'Concerns over conflicts of interest'

The NZTA says existing policies regarding conflicts of interest across the vehicle-supply chain – possible or realised – resulting from its service providers have been identified as an area of “serious concern” moving forward.

The agency has issued the statement after issues were raised about JEVIC and VINZ, which are part of the Optimus Group.

Documents sighted by Autofile show formal warnings were issued to VINZ and JEVIC in August this year over potential conflict-of-interest issues caused by their changes in ownership. The formal warning was accepted by both companies after the agency started to ask questions on the matter in 2016.

Fergus Gammie, chief executive of the NZTA, says the agency’s board has unanimously agreed that conflict-of-interest policies now need to change and has tasked his management team with implementing a new approach. He describes conflicts of interest as “unacceptable in modern business practice”. 

Gammie told Autofile: “The issues relating to JEVIC and VINZ are serious [and] reflected in formal warnings issued by the agency in August. The agency continues to monitor the situation closely. It is currently carrying out a thorough review of all policies relating to conflicts of interest to establish what changes are required to prevent similar situations from occurring.”

Gordon Shaw, chief executive officer of VINZ, says correspondence between the NZTA and VINZ and JEVIC NZ shows the agency has fully reviewed all relevant information and made an appropriate determination. 

“The agency stated it was satisfied no actual conflict of interest arose, outcomes of inspections were never improperly influenced and public safety never compromised,” says Shaw. “VINZ and JEVIC NZ are part of the inspection division of Optimus Group. We inspect vehicles, neither imports cars. We are independent operationally and in governance from other companies in the group.

“While our risk-management procedures are commercially sensitive, as part of our inspection organisation appointments we have a conflict of interest management plan in. VINZ and JEVIC have adopted conflict-of-interest policies, which have been incorporated into staff codes of conduct and employment agreements, which include confidentiality requirements and make it incumbent on staff to report attempts or perceived attempts to influence an inspection.”

Shaw adds: “The inspection companies can demonstrate effective management of conflicts of interest with data in the form of comparative rates of completion of inspection and rejection of vehicles together with reasons for rejection, documentation of meetings and contacts by external parties with inspectorate staff, and independent external review.

The issue has come to light following an article published online at www.newsroom.co.nz on November 1.

Many parts of the article are based on a press release issued on August 25 by Catalyst Communication Consulting acting for a “group of industry members involved in aspects of the vehicle-importing industry”. They are unsurprised at admissions made by the NZTA it has been “lax in enforcing compliance with regulatory requirements”. 

The group – which has opted to remain fully anonymous – claims it has been liaising with NZTA for more than a year in relation to this “conflict of interest in the supply chain by which used Japanese cars are imported”.

The group statement, which has been released to Autofile by the NZTA, continues: “This issue raises significant concerns about the safety of vehicles imported and the risk posed to New Zealand buyers of them. The group originally identified the conflict of interest in August 2017 and starting asking questions of NZTA. It has taken more than a year to get any kind of action.

“The conflicts of interest involves companies under the umbrella of one entity, Optimus, which is listed on the Tokyo Stock Exchange. 

“The multi-layer conflicts of interest are obvious. The group of industry members was concerned by revelations, confirmed in correspondence obtained from the NZTA, that rules governing the appointment of JEVIC and VINZ to carry out border certifications and inspections required them to immediately report any changes in their ownership to the NZTA. 

“The group understands when the agency was told about the deal in May 2016, it simply rubber-stamped it. When the group of industry members found out about the Optimus deal in August 2017, they raised their concerns with the agency. The NZTA failed to address the issue. Only now, more than a year after initial concerns were raised, the NZTA has advised the group it has written to JEVIC and VINZ advising they breached the rules of their appointments. The NZTA has sent formal warning letters to JEVIC and VINZ, but has declined to take any enforcement action.”