Mai Chen: Hard lessons can be learned from every crisis

Opinion

When a crisis like the phone hacking scandal in the United Kingdom happens, the business concerned understandably wants to mitigate the damage by quickly identifying and purging the wrongdoers, making apologies, providing restitution and moving on.

What they often fail to appreciate is that governments will not generally be satisfied until the public believes it has seen proper accountability and transparency, and the Government has a lot of tools to exact that accountability.

This is all additional to the arrests which the police have made for breaches of the law and alleged corruption.

The public expects the Government to act when serious problems arise in an industry or profession, and it often does so through a government inquiry or/and policy and law reform.

Thus, there will not only be serious reputational damage to the brand and business of the organisation, but once the public and Government scrutiny goes on, there are likely to be multiple inquiries, with the possibility that laws and policies will be changed for the whole industry and not just the offending player in the market.

The News of the World scandal has also seen Parliament exacting accountability and transparency through summoning Rupert Murdoch and his son to give evidence, and parliamentary questions to the Prime Minister and his addresses to the House.

Parliamentary privilege means that nothing said by MPs is defamatory and witnesses summoned must give all information requested.

The scandal has crossed borders too, with requests from American politicians that the US Department of Justice investigate News International for potential breaches of the US Foreign Corrupt Practices Act.

As we enter the second week of hearings by the royal commission into the Pike River disaster, the same demand for accountability and transparency must be met in New Zealand. The focus has been on concerns about mine safety.

The commission's terms of reference include making recommendations on changes to relevant laws and practices, and there will almost certainly be changes to the legislation and practices governing New Zealand's mining industry.

Pike River is also subject to a coronial inquest, a police investigation, and an inquiry under the Health and Safety in Employment Act 1992.

Unsurprisingly, Pike River went into receivership long before any of these inquiries will be completed.

There are many other examples of crises throughout New Zealand's recent history where government intervened to ensure proper accountability and transparency, whether that be Cave Creek, or the lights out ministerial inquiry in the Auckland CBD.

Business should never give government a reason to start investigating an industry, given the tools at its disposal to get accountability and transparency.

Usually that can be achieved simply by carrying out your business lawfully and ethically, but if your competitors are not doing the same, then you need to be careful - their bad behaviour could become your problem.

Industry needs to be responsive to public concerns, and if scandal hits, understand that the best course of action is to assist the Government to get clarity on what happened and to ensure there is accountability, not only for individual mistakes, but also for restoring public confidence to the sector as a whole.

* Mai Chen is a partner in Chen Palmer public and employment law specialists, a University of Auckland Business School adjunct professor and author of Public Law Toolbox (forthcoming).