Fraud and corruption prevention: Getting it right

October’s Transparency International New Zealand Leaders Integrity Forum was hosted by the Office of the Auditor-General in our Auckland office for the first time since July 2021. Sector Advisor, Manisha Das, shares key points and reflections from the discussion.

A group of people attending a presentation in an office boardroom. Two presenters are seated at a table at the front of the room. A third person is addressing the audience.In the 2021 Corruptions Perceptions Index, New Zealand scored 88 out of 100, ranking first equal with Denmark and Finland. Although our public sector is perceived as one of the least corrupt in the world, we cannot take this for granted. The October forum focused on strengthening the public sector's resilience to fraud and corruption, and minimising opportunities and temptations through preventative measures. 

Detective Inspector Christiaan Barnard (Manager Financial Intelligence Unit, New Zealand Police) was the chairperson for this forum and provided some of his reflections on the topic of fraud and corruption. Christiaan notes that prosecution and investigation play key roles in holding people accountable for fraudulent activities, returning stolen resources, and bringing closure to victims. However, it’s not a sustainable and long-term solution, especially due to limited investigation resources. 

Christiaan emphasised that prevention is central to the success of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. However, he explained the impact and value of prevention is yet to be better understood and quantified. Therefore, unlike prosecution, prevention is not as recognised and visible, and requires further effort. 

The main speaker for this forum was Karen Chang (Chief Executive, Serious Fraud Office (SFO), Te Tari Hara Taware). Karen opened the discussion by sharing the priorities and aspirations of the new Counter Fraud Centre (the Centre), as well as the value the service adds to how the public sector perceives and tackles fraud.  

In 2020, the SFO was given special funding to prevent fraud of the Covid-19 recovery and relief fund.  This work led to the establishment of the Centre, which was officially launched in July 2021.The Centre acts as a first point of contact for assisting and supporting public sector agencies with fraud prevention and anti-corruption capabilities. The Centre currently runs on a voluntary access basis and requires agencies to approach it for expert advice. 

This year, the Government agreed to fund the Centre on a permanent basis. Karen noted this was a big milestone, which recognises prevention not just as a useful reactive response to Covid-19-related fraud, but also as its own integral discipline. Karen further explained that it’s important to be the ‘ambulance at the top of the cliff’ as opposed to relying on prosecution, which is usually at the end of the fraud life cycle. 

Karen outlined the two main priorities for the Centre. The first is to build capability and resilience in the public sector. The Centre is leading this work by supporting agencies to design their own fraud and risk assessments. The capability across the public sector varies. However, expert advisors can help tailor risk assessments and provide templates as per the nature and size of the organisation. A Counter Fraud Centre Portal has also been established which includes counter fraud and corruption resources for registered members.

The second priority is to shift the culture around fraud. Karen shared that organisations are often reluctant to identify fraud within their organisation due to the negative associations of this subject. However, Karen argues that fraud is covert and, instead of dealing with fraud prosecutions, organisations can prepare by being more proactive and vigilant. Karen emphasised that finding fraud should be perceived positively and needs to be more widely celebrated.

Karen acknowledged that the shift in culture will require effort from people in leadership positions to prioritise and develop capability where needed. This messaging aligns with the Office of the Auditor-General's integrity framework, which highlights that cultural change requires ongoing commitment from leadership teams to influence and increase awareness about good practices in an organisation. 

To end, Karen emphasised that we do not need to reinvent the wheel. Countries such as the UK have well-established fraud prevention processes and mandates, which have collected sufficient evidence to demonstrate success. Karen argued that we are in a strong position to implement preventative initiatives through the insights from our counterparts, to strengthen our public sector against fraud. 

As I reflected on the topic of this session, I have learnt that realistically fraud is inevitable. While it may be impossible for organisations to eliminate fraud, we have the capability to build a culture that’s more open about fraud prevention. Embedding this culture requires ongoing commitment and effort from leadership roles to ensure that the public's resources are protected against fraudulent activities. 

Kay Williams says:
Apr 24, 2023 05:01 AM

For the ordinary citizen fraud is a common experience.<br/>When dealing with crown entities and statutory bodies we have a default position.<br/>Don’t ask don’t know don’t have to do anything. Lack of recognition to make inquiry is void for fear of the discovery of fraud by the agency or government. My concern is when the facts of the matter are part of a predetermined outcome to omit from consideration in the investigation process.<br/>We have poor literacy skills the intent is to communicate by way of the written word and avoid the verbal and visual acknowledgment of the individual. Legal wit and might is used with oppressive weight to deny inquiry. Stratagem and trick with omissions and spoliation are common occurrences over decades of fraud upon the public and the state. Time delay is the friend of fraud as we use excuse to defer the longevity of harm.<br/>The greatest concern is our media as the fourth estate, has an entrenched sense of entitlement it works arbitrarily and symbiotically with in-house plants in cabinet for information as they pick and chose between sensationalism for profit as they are the complicit party to coverups.<br/>The most egregious is the oppositional intent to the concept of accountability when the unpalatable truths in our country fall into the concept of coverup.<br/>The social contract is broken between the general public and ministers of the crown as government representatives engage in the the words that equal misdeeds and inaction. To obstruct prevent and pervert due process and rule law obligations set in motion a collective demise that has undemocratic outcomes. Fraud is to deliberately mislead in order to gain unfair advantage, we commit on a daily basis. The highest ethical standards that are expected from our government agencies politicians so too the concept of good governance hinges on investigation and accountability.

Add comment

You can add a comment by filling out the form below. Plain text formatting. Web and email addresses are transformed into clickable links. Comments are moderated.