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Request for MSD Enquiry

Serious Allegations against Ministry & Crown Law
This is a letter by Christopher R. Arnesen, one of the early Section 70 fighters, to Carmel Sepuloni, the Minister for Social Development (MSD). In this letter he demands an enquiry into the dealings of MSD, its CEO Brendan Boyle and Crown Law. 

Copies were sent to other ministries, organisations and international diplomats who were all too happy to learn what's going on in New Zealand.

As Ms Sepuloni's office chose to ignore most issues raised in the letter, we think it is essential to make this letter available to the public. Significantly, however, Ms Sepuloni did not deny any of the serious allegations. 



November 3rd, 2017

Dear Ms Sepuloni

This letter raises objections over the increasing excesses committed by senior officials in the Ministry of Social Development (MSD), particularly where Section 70 of the Social Security Act and the Spousal Provision are concerned. Meddling, disregard for the law and dishonesty have reached the stage where neither the public nor politicians can continue to trust a government department which plays a vital role in the lives of thousands of New Zealanders.

This will be a lengthy letter, the allegations serious.

1. “THERE WILL ONLY EVER BE ONE AGREED GOVERNMENT POSITION”

Years ago I wrote to the Ministry’s then Chief Executive, Peter Hughes, pointing out that whenever Section 70 of the Social Security Act and the treatment of overseas contributory pensions are questioned, the responses from successive Social Development Ministers over the past two decades have all been identical. It doesn’t matter whether it has been a National-led Government or a Labour-led Government, every Minister has spoken with exactly the same voice.

Mr Hughes replied:

“You have remarked on the similarity between responses you have received from different ministers on the same issue over the years. The explanation for this is that, in relation to policy, there will only ever be one agreed government position. Thus policy is constant and will not change...”

It is difficult to draw any conclusion from the above admission other than:

The nation’s retirement policies are not the preserve of our elected representatives – but that of senior civil servants.

Under Section 70, the MSD Chief Executive has the power to deduct any overseas pension from NZ Super entitlements which ‘in his opinion’ is similar to NZ Super. It is a grave misfortune that Parliament, in giving such extraordinary powers to a single civil servant, failed to provide any form of monitoring system to ensure that the Chief Executive did not exceed or abuse his authority.

Most tier one overseas pensions could be considered similar to NZ Super and therefore subject to the direct deduction policy. Over the years however, under the authority of the Chief Executive the Ministry has treated virtually all overseas tier two (contributory) pensions as also similar to NZ Super and therefore subject to direct deduction.

On November 24th 2005, MSD’s Chief Executive (again, Peter Hughes) signed and delivered a report informing Parliament that tier two earnings-related overseas pensions were being subjected to direct deduction “despite the fact that, other than being administered by the state, they have little resemblance to NZS”.

If an overseas pension is not, in the opinion of the Chief Executive, similar to NZ Super, it may not therefore be legally subject to the direct deduction policy. Nevertheless, despite the CEO’s signed admission the Ministry has continued to this day to capture tier two overseas pensions unlawfully.

For the next three years the Ministry did everything in its power to conceal the CEO’s admission along with the 2004 and 2005 Reviews of NZ Superannuation – Treatment of Overseas Pensions and Payment Overseas, citing one dubious reason after another to prevent this material from being released:

“It would seriously jeopardize the nation’s security”, “It would harm New Zealand’s international relations”, “it would prevent the Coalition Parties from being able to work together” and so on.

After every excuse for concealing the Reviews and the CEO’s admission had been exposed as absurd, the Ombudsman ordered the Ministry to release the material. Even then, MSD conspired to delay the release until the eve of the 2008 elections, by which time it could no longer be used effectively.

Whenever questions/complaints are received concerning the direct deduction of a foreign pension, all that is necessary for MSD in its replies, and the replies it prepares for Cabinet Ministers, is the simple explanation that it is required by law.

Nevertheless, since the release of the CEO’s admission, the compunction on MSD’s part to justify/defend the direct deduction policy has intensified. It is no longer just the standard lie:

“The purpose of Section 70 is to ensure that those persons who have lived and worked overseas should not be advantaged over New Zealanders who have not had the opportunity to live and work outside New Zealand.”

The need to justify/defend Section 70 has become almost paranoid. MSD fails to recognize that the more anyone tries to justify something, the more it arouses suspicions of fraud. Fraud could not be a more apt term for the Ministry’s continuing abuse of the retirement savings of former migrants.

Claims that explaining the purpose of Section 70 is a courtesy, a desire to be helpful, are nonsense. Any desire to be helpful on the part of MSD is akin to the highwayman who, in gentlemanly fashion, doffs his hat before he robs his victims of everything they possess.

2. “POLICY IS CONSTANT AND WILL NOT CHANGE”

An increasing number of Members of Parliament in opposition have recognized that the treatment of overseas tier two pensions is not justified. However, it is a very different story with any ruling party, be it National or Labour. Neither party (when they were the Government) ever questioned MSD’s actions.

Money talks: appropriating overseas pensions reduces the Government’s superannuation bill by around $325 million annually, a substantial sum of money.

In 2012, Labour MP Jacinda Ardern drafted a terms of reference for a Social Security Select Committee of Inquiry to investigate the treatment of overseas contributory pensions, essentially retirement savings of the elderly. Prompted by the Ministry, with a slim majority the National Government squashed the inquiry.

In the 2005 coalition agreement between Labour and NZ First, the two parties pledged to work together to improve the treatment of overseas contributory pensions, and to facilitate social security reciprocity with the United States.

Several months after the coalition agreement came into effect, NZ First Deputy Leader Peter Brown wrote to me apologizing that it would be impossible to conclude any social security arrangement with the US. He had been advised by officials that the US was totally opposed to any agreement with New Zealand.

This ‘advice’ was forwarded to the Social Security Administration in Baltimore, soliciting an immediate response from the highest level of the Administration. The Administration assured that the US was NOT opposed to a social security agreement with New Zealand, implying that the problem lay with N.Z. authorities.

Mr Brown declined to give me the names of the MSD officials who had deceived him. Please correct me if I am mistaken, but it is my belief that public servants do not have the right to undermine social insurance negotiations with another country, especially through falsehood.

I respect Rt Hon Winston Peters but his claim is incorrect that NZ First was close to a breakthrough on the treatment of overseas pensions with Minister David Benson-Pope, until the Minister was suddenly replaced by Ruth Dyson.

In further letters, NZ First Deputy Leader Peter Brown informed me that he was being blocked by officials at every turn from obtaining a meeting with Benson-Pope. Eighteen months into the third term of the Labour Government, Benson-Pope finally agreed to a meeting. To quote Mr Brown, “I wish I could report some progress. Frankly, it was like banging my head against a brick wall.”

Mr Peters has been outspoken in his condemnation of Section 70 and the need for reform. In 2016, NZ First’s Private Members Bill, proposing changes to NZ Super with an end to Section 70, was narrowly defeated by only one vote. Prior to the 2017 elections, details of Mr Peters’ NZ Super payments were leaked in an effort to discredit him. In all probability the leaks came from high ranking officials within MSD, the only persons with direct access to this information.

3. INTERNATIONAL OPPROBRIUM

The failure to secure social insurance reciprocity with most other nations accentuates how unpalatable New Zealand’s retirement policies are to the rest of the world. The very few agreements which New Zealand has secured with other countries are seriously flawed.

It is now known that in negotiations with Ireland and Canada, MSD officials withheld information about Section 70. Both countries only discovered the truth after the agreements had been signed and had come into effect. Both countries have protested vigorously, to no avail.

Whether other agreement countries were similarly deceived is uncertain, but it has been well documented that many non-agreement countries have loudly condemned New Zealand’s treatment of overseas contributory pensions.

Sweden flatly refused to consider social insurance reciprocity unless New Zealand agreed not to apply Section 70 to Swedish pensions. Germany tried to negotiate an agreement on condition that Section 70 would not be applied to German pensions, only to be rebuffed by MSD officials. The stock response from MSD to complaints from these and many other countries is that this is an internal matter, mind your own business.

The most recent criticism (August 2017) came from Swiss Ambassador David Vogelsanger, irate and offended that 6000 Swiss pension-holders have their KiwiSaver-equivalent Swiss pensions deducted from their NZ Super entitlements. Mr Vogelsanger joins a growing list of foreign diplomats, outspoken in their condemnation of MSD’s treatment of overseas contributory pensions.

The United States takes a harsher stand. Thousands of Kiwis live and work in the US, paying into the US Social Security system (as required by US law), only to be denied a pension if they return home (or retire outside the US) in retaliation against New Zealand’s retirement policies. Without going into details, the Ministry’s efforts to circumvent the impasse with the US have been crude, farcical.

In terms of social insurance reciprocity, New Zealand is a pariah among nations. After many years inability to secure any new agreements, the Ministry made a significant breakthrough in 2013. Instead of pursuing arrangements with the US and/or Germany, which would have benefited our economy by millions of dollars annually, MSD secured an agreement with Malta. The number of persons affected by the Malta Agreement: two.

3. THE MINISTRY AND THE HUMAN RIGHTS COMMISSION

The Ministry’s interference, compromising the Human Rights Commission’s ability to impartially assess pension grievances, is a major concern.

After the 2001 lifting of a moratorium on grievances against the government, the HRC received its first complaint of pension discrimination, an Auckland lady denied NZ Super on the grounds that she was married to an American with retirement investments in the US.

Previously, the same woman had attracted the interest of TVNZ. After extensive filming and interviewing with a sympathetic Ian Sinclair, the program was scheduled to be screened when it was suddenly axed, no explanations given. Coincidentally, then Social Development Minister Steve Maharey was also Minister for Broadcasting...

It is understandable that the HRC would have scant knowledge of the complexities surrounding the nation’s retirement policies, requiring qualified opinion from MSD before considering the Auckland woman’s complaint.

Although superannuation and retirement policy issues are the Ministry’s domain, surprisingly, MSD forwarded the complaint to Crown Law to draft a response.

The response, prepared by Crown Law Solicitor Simon France, has been used by MSD ever since, scarcely varying the wording, to reject every pension grievance filed with the HRC.

Any competent lawyer would have demolished most of the arguments presented by Crown Law, except no lawyer was ever permitted to see Crown Law’s rejection - which MSD duly presented to the Commission.

From the very first grievance to this day, MSD has stamped each rejection “In Confidence” thereby restricting complainants from seeking wider opinion. Concealing its responses behind closed doors is in violation of the Universal Declaration of Human Rights as well as the International Covenant on Civil and Political Rights (ICCPR) – treaties New Zealand has pledged to observe.

For more than a decade, MSD has successfully crushed every complaint of pension discrimination filed with the Commission. It is understood that over the years there have been 31 complaints in total.

In 2014 the HRC came to a decision to no longer simply accept MSD’s rejections and that three new complaints of pension injustice merited further consideration. The Commission agreed to assist the complainants in having their grievances heard by the Office of Human Rights Proceedings.

Notwithstanding, the Ministry has employed one questionable tactic after another. It has managed to delay any hearings before the OHRP by almost 4 years, now scheduled for 2018. At least one complaint is from a couple in their eighties.

4. “REPUGNANT TO THE MOST FUNDAMENTAL CONCEPT OF JUSTICE”

In another show of contempt for the Universal Declaration of Human Rights and the ICCPR, the Ministry has routinely used fake names or pseudonyms for its employees appointed to the Benefits Review Committees.

The Social Security Appeal Authority (SSAA) repeatedly warned MSD that it did not have the right to use pseudonyms during clients’ benefit reviews, that it was unlawful and “repugnant to the most fundamental concept of natural justice”.

In 2016, MSD Chief Executive Brendan Boyle promised to discontinue the practice. Nevertheless, MSD continued with the practice, breaking a statutory order not to use false names and signatures in legal documents.

In 2017, the SSAA referred the matter to the Solicitor General: “This Authority cannot accept the Chief Executive filing documents that contain false information. He must now disclose the full extent of what is false”.

The issue came to light after a MSD manager disclosed the falsehoods to the SSAA. In September 2017, the issue became public (Stuff, Newstalk, Yahoo, The NZ Herald) after a beneficiary announced that she was suing MSD.

The publicity prompted a statement from Chief Executive Boyle claiming that concealing names of his employees was purely to protect them from ‘volatile’ members of the public in the aftermath of the 2014 tragedy in which two WINZ employees were murdered in Ashburton.

Mr Boyle has found reasons not to reveal how far back his department began using fictitious names. The practice of concealing identities appears to have begun a long time before the Ashburton incident, unless Mr Boyle can produce evidence proving otherwise.

Despite calls for the Chief Executive’s resignation, the State Services Commissioner has fully supported Mr Boyle, praising his concern for the safety of his employees. The Commissioner is Peter Hughes, the former MSD CEO...

Mr Boyle has filed an Appeal in the High Court, refusing further discussions. He might call on Crown Law to represent him; given the untold millions of dollars in taxpayer funds paid to Crown Law’s solicitors every year, success is likely.

If Boyle succeeds, what is the future for our nation? Already, ACC has begun using fake names. What next? Will judges, jurors and prosecutors, who often face ‘volatile’ members of the public, hide behind fake names? What about policemen, teachers, nurses, doctors, bus drivers – anyone who deals with a ‘volatile’ public?

5. DECEIVING THE UNITED NATIONS

In 2014, sixteen individuals (including myself) filed complaints with the United Nations in Geneva over Section 70 and the Spousal Provision. A year later the UN dismissed the complaints after accepting a Response from the N.Z. Government.

Through the Official Information Act, a copy was obtained of the Government’s Response to the UN. It confirmed that facts had been distorted, misrepresented and falsified. It could be summed up in 3 words: pretentious, arrogant, dishonest. It was a calculated, and successful, attempt to block the UN from looking too closely into New Zealand’s retirement policies.

Citing privacy considerations, the names of all individuals had been deleted from the copy of the Response, except mine. The Response had been submitted to the UN under my name (without my permission) as “The Arnesen Communication”.

After voicing my objections, Social Development Minister Anne Tolley’s secretary assured that no further copies with my name attached would be released. Copies of the Response under my name still surface. My request to be informed as to who was responsible for the Response was ignored.

I wrote twice to New Zealand’s Ambassador to Switzerland, Amanda Ellis (who delivered the document to the UN), asking who was responsible. Both requests were ignored. A similar request was sent to MSD. Again, no reply, no apology.

After months of research and collecting evidence, an appeal against the dismissal of the complaints from New Zealand, an objection to the misuse of my name and a rebuttal of every false claim made by the Crown, was couriered to Geneva. Nothing further was ever heard from the UN.

Mrs Sissi Stein-Abel from Christchurch was more fortunate. MSD confirmed to her that, at its request, the Response to the UN had been prepared by Crown Law and signed off by Social Development Minister Anne Tolley. MSD refused to name the authors, citing the Privacy Act.

In other words, MSD and Crown Law can treat the privacy of ordinary citizens with contempt, while zealously protecting the privacy of their own officials.

Although I am inclined to believe that the blame for the Response to the UN lies with the MSD, I am unable to accurately determine who is ultimately responsible: Anne Tolley, Ambassador Ellis, MSD or Crown Law? In fairness to Ms Tolley, it is inconceivable that she would risk her reputation had she realized the document she was signing was a deception.

In all likelihood, the document may have been handed to Ms Tolley with an assurance from the Ministry that everything was in order, only requiring her signature on the covering letter. With the pressures and demands on Cabinet Ministers, the Response’s length cloaked in legalese plus the complexity of the issues involved, the document may have merited no more than a fleeting glance.

If the Minister had scrutinized the Response, surely the first alarm bells would have sounded over the use of legal terms in Latin, none of which appear in the NZ List of Legal Definitions.

With the Response’s emphasis on the effectiveness of domestic remedies which, it is claimed, the complainants had failed to pursue, an astute Minister would have asked: “If they had not tried our domestic remedies, why complain to the UN in the first place? Get me some facts and figures please!”

Social Development Ministers fully comprehend how the contentious Section 70 works. When the Response claims, more than once, that the purpose of Section 70 is to maintain a policy of sharing pension costs with other countries, any Minister should know that the claim is false.

The true purpose of Section 70 is to reduce the operating costs of NZ Super so that, wherever possible, sharing pension costs for individuals living in New Zealand can be avoided, leaving pension costs entirely to another country. Witness the nature of the complaints to the UN, to say nothing of the more than 150,000 elderly Kiwis who receive nothing in retirement income from NZ due to the aplication restrictions. If Ms Tolley had indeed read the claim about the purpose of Section 70, almost certainly she would have sent it back to be rewritten, refusing to put her signature to a lie.

With every objection to the misuse of my name ignored, with every attempt to find out who was responsible thwarted, I turned to NZ First’s Denis O’Rourke, a waste of time. I appealed to my local MP, Poto Williams, and never heard another word. Approaches to three journalists were futile – it appears that no one wanted to touch anything associated with Crown Law.

Regardless of the Privacy Act, according to our civil service I have no right to privacy. An official, dishonest, document is permanently filed with the United Nations under my name. And there is nothing that I can do about it other than defer to requests to have the full details published on the web.

6. PERSONAL QUESTIONS FOR THE MINISTER

With the 30-day right of reply and the seriousness of the allegations in this letter, I believe you will want to consult with senior officials before sending a response. I realize it is pointless to request the names of the persons drafting your reply, who of course are protected under the Privacy Act, however it would be appreciated if you could at least inform me which department, MSD or Crown Law, was involved.

I would like to ask you some questions of a personal nature which will not require consultations. I would be grateful for your prompt reply to these questions.

If, in the opinion of the Chief Executive, an overseas contributory pension bears little resemblance to NZ Super, do you, or do you not, believe that pension should be subject to the direct deduction policy (Section 70)?

Do you, or do you not, believe that New Zealand’s public service is justified in ignoring the articles of the Universal Declaration of Human Rights and the articles of the International Covenant on Civil and Political Rights?

Do you, or do you not, believe that our public service is justified in using false names and false signatures as protection from a volatile public?

When it has been convincingly established that the Government’s Response to the United Nations was a calculated deception, do you, or do you not, believe that those responsible should be asked to resign?

A Christchurch woman wrote to MSD to ask, with regard to pension grievances submitted to the HRC, why did MSD consider it necessary to cloak its involvement in confidentiality – in violation of both the International Covenant on Civil and Political Rights and the Universal Declaration of Human Rights?

The reply, typically Crown Law, came from the Chief Executive, 30 days later:

“The Ministry is unable to answer this part of your request. The Ministry does not have an opinion about these questions. Questions which require an agency to form an opinion are not considered to be official information. As such, your request for this information is refused under section 18(e) of the Official Information Act 1982 as this information does not exist”.

If you had put the same question as above to the Chief Executive and received the same response, would you, or would you not, consider it acceptable?

If, as with many people, such a response was considered reprehensible, would you, or would you not, suggest to the Chief Executive that he should resign?

7. CONCLUSION

The plight of New Zealanders denied NZ Super through Section 70 and the Spousal Provision makes brief news roughly every two years, then forgotten. It is the same story every time, only the names change. No journalist has ever delved into the deeper issues involved. MSD’s published responses to these stories without fail have been notable for misrepresentation, evasiveness, falsification.

A single example: after articles questioning Section 70 appeared in the Sunday Star Times, MSD Deputy CEO Iona Holsted contributed a response (July 15, 2012) so blatantly false that the SST was deluged with complaints. Two were published exposing her perfidy. Holsted neither apologized nor resigned.

High ranking Ministry officials evidently have no compunction when it comes to deceiving the public. There is no doubt that MSD/Crown Law lied to the UN. It has sought to block the rights of pensioners through the HRC, at the same time flouting international treaties safeguarding human rights. MSD has ignored statutory orders to discontinue the use of fake names. There is the impression that increasingly the Ministry considers itself above the law.

Can Cabinet Ministers continue with confidence to sign any letter relating to pension grievances prepared by MSD/Crown Law? The answer is, no.

It is assumed that the reply to this letter will be prepared by MSD and Crown Law. Several examples of their replies to pensioners’ complaints have been seen over the years including the example quoted above, along with their Response to the UN unwittingly signed off by a Cabinet Minister. I therefore know what to expect.

Governments change, politicians come and go. All the while, the Ministry of Social Development has retained a firm grip over retirement policies. Will the new Government in 2017 recognize that New Zealand’s policies and directions should not be dictated by public servants, but rightfully determined by our elected representatives?

Please note: Copies of the Chief Executive’s signed admission, The Arnesen Communication (the Government’s Response to the UN), and The Appeal/Rebuttal of the Crown’s claims are all available on the website PensionAbuse.org.nz

Sincerely yours

Christopher R. Arnesen




The Minister's Answer

It took the Minister's office almost four months to answer Christopher Arnesen's letter. This is the document Carmel Sepuloni signed on 27 February 2018:

"Dear Mr Arnesen

Thank you for your letter dated 3 November 2017 about section 70 of the Social Security Act (1964) and the spousal provision.

You raise a number of concerns including the treatment of tier two pensions, the role of the Ministry of Social Development (the Ministry), the use of pseudonyms by the Ministry for employees appointed to the Benefit Review Committee, and the issue of your name in the Government's response to the complaint to the United Nations.

As you note, the issue of section 70 is complex. I have asked officials from the Ministry to look at certain aspects of the direct deduction policy and report back to me later this year. At that stage, I will have a better understanding of the impact any change may have on particular superannuitant groups. Currently, there are no changes planned.

With regard to the use of pseudonyms, I have been advised by the Ministry that it has determined that the use of pseudonyms is necessary and appropriate to protect staff from being identified and placed at greater risk of harassment or threats from both within and outside their work environment.

Thank you again for writing. I hope you find this information is of interest.

Nga mihi

Carmel Sepuloni
Minister for Social Development"


Our answer to this letter:
Blah blah blah...

Regarding the use of pseudonyms, you might be interested in these articles - in which you can see that the case will be dealt with by the High Court. MSD appealed the decision of the Social Security Appeal Authority which demanded this practice to be stopped.





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