THE BLOG

"Corruption" vs. "Systemic Corruption" -- and Why the Latter Is Much, Much Worse

02/18/2015 04:30 pm ET | Updated Apr 19, 2015

I won't say spending a lot of my time working with great groups such as the New Hampshire Rebellion, Mayday PAC, Stamp Stampede, Wolf-PAC, et al., fighting the systemic corruption of our broken election system doesn't take a toll. I am constantly fighting burnout. The task can seem Sisyphean; though that rock becomes easier to roll up the hill the more hands we have helping out.

Still, I think this issue takes such a toll on me, personally, because I know what we could have. Before I got involved in taking on "money-in-politics" issues in America, I was studying what it would take to create a less corrupt society. And I wrote a book (which I'm in the middle of writing the second edition of and might do a Kickstarter campaign for, so hold off on buying it) about what Transparency International has consistently ranked as the least corrupt country (or one of the top two least corrupt) in the world: New Zealand.

Right now, there's a major (by their standards) scandal in New Zealand involving the prime minister, John Key, his National Party (center-right), and the SkyCity Casino in Auckland.

Here's the background: One of the key efforts of the Key government has been the building of a convention center in Auckland, New Zealand to rival the ones in Sydney, in order to drive more business, tourism, and investment to New Zealand.

SkyCity, which currently holds a regulated monopoly to run a casino in Auckland, agreed to build a $402M (NZD) convention center attached to their casino, in part in return for some concessions from the government. Specifically, the government would grant them a long-term gambling licence extension, and they would be allowed to have more tables and more "pokies" (Slot machines & Video poker machines) in their casinos, once the convention center deal was finalized.

There were allegations and rumors (source:NBR) that SkyCity got this deal - rather than another company - because of personal connections between Key's chief of staff, Wayne Eagleson, and SkyCity's government lobbyist, Mark Unsworth.

At any rate, the center was projected to bring in 800 permanent jobs and $49M in GDP; however, there is significant opposition to gambling expansion in New Zealand - so the deal was controversial.

One of the biggest reassurances though, was that the convention center would be entirely privately funded by SkyCity. Key held a press conference where he said: "This won't cost taxpayers or ratepayers one cent." The deal wasn't ever popular with the voters, but it was broadly acceptable because of the "not one cent" pledge.

Where the scandal has occurred is that recently, SkyCity has since revised its cost estimates to $532M (NZD) based on increased materials cost, and said that it would walk away from the project if the government didn't fund the remaining $130M. This put Key in a not-so-great position of either giving up the revenue and the jobs the convention center would bring, or reneging on his pledge that the deal wouldn't cost taxpayers a dime.

The National Business Review (a financial publication in NZ) published an opinion piece entitled "Close to Corruption" by Matthew Hooton. In it, Hooton wrote:

"The procurement process for the Auckland centre was a farce and as close to corruption as we ever see in New Zealand."

Close to corruption? Well... maybe, but is there systemic corruption - the type that goes on in the United States - here?

First, let's check - did Sky City ever fund the National Party's campaigns? Yes, but only in 2005, when "Sky City," "Sky City Entertainment Group," or "Sky City Management Ltd." contributed $60,000 to the New Zealand National Party.

However, that same year, they also contributed $60k to the center-right Labour party (which was in power at the time,) $12k to the libertarian ACT party, $12k to the Progressive Party, and $12k to the moderate United Future Party. The only ones they didn't give any money to were the NZ Green Party (who likely refused or would have refused if offered) and the nationalist-populist NZ First party (because nobody likes those guys.)

Sky City is NOT listed as a donor to the National Party for years 2006-2013. They could have donated anonymously - New Zealand allows for anonymous donations - but it must be anonymous to the recipient as well, so National wouldn't know who sent them the money.

Furthermore, in 2005, the leader of the National Party was not John Key but instead Don Brash, a political rival of Key's, who Key beat in a challenge for leadership of the National Party in 2006. (Brash would eventually leave the National Party and join the libertarian ACT party in 2011.) None of the money from SkyCity came in under Key's leadership.

So, no, I don't think those 2005 campaign contributions had anything to do with the deal in this case.

Keep in mind - New Zealand doesn't have public funding. They do have public airtime (which helps lower the costs significantly, I'm sure), but New Zealand elections are privately funded otherwise. Yet, New Zealand has not (yet?) developed a system of corruption like the one in the U.S. That is - NZ Members of Parliament are not (yet?) dependent upon their funders the way they are in the U.S. Indeed, one party in particular, the NZ Green Party remains more or less independent of funders by primarily funding their party from a mandatory 9% contribution of the salaries of their elected MPs - and raises a competitive amount this way.

Here's the main point: New Zealand - like all democracies - has corruption. But it doesn't have systemic corruption like the United States does.

Systemic corruption is when politicians must give favors to the donors of their campaigns, but here the favors (if any) were due to personal connections.

Systemic corruption is when bad behavior is rewarded - but in New Zealand it is punished. People are expressing their discontent and as a result, the government held fast to it's pledge of no public funds for private works, despite the temptation, because they knew that the people wouldn't stand for it. Regardless of whether or not Key or his staff did anything wrong, this scandal will hurt his party in the next election, and his party may even lose the next election in 2017 due to it.

Systemic corruption is when politicians continue to do what is in the best interests of their funders because they fear the funders more than they fear the voters. However, Key clearly fears the voters and is trying to do what he believes will get him re-elected, which in this case, is holding strong to his pledge despite the temptation.

Certainly I think there's much that can be improved with New Zealand's campaign financing laws; but unlike the United States, candidates who run for office in New Zealand are not dependent upon special interests and crony capitalists to raise the money they need to campaign.

That is what a working democratic system is like. And we could have that here in the United States, but it will take a hard and long effort, which only starts with citizen-funded elections and continues through electoral reforms and beyond.

So yes, I know what I'm missing. But I also know what we could have, and that helps keep me going.

----

This Blogger's Books and Other Items from...