognises that a Minister, while holding a ministerial warrant, acts in a number of different capacities. They act:

• in a ministerial capacity, making decisions and determining and promoting policy within particular portfolios;
• in a political capacity as an MP, representing a constituency or particular community of interest; and
• in a personal capacity.

7.5
Given their multiple roles, it is likely that Ministers will face conflicts of interest from time to time, as a result of either the different roles they are required to play or associations or relationships they develop when fulfilling these roles.

7.6
The processes that apply to managing ministerial conflicts of interest have evolved over time. The current version of the Cabinet Manual (which is available on-line) includes some steps that would not have been in place at the time of the events giving rise to this inquiry. However, the basic principles have remained fundamentally unchanged.

7.7
The Cabinet Manual states:

Ministers are responsible for ensuring that no conflict exists or appears to exist between their personal interests and their public duty. Ministers must conduct themselves at all times in the knowledge that their role is a public one; appearances and propriety can be as important as an actual conflict of interest. Ministers should avoid situations in which they or those close to them gain remuneration or other advantage from information acquired only by reason of their office.

7.8
The management of any conflicts that are identified is agreed between the Prime Minister and the Minister concerned, with advice as required from the Cabinet Office.

7.9
In common with all MPs, Ministers are required to disclose certain assets and interests in an annual Register of Pecuniary Interests of Members of Parliament. However, there is a heightened risk of conflicts of interest arising for Ministers because of the influence and power that they exercise, and the information to which they have access, when carrying out their portfolio responsibilities and as members of the Executive. Because Ministers are making decisions all the time, conflict of interest issues need constant management.

7.10
The Cabinet Manual emphasises that Ministers are responsible for proactively identifying and reviewing possible conflicts of interest and ensuring that any conflicts of interest are promptly addressed. However, steps are also taken by the Cabinet Office to assist Ministers to manage conflicts.

7.11
These steps include briefing new Ministers, supporting an annual review of Minister's interests, and periodic briefings on potentially relevant issues, such as insider trading or receiving gifts. The Cabinet Office is available during the year to provide guidance on any conflict issues that may arise and on the acceptance of payments or gifts.

Background to Mr Barker's involvement

7.12
Mr Barker became Minister of Internal Affairs in October 2005. He had met Mr Liu before Mr Barker became Minister of Internal Affairs and they had mutual friends.

7.13
Mr Barker told us that, at some point, he became aware of concerns about Mr Liu. He was not able to pinpoint exactly when that was, or from whom he learned of these concerns, but it seems likely that it was during 2007 and that the information came to his attention as a result of the problems Mr Liu was having with his permanent residency permit.

7.14
Mr Barker told us that his recollection was that mutual friends of Mr Liu had told him over a dinner that Mr Cunliffe was considering revoking Mr Liu's permanent residency permit. He later approached Mr Cunliffe to talk to him about it.

Mr Barker's conversation with Mr Cunliffe

7.15
Mr Cunliffe told us that Mr Barker had approached him to talk about Mr Liu (as did Mr Carter and Mr Samuels), and that Mr Barker had asked that the conversation be kept confidential. Mr Barker confirmed that he had talked to Mr Cunliffe, but did not recall requesting confidentiality.

7.16
Mr Barker told us his object in talking to Mr Cunliffe was not to advocate on Mr Liu's behalf and that he had not given Mr Liu or anyone associated with him any indication that he would do so. At that time, Mr Barker was not aware of Mr Liu's citizenship application and did not discuss any decisions he might make as Minister of Internal Affairs, or any decisions Mr Cunliffe might make as Minister of Immigration. Instead, Mr Barker wanted to ascertain the substance of the allegations being made against Mr Liu, and whether Mr Barker needed to be concerned about continuing to associate with him.

7.17
Mr Barker said that Mr Cunliffe had told him that Mr Liu was allegedly a "bad man", or words to that effect, but that Mr Cunliffe would not elaborate. Mr Barker did not attempt to pursue the matter because he knew Mr Cunliffe would not provide information if he did not consider it to appropriate to do so.

7.18
Mr Barker told us that he did not tell Mr Liu or any of their mutual friends about his conversation with Mr Cunliffe, but, as a result of the concerns he had about Mr Liu, he took steps to avoid social situations at which they might meet.

Letter from Mr Liu's lawyers to Mr Barker

7.19
In October 2007, after Mr Cunliffe's decision not to revoke Mr Liu's residency application, Mr Liu's lawyers sought to reactivate his citizenship application. They wrote to Mr Barker as Minister of Internal Affairs, telling him that Mr Cunliffe had recently confirmed Mr Liu's permanent resident status, and seeking Mr Barker's assistance to expedite Mr Liu's citizenship application.

7.20
The letter goes on to say:

We are advised that there are further agencies currently being carried out but we are not advised which agencies are undertaking the checks.

We seek your assistance to expedite our client's application because the delays have been grossly unfair and have caused our client, his partner and children who are all New Zealand citizens, unnecessary stress and hardship.

Mr Barker's reply to Mr Liu's lawyers

7.21
As is standard practice when a letter is received by the Minister about a citizenship application, Mr Barker's Private Secretary contacted officials at the Department for information about Mr Liu's file so that they could reply to the letter.

7.22
The Department provided a brief report explaining that Mr Liu's application had been delayed because he was subject to an Interpol Red Notice. The Department said it was unable to disclose this information to Mr Liu because it had been asked not to.

7.23
The next month, the Private Secretary requested a further update on Mr Liu's file. In response, the Department investigator who was managing Mr Liu's file and also dealing with a Privacy Act complaint Mr Liu's lawyers had made on the same matter, said he would contact Interpol to see if the information about the Interpol Red Notice could be released to Mr Liu. Department officials also drafted a response to the lawyers' letter for the Minister to sign.

7.24
That letter that was later signed by Mr Barker included the following paragraphs:

While I can understand Mr Liu's frustration about the time it is taking to process his application, it is important that the checks by other government agencies are completed to the satisfaction of those agencies.

I have asked my officials to encourage those agencies to give Mr Liu's application their urgent attention.

To discuss the progress of Mr Liu's application, you may wish to contact [name of Investigator] on freephone 0800 225171, extension [ ]. I assure you that I will take Mr Liu's personal circumstances into account when his application is forwarded to me for a decision.

7.25
From our review of citizenship files, it appears that the letter to Mr Liu's lawyers was fairly standard. For example, the sentence "I assure you I will take Mr Liu's personal circumstances into account when his application is forwarded to me for a decision" was used in responses to other applicants. It was also used in a letter sent by Mr Barker's predecessor in the role of Minister of Internal Affairs, in response to an earlier request for urgency from Mr Liu.

7.26
We asked Mr Barker and the officials about the sentence "I have asked my officials to encourage those agencies to give Mr Liu's application their urgent attention", because this sentence did not appear in the draft originally sent to Mr Barker's office. We were unable to clearly establish when it was added and by whom. Mr Barker told us that he did not add the sentence, and would not have instructed his officials to do so because that could have been seen as interfering in operational matters of the Department.

7.27
We consider it likely that the sentence was added by Department officials because there was a general concern then about delays in processing applications (as a result of a backlog caused by changes to the Citizenship Act).

7.28
The letter was sent to Mr Liu's lawyers on 13 December 2007.

7.29
We discussed with Mr Barker whether it was appropriate for him to sign the letter, given that he knew Mr Liu. Mr Barker told us that he thought it was acceptable for him to do so for two main reasons.

7.30
First, he was not being called on to make a substantive decision about Mr Liu's application for citizenship. He was merely signing a letter, drafted by officials, which explained the status of his application. His understanding was that it was acceptable to sign a letter to someone he knew in those circumstances.

7.31
Secondly, he had no intention of considering Mr Liu's application and his assumption was that he would never actually do so. He said he had previously dealt with an application involving similar concerns about an Interpol Red Notice. After he had asked for more information on that case, it had been deferred and he had never seen it again. He assumed Mr Liu's application would be deferred in the same way.

7.32
He also told us that he had no Associate Minister at the time to transfer the matter to, and did not think asking one of his staff to sign the letter in his place would have made any practical difference. He told us that he was required to deal with a large volume of correspondence and, rightly or wrongly, sometimes the focus was simply on dealing with it as quickly and efficiently as possible. In this instance, six weeks had passed since Mr Liu's lawyers had written to him. If the letter were not signed in December, it might not be attended to until after the holiday period, resulting in an even longer delay.

Our comments

7.33
Although we understand Mr Barker's reasons for signing the reply to Mr Liu's lawyers in October 2007, we do not consider it was wise for him to have done so, for two main reasons.

7.34
First, what he was saying in the letter was not true. If he never intended to make the decision on Mr Liu's citizenship application, it was not appropriate for him to suggest that he would. Given the connections he had with Mr Liu, the giving of a personal assurance of that kind could have given the impression that those connections might influence the decision that would be made on his citizenship application.

7.35
Secondly, if Mr Barker had not intended to ask officials to encourage government agencies to process Mr Liu's application urgently, he should not have signed a letter suggesting he would. We acknowledge Mr Barker's points that the letter was drafted by officials, and that he had concerns about being seen to alter it (because that too could be interpreted as interfering in an operational decision of the Department). However, by signing a letter in those terms, a perception was created that Mr Barker had some involvement in directing the management of the file, and intended to make the decision on it.

7.36
Mr Barker emphasised to us that there was little guidance available about when it was inappropriate for Ministers to make decisions or engage in ministerial activities about people that they might be connected to. He said he did not recall being given a briefing by the Cabinet Office when he was first appointed a Minister, possibly because he was initially a Minister outside Cabinet.

7.37
We found information that showed Mr Barker was intended to be invited to a briefing given for Ministers in November 2002, but could not confirm whether that briefing took place or, if it did, whether Mr Barker attended. We also agree that non-financial conflicts of interests, such as conflicts arising because of relationships or associations with other individuals or groups are often less clear cut than financial conflicts of interest. It is more difficult to establish rules about how to manage them.

7.38
However, given the terms of the Cabinet Manual, the references it makes to the need to avoid the appearance of conflicts as much as actual conflicts, and the availability of advice from the Cabinet Office, we consider that appropriate guidance was available.

7.39
We accept that, with conflicts of interest, the necessary judgement calls are not always easy, and that decisions about how to manage them sometimes need to be made quickly based on the information available at the time. Although we consider that Mr Barker should not have signed the letter, we have not encountered any information in the course of our inquiry that suggests that Mr Barker attempted to involve himself in, or interfere with, the Department's management of Mr Liu's application in any way, or in the decision later made by Mr Jones.

7.40
It is also apparent that any error in judgement Mr Barker made in signing the letter has been magnified by later events and circumstances that were not of his making.

Transfer of citizenship decisions to Mr Jones

7.41
In early 2008, Mr Barker told us that he approached the Secretary of the Cabinet to seek her advice about some potential conflicts of interest. He said this was not a formal request for advice but a discussion at the cafe at Parliament.

7.42
He said his concerns did not relate specifically to Mr Liu's citizenship application which, he told us, he assumed he would never see. They related to two other potential applications he was aware of – a family who had approached him in his constituency, and an individual he knew who was applying for citizenship.⁴

7.43
Unlike the Immigration portfolio, where there is an Associate Minister to whom the Minister can transfer decisions in the case of a conflict of interest, at the time there was no Associate Minister of Internal Affairs to whom Mr Barker could transfer decisions as a matter of course. Ministers are able to transfer decisions to any other Minister as need arises. However, Mr Barker told us that the Secretary's advice was to set up a standing transfer with the approval of the Prime Minister.

7.44
Mr Barker told us it was he who recommended to the Prime Minister that decisions be transferred to Mr Jones. His reason for choosing Mr Jones was largely because the immigration portfolio was considered to have the strongest parallel with the citizenship portfolio. Mr Jones, as Associate Minister of Immigration, was considered a "natural fit".

7.45
Documents provided by the Department and the Department of the Prime Minister and Cabinet show that it took some time to organise the transfer. The decision to transfer citizenship decisions to Mr Jones in the case of a conflict was approved by the Prime Minister in April 2008.

7.46
After the Prime Minister had approved the standing transfer to Mr Jones, there was a further delay in finalising the letter to be signed by Mr Barker transferring decisions to Mr Jones. Various versions of the letter were drafted before the final form was adopted. We were told that this delay might have been due to changes in Mr Barker's personnel at the time.

7.47
The letter confirming that decisions on citizenship applications would be transferred to Mr Jones in the event that Mr Barker had a conflict was not signed until 26 June 2008.

7.48
By that time, officials were aware that Mr Liu's application was shortly to be presented to the Minister. A second letter, transferring the decision about Mr Liu's application to Mr Jones, was prepared by officials and signed by Mr Barker a week later (on 3 July 2008).

Our comments

7.49
The decision to organise a transfer of responsibility to Mr Jones was appropriate and in keeping with the principles set out in the Cabinet Manual.

7.50
The identification of the Associate Minister of Immigration as the person to make such decisions was appropriate. As it happened, this was the only decision that Mr Jones made under this delegation.

7.51
Although it might have appeared, from the timing of these letters, that the decision to select Mr Jones as the decision-maker was made specifically in response to Mr Liu's application, that was not so.

7.52
The decision that it would be Mr Jones who would deal with such applications had effectively been made in April 2008, when the Prime Minister approved a general transfer of citizenship decisions to Mr Jones in the event that Mr Barker had a conflict of interest. This appears to have been before any of the parties involved knew that Mr Liu's application was about to be submitted to the Minister.

4: Neither of those applications resulted in any decisions by Mr Barker or Mr Jones.