Auditor-General on English

October 28th, 2009 at 4:23 pm by David Farrar

Am reading full report. The summary says:

The current parliamentary system is designed to establish whether a member of Parliament (MP) maintains a current residence (other than a holiday home) outside Wellington rather than to decide where an MP “lives” in an everyday sense. Traditionally, that residence was in the MP’s electorate.

Yes, this is the essence of it.

Mr English correctly completed the declarations he was required to as an MP, and provided other information on his accommodation arrangements, in order to claim Wellington accommodation costs.

And:

For at least 15 years, the parliamentary rules for claiming accommodation costs have specifically provided for MPs to claim their costs when they buy or rent a property in Wellington. This has enabled a range of practices to arise, including renting from family trusts. The administrative system now includes protections such as a market evaluation of rent and a cap on the total that can be claimed to manage the associated risks. The fact that Mr English was being reimbursed for the cost of renting a house owned by his family trust was not exceptional.

So there is now no doubt that Bill retained eligibility for Wellington accommodation assistance over the years 2000 – 2008.

There is an issue over the Ministerial assistance:

Ministerial Services asked Mr English to sign a declaration that he did not have a pecuniary interest in the family trust. He did so, and attached a copy of the advice he had received about what amounted to a beneficial interest in a trust for the purposes of Standing Orders. Having received that declaration, Ministerial Services got a market evaluation of the rent, took over the existing rental agreement, and provided the house as a ministerial residence.

In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services’ situation. We consider that Mr English does have an indirect financial interest in the trust.

This issue arose because of Ministerial Services’ evolving practice of renting properties for Ministers combined with the parliamentary rules that enable MPs to rent from family trusts or similar. The two systems do not fit well together.

At Mr English’s request, the rental agreement between Ministerial Services and the trust has now ended. Mr English has reimbursed the rent and other costs that had been paid.

What this basically says is the advice that the house could be leased as a Ministerial House was not correct. This means however that he would still be eligible for the normal parliamentary level assistance of $24,000 a year – however he has confirmed he will not be taking up any assistance.

This reinforces my position that it is much better if MPs do not directly on indirectly own the house they get assistance for. If Bill had moved into Vogel House, or Bolton Street, these issues would haver have occurred I suspect.

The Prime Minister has announced that a new policy is being implemented under which Ministerial Services will no longer provide accommodation directly for Ministers. Instead, Ministerial Services will simply provide a fixed level of financial assistance to Ministers, who will make their own accommodation arrangements. This approach will mean that the question of whether a Minister has a personal financial interest in a property will no longer be relevant, and may help to smooth the interface between the parliamentary and ministerial accommodation entitlements systems.

The news system does sort out any conflict of interest issues.

UPDATE: The full report has more details on the trust issue, and where the advice came from:

He sought advice from the Registrar of the Pecuniary Interests of Members of Parliament on what amounted to a pecuniary interest in a family trust. The Registrar responded with advice that discussed generally what is a beneficial interest in a trust for the purposes of the Standing Orders requirements. …

The Registrar’s advice was based on the definition in Standing Orders of when a beneficial interest in a trust should be declared for the Register of the Pecuniary Interests of Members of Parliament. We have concluded that this was not the right test to apply in this situation, as it is a narrow definition of pecuniary interest for a particular purpose. In general, it is usual to regard an interest held by a spouse or close family member (such as a dependent child) as creating an indirect financial interest. In our view, Mr English has an indirect financial interest in his family trust, because of his relationship with the likely beneficiaries.

So he sought advice from the Registrar for Pecuniary Interests, but that advice was not applicable to the accommodation issue.

The result was that the Crown was renting a property for Mr English from a trust in which he had an interest, and the arrangement was explicitly based on a view that he did not have an interest. Clearly, this was unfortunate. We emphasise that the Minister’s declaration was based on advice. However, in our view, the advice was not directly relevant to this situation. We consider that Ministerial Services should have raised this with the Minister.

Again this is my point about both Bill’s situation, and the Greens Super Fund. Even an indirect relationship is undesirable.

This issue illustrates the different starting points of the two accommodation entitlement systems and that they do not fit well together. Having an interest in a property is not a barrier in the parliamentary system, and protections are in place to manage the risks created by the conflict of interest. The issue has only arisen in the ministerial system because Ministerial Services has moved to rent properties rather than own them and has worked to tailor the housing support it provides to the needs of individual Ministers, including sometimes taking over existing rental arrangements.

The upshot is that the owning the home through your trust was okay for parliamentary rules, but not for Ministerial rules. This really shows why the the two systems need to be streamlined.

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31 Responses to “Auditor-General on English”

  1. Adolf Fiinkensein (2,923 comments) says:

    Well, there is a hell of a lot more substance here than there was in the Ingram report.

    English clean as a whistle. Labour peddling shit again.

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  2. Robert Winter (100 comments) says:

    “In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services’ situation. We consider that Mr English does have an indirect financial interest in the trust.”

    Clean as a whistle? Clouds of greyness and opacity, more like.

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  3. Manolo (14,074 comments) says:

    Adolf, please spare us your feeble defense of English. What he did could be legal and within Parliament rules, but inexcusable for a Minister of Finance.

    Mr. English was caught double-dipping and he decided was politically (and morally) convenient to repay the money. As simple as that.

    The fact that for the previous nine years New Zealand was governed by the corrupt Labour Party doesn’t give your lot the authority to continue the trend.

    [DPF: Bill was single dipping, not double dipping. Now some say he should not have even single dipped, but at least get the terms right]

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  4. RightNow (7,012 comments) says:

    Is this the end of the matter then? Can Bill get on with his job?

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  5. TripeWryter (716 comments) says:

    So:
    Will The Dominion Post, who so self-righteously accused him of ‘rorting’ the system, now backpedal and acknowledge that he did nothing wrong?

    You can say ‘perception is everything’ all you like. But that’s not entirely true.
    ‘Perception’ can be what you choose to make it.

    The Dominion Post and The New Zealand Herald and some of the provincial papers pushed a ‘perception’ that English was fundamentally dishonest, which I found difficult to believe.

    No, I’m not a Nat, nor a Nat supporter.

    It seems he’s done nothing wrong, and nothing much different from other ministers of all political stripes since … when.

    If you don’t like the rules, change the rules. But don’t accuse someone who is keeping them.

    I also found it odd that newspapers should bang English over the head about his taking of public money.

    Let’s not forget that several newspapers — particularly those owned by Fairfax — tried to convince the public that drink-driving convictions were being ‘withheld’ by the police and the Ministry of Justice.

    Yes, it was, and no, it wasn’t. The information was freely available in the court rooms of the country, to which newspapers no longer bothered sending their reporters any more.

    They were expecting the state agencies to provide this material at taxpayers’ expense.

    Is that a rort?

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  6. Big Trev (14 comments) says:

    just pop over to red alert to watch trevor mallard post “oops – Im sorry – I was wrong”. Im sure he’s man enough to apologise – TUI!

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  7. big bruv (14,160 comments) says:

    Bugger!

    I was really hoping that Neville would have been placed in a position where he had no other option but to sack English.

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  8. tvb (4,517 comments) says:

    English has cleared this up and now the AG has given him a tick. This is more than we can say for the Labour Party. I believe an audit is now due on the Labour Party Leader’s Account.

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  9. Murray M (455 comments) says:

    “Is this the end of the matter then? Can Bill get on with his job?”

    You mean like in a show of utter hyprocrisy, bleating on about how tax payers are legitimately lowering their taxes, and it’s not morally right according to Bill. You know, the tax payers who voted him and smiley in.

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  10. Bevan (3,924 comments) says:

    Clean as a whistle? Clouds of greyness and opacity, more like.

    Do you want the Public Servant sacked for making a mistake in the advice they gave Bill English?

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  11. Chris2 (770 comments) says:

    I think the lingering issue of concern, is English has never declared WHY he resigned from having a direct beneficial interest in the Trust that owns the Wellington property which Ministerial Services leases for him and his family.

    In the absence of any explanation from him, it will lead to endless speculation that he rearranged his financial affairs in order to maximise the entitlements he became eligible for when appointed a Minister.

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  12. Tim Ellis (251 comments) says:

    To be fair to Mr Mallard at Red Alert, when I asked him if he would apologise to Mr English for calling him a fraudster and a money launderer if the Auditor General cleared him, Mr Mallard did squirm and avoid the question (and later started moderating my comments and called me a troll when I repeated the question), so I don’t think it’s fair to ask Mr Mallard to apologise for the allegations he made (yet another allegation in a series that have proven to be untrue).

    If Mr Mallard does respond to form, I expect he will abuse the Auditor General for bias.

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  13. annie (539 comments) says:

    There was never any real risk that the rules were violated – but at heart, this isn’t about the rules.

    It’s about judgement and appropriateness, especially for a finance minister who can unblushingly attack people and institutions who use methods of tax evasion that are also within the current rules.

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  14. labrator (1,850 comments) says:

    This ruling would indicate that you couldn’t also rent the property off of a family member either. I wonder how close a family member you’d have to be?

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  15. thedavincimode (6,877 comments) says:

    1. So the rule is directed at ascertaining whether a residence is maintained outside Wellington. Pity someone didn’t tell Bill that at the outset whilst he stumbled around looking like a possum in the headlights.

    2. He filled the forms out correctly. Oh goody. He can fill out a form, but when it comes to dealing with an obviously sensitive issue he lurches around bumping into the china cabinets of public opinion with absolutely no grasp of the consequences in terms of public perception.

    3. He took advice to the effect that he had no pecuniary “interest”; presumably by virtue of the fact that it was a discretionary trust and he was not a beneficiary. And he followed that advice religiously without stopping to think about the implications or what the rules were trying to accomplish.

    4. The rules are a fuckup.

    So … so what?

    Maybe someone with more interest in this can read the report and offer some insight on the validty of the AG’s view that a person who is NOT a beneficiary of a DISCRETIONARY trust can somehow be regarded as having an interest in it. But that seems a curious proposition at first sight. It may be that the AG has his eyes on rules relevant to financial accounting disclosure requirements. If so, that is irrelevant to this issue unless there is something requiring those definitions or principles to be applied for these purposes. On the face of it, it seems that the AG is barking up the wrong tree.

    However, that just isn’t the point. Here we have a Minister and Deputy Prime Minister who, on the one hand is piously espousing the evils of people avoiding tax instead of being productive, and on the other hand claiming he has filled out the forms correctly based on the advice he received. A Minister who tells us that he is on the case with the global melt-down fuckup scenario, but can’t think beyond filling out the forms.

    Various professions impose ethical obligations directly relevant to what its members do and to any requirement for public trust in them. Those professionals often have to suck it up and be personally disadvantaged as a consequence of those obligations and I’m not just talking about rules suggesting you don’t root your patients. It just comes with the territory. I’m not suggesting they always do and when they don’t and get sprung, bad things can happen – struck off, can’t practice, whopper bill to fund the cost of the disciplinary tribunal getting on the piss to discuss it etc. In an ethical context it just isn’t practical to endeavour to prescribe an exhaustive set of rules that will govern every set of circumstances So these rules provide a framework of behaviour. By their very nature and role, they simply cannot be prescriptive. Its not like parking, speeding and killing someone.

    That’s why, irrespective of what the AG now says, and despite the fact that on the face of it its hard to see how on any normal language usage English could be regarded as having an “interest” in the trust, he should have just asked himself whether it wasn’t just a bit cute. The object of these rules would appear to be self-evident. In other words, if, on the basis of the advice he received, he could only claim the allowance because he wasn’t a beneficiary when other family members were, he should have stopped and asked himself whether what he was doing was within the spirit of the rules. Aside from various professional ethics, in business generally there are lots of acts or practices that are “legal” but that that would nevertheless be at best regarded as sharp practice or would attract the unfulfilled interest of regulatory authorities on the basis of the sniff test. Why should there be a lesser standard in this regard for English who occupies a position of public trust, and who seems to be happy to slag off the taxpayer community who also act on advice and “fill in the forms”.

    I might be wrong about the AG going off the rails – he might be right. But assuming I’m right, that just isn’t the point. English fucked this up badly and given his subsequent forays into the limelight he looks like a hypocrite at best. I can understand how and why it happened but he doesn’t seem to be a good learner or student of history back to November 2008.

    Sorry Adolf. In the spirit of the rules, being the same test that Bill seems quite happy to apply to the taxpayer community, he ain’t as “clean as a whistle”. More like thick as a brick and a slow learner. The only thing he seems to have got right in his unfortunate recent fuckup trifecta is to abuse the shit out of some arse at TVNZ.

    And why do others look to justify or benchmark English’s behaviour by reference to the most corrupt and unscrupulous group of creeps that ever emerged from the slime and crawled across the political landscape? This isn’t about Liabore’s standards of behaviour.

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  16. ernesto (257 comments) says:

    “The result was that the Crown was renting a property for Mr English from a trust in which he had an interest, and the arrangement was explicitly based on a view that he did not have an interest. Clearly, this was unfortunate. We emphasise that the Minister’s declaration was based on advice.”

    http://www.stuff.co.nz/national/politics/2910957/Bill-English-buckles-over-housing-allowance

    “In an attempt to defuse Opposition claims that he arranged his affairs to qualify for extra taxpayer cash, Mr English also issued a legal opinion from Stephen Kos, QC.

    Mr Kos found Mr English did not have a beneficial interest in the trust that owned his family home in Wellington, despite his declaring it in his 2008 return.

    Mr Kos said changes to the English family’s Endeavour Trust, which saw Mr English quit as a trustee, had not affected his eligibility for the allowance.”

    “It is clear that no pecuniary interest arises from the fact that Mr English was a trustee and discretionary beneficiary of the trust.”

    No bonus for Mr Kos then. Doh.

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  17. adam2314 (377 comments) says:

    It starts at the top..

    How can you expect the ” rorts ” by the Hoy poloy to be reigned in. if the top is ” Seemingly Rorting the system ” ??.

    Time for open and honest remuneration for the Pollies..

    Then clamp down on the rest.. Take no prisoners..

    Won’t happen in our life time :-))

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  18. nickb (3,696 comments) says:

    Hmmm come on philu, billybonkers et all- I thought english had committed fraud?

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  19. Nefarious (533 comments) says:

    “Hmmm come on philu, billybonkers et all- I thought english had committed fraud?”

    He fookin has!

    Look at him masquerading as a Finance Minister. He’s got all the financial smarts of Elton John.

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  20. Michael E (274 comments) says:

    Two words for the Labourites claiming Bill following the incorrect advice given by officials over housing allowances: Marion Hobbs

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  21. thedavincimode (6,877 comments) says:

    Two words for Michael E: So what?

    Two more: Your point?

    Only one word for Nefarious to avoid complicating the message: Fuckwit.

    [Editor’s note: the apparant invective directed at Nefarious was merely intended to truncate an excessively long explanation as to why the Elton John comment had nothing to do with the point at issue and potentially inferred that Nefarious has a thing about homos that play the piano and wear big glasses.]

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  22. Bok (740 comments) says:

    This is worth breaking my dissassociation with this blog for.

    Calling Phil the abuser of women Ure…

    You used a weapon to scare women and into giving you money.

    So we all know that you are a low life. But are you going to redeem at least a bit of yourself to apologize to English?
    (Shall I post the post you made about the investigation that would show English to be a fraud, cheat and double dipper?)

    Thought not.

    But most of all. You Mallard are the reason people like me who paid up to $60 k per year in tax left NZ. Why people look at NZ and weep. A country that was about can do, about rolling up your sleeves and getting stuck in, whether it was building a shed or looking after a person who needed a feed and a bed.

    You and your lot, you low life, changed all that. Well done. You bred the Phil Ures and chased away the people who cared.

    And we all know you read this you coward, so I am not just spouting off. Well done. You screwed one of the best countries in the world and made it a joke. Are you going to apologise? No. You are to thick to realise that people respect those who realise their mistakes.

    I hope Farrar bans me because quite frankly the likes of mallard and Ure, Winter and sonic is worse than the dogshit that I step in… at least I can wash my shoe….

    In Maori tradition (and with permission – I asked – I bare my buttocks to you!

    Robert Winter.
    So if you went to inland revenue and they said that you did not owe a cent, and then it was found you did in fact owed lots, you should go to jail for tax evasion? Why are the left so stupid?

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  23. philu (13,393 comments) says:

    how are your food/alcohol ‘issues’ going there..?..bok..?

    still clinically obese..?

    still turning red in the face..?..and having the rages..?

    still getting the night sweats..?

    how’s the goitre..?

    and the chronic flatulence..?

    (a bit less pigging out on the food might help with that..eh..?..)

    are you still having to hire a trailer to haul your food to your ‘picnics’..?

    is everywhere you go still just an excuse/excursion to get/consume yet more food..?

    is someone else still having to wipe your bum for you..?)

    and are you still a ‘fashion-sight’ in your two sizes too small short-pants safari-suit..?

    y’know..!..the yellow one..?..

    aahh!!..the ‘memories..!..’..eh..?

    phil(whoar.co.nz)

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  24. Inventory2 (10,440 comments) says:

    Phil – just answer the question, without the personal abuse.

    You reckoned English was a goner. You were wrong

    End..

    of..

    story…

    ..eh..?

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  25. philu (13,393 comments) says:

    who made you hall monitor..?

    phil(whoar.co.nz)

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  26. Robert Winter (100 comments) says:

    @Bok: such unnecessary anger. My argument (elsewhere) is simple, If you take advice from a third party on taxation, and IRD subsequently find you to be in breach of the law, they will pay little heed to that third party advice, and will not normally allow you to use its third party nature as a defence. The grammar of the AG’s report suggests clearly that Mr English offered evidence of third party advice, which proved to be incorrect, to Ministerial Services. He is, presumably, responsible for the provision of that third party advice in justification of Ministerial Services accommodation support. If, however, the advice offered by Mr English to Ministerial Services in support of his claim came originally from Ministerial Services, it would be a different matter.

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  27. Jack5 (5,167 comments) says:

    Re Robert’s 11.03 post.

    When did the IRD become the standard for all commercial law? Can we throw out all case law etc, and just rely on the history of IRD decisions?

    In all of the houha about Bill English, the Wellington wolves ignore the problems of a Minister being an electorate MP at one of the extreme ends of the country? Are Southlanders and Northlanders to be denied the right of having an MP who can become a Cabinet Minister?

    Some MPs in Britain and NZ (and probably elsewhere) may have been greedy. However, it is more important IMHO that expense and salary for MPs are sufficient enough to allow ordinary, working people to become MPs and Ministers and still serve their electorates. (Why not two rates of pay: one for electorate MPs and a lesser one for the list lackeys?)

    MPs, judges, and the police should also be paid well enough to minimise the chances of corruption. You can never eliminate graft, as the recent MP who has just gone to jail demonstrates. But we want as few corrupt politicians as possible, and that means paying them well. MPs should get at least a small proportion of what we pay the state employed barons who run organisations like TVNZ.

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  28. thas (61 comments) says:

    @thedavincimode at 6:19 – good comments. I couldn’t be bothered reading the full post, let alone the report. But apart from the strange concept of a non-beneficiary of a discretionary trust having an interest in it, the spirit of the rules is clear. And then, like a true politician, only weeks later English mouths off about “legitimate tax avoidance” …
    Too long being nothing but a politician, I would say.

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  29. Adolf Fiinkensein (2,923 comments) says:

    thas, perhaps you have failed to learn the difference between ‘tax avoidance’ which IS legitimate and ‘tax evasion’ which is not.

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  30. ross (1,437 comments) says:

    Well, I did say at the outset of this fiasco that John Key’s task was simple: tell each of his MPs to justify why they should be getting taxpayer handouts. Bill, it seems, took a while to wise up to the fact that he can live quite comfortably without them.

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  31. david (2,564 comments) says:

    Remember who lodged the complain with the AG in the first place.

    Yes, like punchy the clown, geriatric Jim Anderton popped up into the sunlight for a fleeting moment then sank back into the stygian darkness of obscurity. Left no trace, like a ninja in that you are not sure if you even saw him or was it a figment?

    Where is he now I ask? Is he cowering in a corner hoping that no-one remembers that he was a player in this saga, or is he indulging in an orgy of texting to New York while trying vainly to craft a media statement from “leader of the Independant Jim Anderton Party” that proclaims his satisfaction about Justice bein g seen to be done while at the same time letting it be known that the AG is only new at her job and hasn’t learnt the rules of engagement as yet?

    Where are you Jam Inderton? Come out and play.

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