Follow the Money - TINZ Corruption Scan March 2025

Transparency International New Zealand is able with its resources and capacity, to undertake high level monitoring of corruption to inform strategy and therefore advocacy and educational priorities. However, we acknowledge that the information we can obtain is limited due to being mostly sourced from publicly available information and is subject to change, for example, if appeals are held that overturn current decisions.

Public sector corruption

The public sector is largely free from corruption. However, where corruption occurs there are patterns that can be seen in prosecutions and court cases from our review of current information. These are reasonably obvious, as corruption is more likely to occur where there is:

a large amount of public funding being allocated on big projects or general procurement;
a link to organised crime trying to get drugs, firearms or other illicit goods into the country;
our financial systems are being used inappropriately.

There are good public sector integrity frameworks in place to guide improvement, notably the OAG’s Integrity Framework 2024. The Public Service Commission also publishes Standards of Integrity and Conduct.

Vulnerable public sector areas include:

New Zealand Police - There have been cases of leaking sensitive information, dishonesty, indecent communications, firearms charges, money laundering and drug dealing. Since 2020, ten staff have been charged following investigations by the Police’s National Integrity Unit. A police investigation during the year revealed that police database information had been provided to gangs.
Corrections - There have been cases of smuggling, corruption and inappropriate use of information. In the last year six years, people have been charged with corruption and bribery following an investigation at Rimutaka prison.
Border Services (Customs, MPI, Aviation Security) - There have been prosecutions of baggage handlers, and an insider threat at the Port of Tauranga. A Customs 2024 assessment (not currently public) notes the increasing exploitation of people within the border systems: shipping lines, freight forwarders, warehouse people, and freight and logistics staff largely related to drug and firearms importation.
Local Councils, Council Controlled Organisations and regional facilities including DHBs - Examples of proven or alleged recent cases include procurement fraud, bribery/kickbacks, contract manipulation and fraudulent signing-off of compliance requirements. An NZSIS Security Threat report identifies local government, as prime targets for ‘influence building’ by foreign agents, due to their extensive authority over valuable strategic resources and critical national infrastructure.
Immigration - A recent case involved bribery of Immigration New Zealand employees in Samoa to enable the illegal recruitment of oversea labourers who were then underpaid and exploited. There are ongoing prosecutions of immigration advisors. Complex immigration scams targeting hopeful migrants from India and Bangladesh have been exposed.‍
Transport - NZTA employees have supplied gangs with confidential information in exchange for drugs. There has also been a case of a falsified driver licence and stolen identities.

Fraud Reporting 2022-23. The Office of the Auditor-General (OAG) reports on fraud that has been reported to appointed auditors for public sector agencies. The most recent report for 2022-23 shows 79 instances of theft and fraud across central and local government – with more instances reported in local government than in central government. There were no instances of backhanders or undeclared gifts, but 22% of reported fraud is in false invoicing and19% is intellectual property or identity theft. The OAG note that this is just a portion of fraud that is likely to be occurring, as not all is reported to the auditors.

Private Sector Corruption

“Some businesses are taking steps to create a culture of integrity. But for many organisational integrity maturity is still in a development phase.” (Lorinda Kelly, Deloitte, page 5).. Corruption occurs in a variety of ways, as bad actors, transnational organised crime and foreign agents try to exploit our high trust and eager business environments.

Financial Systems. NZ’s financial system continues to be abused for criminal intent. Two reports – the Financial Crime Prevention Network (FCPN) threat assessment report, and the Financial Intelligence Unit National Risk Assessment(FIUNRA) highlight the risks.

According to the FIUNRA the “occurrence of fraud is accelerating, with both ‘defrauding’ and the subsequent ‘laundering’ occurring within the financial system… For this reason, the banking sector remains highly vulnerable to money laundering along with any sector that offers services and products enabling movement of proceeds out or into New Zealand.” The FIUNRA identifies banks, remittance providers and VASPs (Virtual Asset Service Providers) as high risk sectors. Sectors abused for high risk crime include the real estate, high-value dealers, casinos, law firms and to a lesser extent accounting practices and NBDT (Non-Bank Deposit Takers).

Shell Companies/Trusts. The FCPN Report identifies that New Zealand entity formation processes are exploited by transnational organised crime actors through the creation of shell companies and the abuse of trust structures. Trusts are known to be highly vulnerable to criminal misuse in New Zealand. They commonly feature in domestic money laundering cases being used to obscure beneficial ownership. The report offers a recent example where a NZ shell company was used by an overseas party to wire money in a healthcare fraud scheme worth more than half a billion dollars.

Business trading practices. One party has been found guilty in the first ever cartel case to be prosecuted in New Zealand. An historic allegation of insider trading is also going through the courts.

Property Market/Real Estate sector. The FIUNRA report notes that the real estate sector is highly vulnerable. Cases of mortgage fraud and money laundering regularly appear in the courts. In 2023-24 the Overseas Investment Office (within Land Information New Zealand) took court cases against three parties, including foreign buyers, for their attempting to purchase land without consent. In one case- Queenstown property linked to international corruption scandal- the NZ Police has identified occurrences of significant funds derived from overseas criminal offending being invested in New Zealand’s financial and property markets.

Corrupt investment practices. Corrupt investment practices remain a problem. The Serious Fraud Office is currently prosecuting a complex multi-million dollar mortgage and investment fraud. The NZSIS Threat Assessment identifies investment as an area of high risk.

Cybercrime: 11% of adult population reported experiencing cybercrime, only10% of those reported it to authorities (Victims of Crime Survey 2024),

"During 2023-24 Te Tari Taiwhenua, Department of Internal Affairs (DIA), led a cross government/business operation (Operation Cargo) against a criminal network of text messaging phishing scammers. This resulted in scam reporting dropping by 80% as shown in the 2023 Digital Messaging Transparency Report.

‘Operation Cargo’ revealed an approach to scamming not seen before here in Aotearoa, where scammers are using special software and hardware tosend SMS scam messages en masse,”

Migrant exploitation, human trafficking. A report by the Human Rights Commission Human Rights Review of the Accredited Employer Work Visa (AEWV), (2024) raised concerns about human rights abuses affecting temporary migrant workers in the AEWV scheme. The Commission identified significant risks to the human rights of :

the right to equality and non-discrimination;
the right to just and favourable working conditions;
the right to an adequate standard of living;
the right to health;
the right to freedom of association;
the right to an effective remedy and access to justice.

Workers are also concerned that they could be the subject of human trafficking and coordinated profiting from these human rights breaches..

Tax Avoidance and Covid Employer Fraud - Inland Revenue (IR) completed 31 prosecutions for tax evasion, knowledge offences and Crimes Act 1961 offences in 2023–24 compared to 34 cases in 2022–23. The reduction relates to COVID compliance support and cases are expected to rise in the future, 85 active cases were before the courts in 30 June 2024.

IR contributes to the efforts to counter and expose organised crime. At 30 June 2024,IR’s special audit team was overseeing the compliance of approximately 8,000 customers identified as high risk because of their potential involvement in organised crime and other behaviours. IR has also increased its data and intelligence sharing with New Zealand Police, the Serious Fraud Office and New Zealand Customs Service. (Seethe IR Annual Report 2024.)

Other types of corrupt activity

Political Corruption. This remains a vulnerable area. Largely it shows up in attempts to influence elections from overseas through donations (NZSIS report). NZSIS reports of an instance where a foreign state manufactured a business opportunity in order to build long-term influence with a politically connected New Zealander. The state concealed its role – and the role of specific foreign interference entities – in the creation of this opportunity and in the wider influence-building process. The NZSIS assesses these actions were part of the foreign state’s long-term aim to covertly influence New Zealand’s political environment. More recently referrals have been made to investigative authorities around whether personal data has been misused to influence an election result. Concerns have been expressed about undue vested influence over a portion of the incoming government’s policy decisions. There remains poor transparency of lobbying activities.

Foreign Interference, extremism and terrorism: A NZSIS Security threat environment report gives examples of known foreign interference against New Zealand cultural communities and also attempts to influence politicians, local government decisions and funding and to exploit business opportunities for military or intelligence purposes.
Charities Sector: This sector appears to be quite vulnerable. A recent case revealed a sham trust collecting grants and not undertaking any charitable proceeds. There is also alleged misuse of gaming machine proceeds, with prosecutions underway.
Sports: Although there are fewer cases than in previous years, Drug Free Sport NZ cases in 2023-24 apply to: Football, cricket, archery, powerlifting, rugby, rugby league, golf, athletics, basketball, softball. There has been an arrest and charges in an alleged NSW case involving a New Zealander.

Who are the culprits?

For the past two years TINZ has been lightly monitoring fraud and corruption cases to understand more about the types of cases being prosecuted, who is doing the crime and the monetary value. Our information is limited to that published on media sites and court reports as well as IR, SFO, and other regulatory reporting. Therefore, this represents a very small proportion of fraud offences. In 2024:

Occupations held by those convicted (in our list) were contract managers, doctor, construction company boss, building inspectors, lawyer, engineer, mortgage broker, truck driver, influencer, dental worker, beneficiary, contractors or sub-contractors, fraud inspector, company director.

Types of fraud included accepting or giving of bribes, corruption, mortgage fraud, fraudulent building inspections, Ponzi scheme, general fraud, investment fraud, scamming, diversion of funds, money laundering, benefit fraud, tax fraud, tax evasion, COVID subsidy fraud. We have also seen prosecution of a small number of New Zealand based online scammers.

Not all cases had a monetary value applied, but the total of the recorded convicted cases in our (limited) list was $27,936,046.96, with the largest amount being $17 million Ponzi scheme; $4 million in an IT contract fraud scheme, $1.7 million money laundering, $1,12m tax evasion, $1.3 million financial advice fraud.

Investigating and Prosecuting agencies noted were NZ Police, SFO, DIA, Commerce Commission, MSD, FMA and IR.

Gender, geography. Two-thirds of those convicted were men. Auckland dominates as the primary centre for corruption/fraud related cases noting that 33% of New Zealand’s population live in Auckland. Other areas are Hamilton, Hutt Valley, Christchurch, Napier, Rotorua. Tax related fraud and evasion cases and petty fraud are more evenly spread around the country.

Size and type of Prosecuted Fraud in New Zealand – NZ Police

Agencies investigating and prosecuting

The Serious Fraud Office. SFO focuses on complex financial fraud which usually involve millions of dollars. In 2022-23, the SFO completed six trials and concluded 24 investigations, obtaining convictions for fraud valuing $32 million.

NZ Police. See above table.

The Commerce Commission is prosecuting one case of criminal cartel conduct. For 2024-2025 the Commission is placing a particular focus on: bid rigging cartels, non-compete agreements, illegal on-line sales conduct, breaches in the grocery and telecommunications sectors, motor vehicle finance and unconscionable conduct.

Financial Markets Authority (FMA). As of 2024 there were 17 prosecutions underway, including insider trading, market manipulation, financial advisor breaches and contravening the Financial Markets Conduct Act, or the Fair Trading Act.

Immigration NZ. In the 2023/2024 financial year, Immigration New Zealand (INZ) investigations led to 860 actions, including the prosecution of 9 individuals.

Ministry for Social Development noted nine prosecutions for wage subsidy fraud. A current large case is underway, in an alleged $2 million fraud against the Ministry of Social Development, relating to provision of essential household furniture to social welfare beneficiaries. In total to 2023, 39 people have been brought before the courts in relation to more than $3 million in wage subsidy payments, whilst civil recovery action is being taken against 40 businesses.

Department of Internal Affairs (2024) have struck off a charity and prosecutions are underway. DIA is also investigating a major case underway involving one casino and prosecutions have occurred against another for breaches of AML compliance. DIA has a major case looking at misuse of gambling proceeds.

Other agencies with regulatory authority: Overseas Investment Office, Real Estate Authority, Drug Free Sport NZ, Professional regulatory bodies.