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Auditor General rules on Dirty Politics allegation

Written By: - Date published: 8:33 am, May 16th, 2015 - 46 comments
Categories: Abuse of power, food, national, national/act government, Politics, same old national - Tags: , , , ,


One of the inquiries into issues arising from Dirty Politics has come to a very unsatisfactory conclusion.

Concerns were raised by the Greens about former National MP Katherine Rich.  She is now the chief executive of the Food and Grocery Council whose roles include lobbying for the alcohol, tobacco and grocery-food industries.  The alleged conflict related to her appointment to the Health Promotion Agency, a government quango whose job is to promote health, wellbeing and healthy lifestyles, the pursuit of which requires people to consume less of her sponsors’ products.

Rich is mentioned in Dirty Politics.  One of the allegations made is that Tony Falkenstein, an anti obesity campaigner, was targeted by the Whaleoil blog and attacked at the request of Rich.

The background is described in the Herald:

In Dirty Politics, Hager claimed Mr Falkenstein was written about after his name appeared on an advertisement seeking out people with Type 2 Diabetes. The advertisement, which sought people for a possible Australian class action against soft drink companies, was sent by Mrs Rich to Mr Graham, and then to Slater for his website, he claimed.

Mr Hager claimed emails showed website posts attacking Mr Falkenstein included the line “3 hits smashing him good and proper” with each described as a “KR hit”.

Mr Hager claimed another email had Mr Graham telling Slater: “Coke keeps sending stuff to KR expecting her to do something (where we come in). Hit pending.” Mr Hager claimed at least one post was also written on Fonterra’s behalf, again through the Food and Grocery Council. A spokeswoman for Coca-Cola said it would take “a bit of time” to respond to the allegations and offered no further comment. A Fonterra spokesman said “we have never, directly or indirectly, requested or paid for posts on the Whale Oil blog”.

Maybe this was Cameron just big noting.  But the allegations are that serious they need to be investigated properly.

The Greens complained to the Auditor General and managed to persuade her to conduct an investigation.

Putting to one side the use of Slater to conduct smears on health advocates Rich’s involvement on the HPA takes some understanding.  Letting someone representing Coke or the alcohol or tobacco industies have a say in promoting healthy lifestyles would be akin to allowing Mobil to dictate climate change policies.

The Auditor General announced her decision into the investigation this week and decided that no conflict exists.  She did not see the need to interview Mrs Rich and determined that section 62(3)(ca) of the Crown Entities Act 2004 resolved things.  This section states that a person does not have conflict of interest only because they have “past or current involvement in the relevant sector, industry, or practice”.

This is a very brave decision because it appears that Ms Rich has never declared an interest in any matter. Ever.

This is startling.  It is one thing to be appointed to a position with the potential for conflict.  It is another for a conflict of interest to have never been acknowledged.

Section 62(2)(d) of the Crown Entities Act 2004 says that someone has a conflict in a matter if they may be directly or indirectly interested in the matter.  The FGC must be interested in the activities of the HPA.  The way I see it nothing could be clearer.  And section 62(3)(ca) cannot have been intended as a blanket protection for appointees with industry connections.  It is merely saying that in general those connections do not of themselves create an interest.  But it is not difficult to imagine a situation where decision concerning a campaign has a direct effect on a personal interest.  And in this situation an interest should have been acknowledged.

Anyone so interested must disclose it.  And they are not meant to vote or even take part in the discussion concerning any matter they have an interest in.

An interesting feature of the decision is that the section the Auditor General was relying on was inserted into the Act with effect from July 18, 2013.  Rich was appointed to the HPA on June 19, 2012.  The protection afforded by this particular section was not there for the first 13 months of her term.

The Auditor General decided that the Dirty Politics allegations were out of scope as these were allegations made about her acting in a personal capacity.  I guess a comment about the appropriateness of her continued role in the position would be out of scope but you have to wonder at her suitability to continue given what has been alleged.

The issue is important.  The HPA has a vital role to play in helping New Zealand deal with obesity and related health effects.  Allowing someone linked to Coca Cola or the Tobacco or Alcohol industries to make decisions about the shape of campaigns leaves you with the strong impression that the HPA will be doing less than what it should be.

46 comments on “Auditor General rules on Dirty Politics allegation ”

  1. locus 1

    call me a cynic …. but only a year to push for a place on the honours list

  2. Differentview 2

    The term “regulatory capture” is now well understood in US politics. I guess it needs to be better understood here, before we end up where they are.

    • Sans Cle 2.1

      What legal recourse is there in NZ to do anything about “regulatory capture”?
      If there are no proper checks and balances, no second chamber for governance oversight, what can we do when we perceive such injustice?

      • Colonial Rawshark 2.1.1

        The US has a “second chamber”; all it means in practice is that the corporations have to pay out to a second lot of pollies with insider trading info, campaigning funds, and post public office board positions.

        If you want to sort the system out you need to limit the size, power and money of the trans-nationals, especially the banks.

        • Sans Cle

          A second chamber can slow the regulatory process down, so at least there is a chance of some form of democratic discussion – leading to greater transparency.
          ‘Democracy’ in NZ’s Parliament (at least at question time) is a tragic joke, so a second chamber replicating that process would not be useful.
          I would like to see a second chamber that has an explicit focus on the future of NZ – society 50 to 100 years from now. Then we may get better decisions.
          Not sure how the AG’s investigation into Katherine Rich would be linked or pan-out in a long-term focused second chamber; but perhaps the Rich case would link to declining governance standards, myopic investigations all eroding the very tenets of (perceived) democracy.

  3. repateet 3

    “… allegations made about her acting in a personal capacity…”

    Here we go again with the “I was not acting as Prime Minister at the time” scenario.

    • Murray Simmonds 3.1

      Yep exactly right repateet and others.

      “Officer, officer, I did not shoot that man. It was just my rifle acting in its personal capacity as a gun . . . . and well, yeeesss, my finger WAS on the trigger at the time that the gun discharged itself . . . but that was just my finger acting in its personal capacity as a finger . . . ”

      And so we go on!

  4. Richard Christie 4

    The Auditor General decided that the Dirty Politics allegations were out of scope as these were allegations made about her acting in a personal capacity. I guess a comment about the appropriateness of her continued role in the position would be out of scope but you have to wonder at her suitability to continue given what has been alleged.

    I wondered if the “she” in this paragraph referred to Rich or the AG.

    Then I realised that it made sense either way.

  5. tc 5

    Colour me surprised, the Nats only allowed this to proceed knowing that the AG would narrow the focus play the ‘personal capacity’ card that shonky has made popular and hey presto there’s no conflict of interest.

    A theme emerging with these sorts of whitewashes is the lack of interviewing key parties to avoid potential hiccups should they not get their story aligned, my how convenient.

    • Colonial Rawshark 5.1

      The right wing have very good lawyers in very tall glass buildings that look out over every city in the nation.

    • RedLogix 5.2

      This idea that you can somehow evade the rules around conflict of interest by simply declaring that you were acting in your ‘personal capacity’ is absolutely fucking insane. It’s a complete inversion, perversion and murdering of the English language.

      Every grown up in public life understands that conflicts of interest WILL occur. It’s normal. All capable people in business or politics will have multiple interests and roles, and from time to time they will present a conflict. There is nothing wrong with this.

      It is how you handle them which matters. You must be alert to them arising, they must be declared early and a plan put in place to manage the specific situation. Not all conflicts of interest are the same, nor do all demand complete withdrawal – but there must be a clear and legally defend-able process in place.

      Anything lower standard simply opens the door to corruption. Which is precisely what our Prime Minister has signaled when he used this ‘personal capacity’ defense – after he was found out. While Key may well have made an argument defending that specific incident – the Prime Minister is the person at the top. It is this person who sets the tone and standards – not only within government and public service – but more widely across the entire business community. This is why it mattered a great deal.

      • felix 5.2.2

        How would the personal capacity angle even apply here?

        Are we to believe she works for the FGC by day for money, and then runs smear campaigns for them by night as a hobby?

        And even if that made sense, which it doesn’t, how could it possibly not represent a conflict with her HPA role to be attacking health promoters in her spare time?

        It’s nonsense.

        • Colonial Rawshark

          It’s nonsense.

          And the AG would know that. It seems to me like this tidy answer on Rich has been very strenuously goal-seeked, even to the point of absurdity. Perhaps there is more conflicted judgement going on here than simply Katherine Rich’s.

          • Sacha

            Here is the letter in question:

            The Auditor-General used the phrase “private capacity” – not clear whether it means wearing the private-sector FGC hat or personal.

            She could have at least interviewed Hager you’d think, rather than completely ignoring the reason why the conflict of interest accusations got enough air so that the OAG was approached in the first place.

            Rich’s conduct seems relevant no matter what hat she was wearing. If the allegations are true, do we want people sitting on oversight boards of public agencies at the same time as they actively undermine the agency’s objectives? Most people understand you don’t appoint a fox to guard the henhouse.

        • emergency mike

          “Are we to believe she works for the FGC by day for money, and then runs smear campaigns for them by night as a hobby?”

          Well put felix. I guess it could be said that when she is acting in her ‘personal capacity’ it’s outside the scope of the inquiry in a ridiculous ‘thats her own business’ way. How convenient. And as you say, totally implausible.

          “And even if that made sense, which it doesn’t, how could it possibly not represent a conflict with her HPA role to be attacking health promoters in her spare time?”

          It’s about as clear a conflict as can be imagined. But in light of the scope of the whitewash above, I thus assume it would be her boss, John ‘Deals Over Dinner’ Key who would make the call as to whether some one who attacks health promoters in their personal capacity is really the best choice for the health promotion agency.

          It appears he not bovvered about it so I guess it’s all fine.

  6. greywarshark 6


  7. Sirenia 7

    Just more unethical behaviour from an unethical government and its allies. Even if a conflict of interest is merely perceived it should be declared. Why don’t they get it?

  8. Clemgeopin 8

    What is wrong with the Auditor general? Is this outfit supposed to work in the best interest of the people of the country or is it there to primarily work for the interest of the government and the big business? At the very least, Tony Falkenstein, Katherine Rich and the Whale oil’s Slater should have been interviewed. This is a half baked incomplete investigation and a very poor decision. A disgrace!

  9. Differentview 9

    Colonial Rawshark had it right: “If you want to sort the system out you need to limit the size, power and money of the trans-nationals, especially the banks.”

    No regulatory system can produce a level playing field between the All Blacks and a college team. Corporations outgun the ordinary folk even worse than that image, because besides being huge, they have no conscience and no compassion. Faced with the need to exercise either, their executives would claim that they have no authority to do other than maximize shareholder value.

    But corporations have a couple of even greater advantages than even very wealthy humans: they do not sleep or need rest, are potentially immortal, can change their identities at will, and can exist simultaneously in many places at once. Just like us humans and deserving the same rights? Not hardly.

    A size limit on corporations would produce local entities nearer to the human scale, and also encourage the creation of more corps, which would compete with each other. The only problem then is international competition from the behemoths that would still exist elsewhere. Answer: no TPP or similar treaties, trade restrictions where appropriate; we run our own society our own way, Pharmac and all.

  10. Penny Bright 10

    In my considered opinion, NZ Auditor-General Lyn Provost is the LAST person who should be making decisions on ‘conflicts of interest’ – she obviously doesn’t have a clue.

    Why do I think so?

    Seen this?


    “The Finance and Expenditure Committee has considered Petition 2011/101 of Penelope Mary Bright and 13 others, requesting

    That the House conduct an urgent inquiry into why New Zealand Auditor-General Lyn Provost did not disclose that she was a shareholder in Sky City Entertainment Group Ltd at the time she declined to conduct an urgent investigation into the failure of the Organised and Financial Crime Agency of New Zealand to carry out “due diligence” on the increased risk of money-laundering arising from the New Zealand International Convention Centre (Bill) 2013.

    We have no matters to bring to the attention of the House. ”

    I wasn’t even asked to give evidence in support of this petition.

    Only Auditor-General Lyn Provost was asked to provide information for this Finance and Expenditure Select Committee.

    In my considered opinion, Auditor-General Lyn Provost is corrupt, I think she is ‘unfit for duty’ and should be sacked, and I have told her so – to her face.

    In my considered opinion, New Zealand is rotten with corruption and corrupt ‘conflicts of interest’, and it reaches to the highest levels of Government, as shown by this above-mentioned Finance and Expenditure Select Committee Report.


    Penny Bright

    Auditor-General asked about her Sky City conflict of interest

    February 3, 2014 iwishart

    Auditor-General Lyn Provost has been asked to explain a conflict of interest between her private investment in Sky City casino shares, and her November 2013 decision to turn down a request for an investigation into aspects of the Sky City casino convention deal controversy.

    Public finances and accountability watchdog Penny Bright, who polled fourth in the Auckland super-city mayoral campaign, sent an email to the Office of the Auditor-General on 8 November last, seeking an investigation into whether the Police organised crime agency OFCANZ “could or should have carried out some work to assess the effect of the [convention centre Bill] on the risk of money laundering in New Zealand”.

    OFCANZ had previously stunned commentators by revealing it had failed to investigate the money laundering implications of the deal, despite having a statutory responsibility.

    Bright complained to the Audit Office about the failure of a public agency to do its job, and her letter was answered by Controller and Auditor General Lyn Provost who wrote, “the Auditor-General’s power to carry out an inquiry is a discretionary one. Large inquiries involve a substantial investment of resources by this office and the entity we are inquiring into.

    “We receive a number of requests for inquiries each year and must choose carefully which matters warrant that level of detailed scrutiny. Our focus is on the use of public resources, and significant financial, accountability or governance issues in a public entity.”

    Having set the context, Lyn Provost then declined to investigate, despite the ‘accountability’ issue, saying it intruded on government policy and was therefore beyond the scrutiny of her office.

    What Ms Provost did not declare in her letter to Penny Bright is that she held shares in Sky City casino. Ms Provost had previously recused herself from involvement in a prior case involving Sky City for that reason.

    Provost is also a former Deputy Commissioner within the New Zealand Police who worked alongside the team responsible for OFCANZ.

    InvestigateDaily has sought comment from Ms Provost. Late today she responded with the following:

    “The particular inquiry request fell outside my mandate in the Public Audit Act as I cannot inquire into matters of policy.
    As the reason for declining to inquire was a matter of law not judgement, I replied myself. I also took the opportunity to reinforce our criteria for inquiries.

    “I have and will continue to stand aside on appropriate matters.”

    Penny Bright


    • Chooky 10.1

      +100 Penny …more conflicts of interest and corruption exposed

      …where is the Labour Party?…and NZF?…and the Greens ….and Mana/Int on this?

    • Melanie Scott 10.2

      Demands for investigation, censure and action in relation to behaviour of Council in Kaipara were similarly batted away by the same party. We received an ‘apology’, but no investigation, censure or action.

  11. Tracey 11

    I have not read the AG;s decision in full.

    NZ is small. With a tendency to rely on a small group to rotate onto Boards and other higher level positions COI is a real problem.

    It appears that the legislation was written to acknowledge this possibility, not to dismiss all behaviour because of it. The AG by relying on

    “a person does not have conflict of interest only because they have “past or current involvement in the relevant sector, industry, or practice”

    would, imo, be correct IF there was not the alleged behaviour in the other role.

    That section, imo, is merely saying that just cos you hold two positions that may/appear to contradict each other is not sufficient to determine on a COI level BUT it DOES suggest that if there is something else then the clause falls away. as a blanket protection Note the word “only”.

    IOW, IF you hold a position in the same industry AND you have done something else then this section does not give you a get out of jail free card. IF, for example, in your other industry position you deliberately set out to smear the character of someone you disagree with in the Health promotion industry, then this could mean you have not the professional integrity to hold simultaneous positions.

    That is my read ing of it anyway.

    • Sacha 11.1

      That is the logical problem in her decision that caught my eye too.

    • mickysavage 11.2

      The funny thing Tracy is that the section they relied on was only enacted 13 months after Rich had been appointed. Presumably before then the situation would have been different.

      I do not think it decides matters anyway. If it was true they may as well take out all of the rules against conflict.

  12. Reddelusion 12

    This dirty politics is about as interesting as fast and furious 8. Move on pleeeeeease

    • mickysavage 12.1

      Why delusion? Don’t you think there should be a discussion about the abusive political practices that Dirty Politics showed existed?

    • Sans Cle 12.2

      Reddelusion, clearly it is interesting enough for your to comment on it! lol
      If I read something that I am not interested in, I gloss over it, perhaps forget it within a few minutes. I wouldn’t dream of commenting on something that doesn’t interest me!
      I have decided to reply to you, because that tactic of feigning disinterest is of interest to me – and also at the heart of political subversion, and democratic subversion of the freedom to discuss what people like!
      Asking people to stop discussing something just draws attention to the subject and to the motivation of the person requesting the cessation of debate.
      So you have my attention, and I would like to ask you:
      1. Why should discussion cease, if people suspect corruption at the highest level of governance?
      2. Were you paid to comment on this blogpost, or are you here in a recreational/ voluntary-sharing-of-ideas-in-good-faith capacity?
      3. Do you have any conflict of interest in the further investigation of the content of Dirty Politics?

  13. Reddelusion 13

    Based on responses to this post ( less mine) 23 as a measure of interest, the answer is no. dirty politics is not new, there is no such thing as clean politics, dirty politics is simply opposition claiming foul over anything they can as they are not in power. National do the same in opposition, predictable but boring

    • whateva next? 13.1

      (Red.)..delusion, a fixed and firm belief, not amenable to reason. It is clear that this fits well, and you will not be able to debate this issue, just continue to believe what you chose, so why then enter into discussion with people who wish to discuss politics?

    • mickysavage 13.2

      Delusion this is Saturday which is normally a very quiet day. I am surprised this post has attracted the attention that it has.

  14. Once was Tim 14

    I’m not sure why the surprise. It’s disgusting I know, but it’s the inevitable result of corporatisation of the Public Service ….. and so far, I don’t see any on the ‘left’ of politics advocating doing anything about it …… except maybe (and strangely enough) Winnie.
    We no longer seem to have public servants these days – merely peons doing their best under “CEO’s” running their various little feifdoms that happen to be owned by the public.
    Why are we expecting anything else whilst this continues to run?
    PoliceCorp anyone?

    ….. oh btw ….. I’m not suggesting Winnie is ‘left’ exactly, but strangely enough he does have more of a concern about many of the things that used to upset us – AND the normalisation of corrupt corporate culture when applied to a public

    • felix 14.1

      Yep, Winston has always seen through that particular bullshit in a way that I wish the Labour party would.

    • Macro 14.2

      I don’t see any on the ‘left’ of politics advocating doing anything about it

      Oh! the Greens see through it all right – and rail against it – but get little traction from the MSM unfortunately. Winston has the MSM’s ear. That’s why you hear him.

    • Sacha 14.3

      Auditor-General was pretty useful office previously.

  15. Macro 15

    If anyone was under the mistaken impression that this was not the most incompetent and corrupt administration NZ has ever had the misfortune to suffer they should be under no illusions now.

  16. Reddelusion 16

    Wow big call Marco, NZ economic performance under national, in contrast to other OECD nations and record immigration would seem to suggest otherwise

    Your free to leave, Venezuela Cuba Peru North Korea are waiting, maybe we could swap, all NZ hard lefties could head over to these socialist paradises and we take their citizens who just want the opportunity what country like NZ provide, rather than whinge whinge and externalise every issue they have on the government

    • mickysavage 16.1

      Hey in Aotearoa under Michael Cullen nine budget surpluses, under National 7 budget deficits.

      Come on delusion, argue with that.

      Can we get a better class of wing nuts?

    • The Murphey 16.2

      Q. Why do you lot repeat the same lines ?

      Q. Does it feel good carrying out the ‘assigned tasks’ ?

      Q. Which country are you located ?

      Q. Do your family / friends know of the ‘assigned tasks’ you carry out ?

      Q. What other ‘assigned tasks’ do you perform ?

      Q. Do you understand the difference between ‘your and you’re’ ?

      • Chooky 16.2.1

        his/her English grammar is very poor …obviously NOT a New Zealander …and obviously NOT well educated….so he/she should just be ignored….a foreign t..l and friend of Jonkey Nact….looking out to rort New Zealanders and New Zealand

    • Macro 16.3

      You affection for your dear leader is touching red. Have you a pony tail he can pull?

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