Part 5: Investigation and prosecution

Local Authorities (Members’ Interests) Act 1968: A guide for members of local authorities on managing financial conflicts of interest.

5.1
In this Part, we discuss:

Offences under the Local Authorities (Members' Interests) Act 1968

5.2
The Act is enforced by prosecution. The Auditor-General is the sole prosecuting authority. That means we investigate allegations about possible breaches of the Act and decide whether prosecution is warranted. Figure 8 describes the two offences under the Act and their respective penalties.

Figure 8
The two offences under the Act

Section Offence Penalty on conviction
5 Continuing to act as a member after becoming disqualified from office, by reason of a breach of the contracting limit under section 3(1). A fine not exceeding $200.
7 Failing to observe the prohibition in section 6(1) against discussing or voting on a matter in which the member has a financial interest. A fine not exceeding $100 and, if the conviction is not successfully appealed, automatic disqualification from office.

5.3
Proceedings must begin within two years of the offence being committed.40

Deciding whether to investigate

5.4
We can investigate a possible breach of the Act or related offence after receiving a complaint or at our own discretion.

5.5
To investigate a complaint, we must first be satisfied that there is enough evidence to justify an investigation. An allegation unsupported by evidence or a simple assertion that there has been a breach is not enough.

5.6
A complaint should be supported with enough evidence to warrant an investigation, such as:

  • details about the alleged financial interest;
  • information about the decision taken by the relevant local authority and the member's participation in that decision; and
  • documentary evidence, such as minutes of the local authority's meeting where the decision was taken, and any supporting reports.

Investigating possible breaches

5.7
Any member of the public can complain or raise questions about a member's compliance with the Act. However, both the investigation and the final resolution of the matter are primarily between the member and the Auditor-General.

5.8
If we decide that a complaint made to us warrants further investigation, we will give you full details of the complaint and an opportunity to respond to it. However, we do not reveal the identity of the complainant. This is consistent with the approach all prosecuting agencies take. It is important that members of the public feel free to provide information about possible offences without fear of their identity being revealed.

5.9
We will investigate the complaint carefully to get the relevant facts and evaluate whether there has been a breach of the Act. This involves considering whether the factual circumstances reveal a breach, and whether any of the exclusions or defences can be relied on.

5.10
We will also seek information about the broader context of the complaint, including your reasons for acting as you did, your understanding of the nature of your interest in the matter and the general context, and the other matters you took into account.

5.11
Although we will give you full details of the complaint and an opportunity to respond, you do not have a formal right to be consulted about whether criminal charges are laid or not.

5.12
If an investigation does not result in a decision to prosecute, our usual practice is to:

  • inform the complainant (if there is one) that we have completed our enquiries; and
  • write to you about our findings.

5.13
We might also inform your local authority of our findings.

5.14
We decide for each case how much of our investigation to publicly report. In making this decision, we consider how publicly reporting the investigation will affect the member's reputation against the need for public accountability. Because the balance of these factors will differ in each case, we decide on a case-by-case basis how much of our investigation we will publicly report.

5.15
We note that, in some cases, it better serves the public interest for us to report more fully on our investigations and conclusions.41 This particularly applies where we have investigated allegations of breaches of the Act that have attracted considerable public interest.

5.16
In these cases, we might also make a brief public statement about our investigation and findings. You are then accountable to the public for your conduct.

5.17
If we consider that the circumstances warrant it, we might decide to begin criminal proceedings. The need to consider prosecution is itself a matter of serious concern. However, in any particular situation, we might form the view that, although an offence appears to have been committed, the circumstances do not warrant prosecution.

5.18
When deciding whether to begin criminal proceedings, we take account of the Solicitor-General's Prosecution Guidelines issued by the Crown Law Office.42 These guidelines are the accepted and authoritative description of how any prosecuting agency should exercise its discretion.

5.19
These guidelines require that:

  • the facts provide evidence of a breach of the Act; and
  • it is in the public interest to bring a prosecution.

5.20
There must be a reasonable prospect of obtaining a conviction. There must be credible evidence that can be relied on in court to reasonably expect that a judge will convict. The burden of proof for criminal prosecutions is stricter than the test required to invalidate a local authority's decision in judicial review proceedings for bias. As well as needing to prove that there has been a breach, it must be clear that none of the exclusions or defences in the Act apply.

5.21
Even if there is evidence that can prove a breach, the public interest in any prosecution must also be considered. Factors relevant to the public interest include:

  • whether it is more likely than not that a prosecution will result in conviction;
  • the size and immediacy of any financial interest, the damage caused, the level of public concern, and the extent to which the member's participation influenced the outcome;
  • mitigating and aggravating factors, including any previous misconduct, willingness to co-operate with an investigation, evidence of recklessness or irresponsibility, and previous breaches, cautions, and warnings;
  • the effect of a decision not to prosecute on public opinion;
  • the availability of proper alternatives to prosecution, such as reporting publicly to the council or the public;
  • the prevalence of the offending and need for deterrence;
  • whether the consequences of a conviction would be unduly harsh or oppressive; and
  • the likely length and expense of the trial.

5.22
This list is illustrative and is not exhaustive.

40: See section 40(2) of the Public Audit Act 2001.

41: See, for example, Office of the Auditor-General (2009), Investigation into conflicts of interest of four councillors at Environment Canterbury, Wellington, at oag.parliament.nz.

42: Crown Law (2013), Solicitor-General's Prosecution Guidelines , at crownlaw.govt.nz.