Part 5: Secondment of Officer 3, and amending the Defence Force Order

Inquiry into New Zealand Defence Force payments to officers seconded to the United Nations.

5.1
In this Part, we describe the arrangements made for Officer 3's secondment and the events that led to NZDF amending its Defence Force Order in December 2005. We discuss:

Arrangements made for Officer 3's secondment

NZDF initially did not agree to pay Officer 3 accommodation assistance. Once the UN offered him the secondment in April 2005, he asked NZDF to review its decision. After the Defence Force Order was reviewed in December 2005, NZDF decided to pay him accommodation assistance. This was six months after his secondment had started.

Before Officer 3's secondment

5.2
Officer 3 was nominated for a UN secondment in late 2004. Immediately before the secondment, he had been posted in the Middle East. His wife had been employed by the UN in New York during his Middle East posting, and he was keen to join her and their children, who were living in New York.

5.3
In September 2004, it was proposed that Officer 3 be seconded to the UN. The Assistant Chief Strategic Commitments and Intelligence requested that Personnel branch prepare a set of conditions of service for Officer 3. The Assistant Chief PersonnelC advised the Assistant Chief Strategic Commitments and Intelligence that the Defence Force Order was under review. In particular, he noted in this Minute that the UN contract prohibited the payment of accommodation assistance by the home state to a seconded person when the person was also receiving the UN's rental subsidy.

5.4
Officer 3 was advised in September 2004 by his service that, if he obtained the UN secondment, he would not be paid NZDF accommodation assistance during his secondment to the UN.

5.5
Officer 3 left New Zealand in January 2005 to go to New York on leave without pay. He had not heard at that point whether he would be offered the UN position. The UN offered Officer 3 the position in April 2005, and his employment was to start in June 2005. He then sought to clarify his conditions of service and entitlements with NZDF. He had previously been posted overseas with his family by NZDF and understood what the NZDF conditions of service and entitlements were for posted officers.

5.6
Officer 3 was aware that the conditions of service and entitlements that his service had advised would apply to him were different to those of Officer 2 and were also different to those of NZDF posted officers. He asked NZDF to pay him the accommodation assistance. His wife worked as a permanent UN employee in New York and had been working there for a period before his secondment. She received the UN's rental subsidy.

5.7
As we discuss in more detail in paragraphs 5.16-5.32, Personnel branch was revising the applicable Defence Force Order in 2004 and 2005. What Officer 3's conditions of service and entitlements should be was referred to Personnel branch for clarification. Personnel branch staff put resolving this issue on hold until the revision of the Defence Force Order was completed in December 2005.

Why Officer 3 did not declare his NZDF accommodation assistance to the UN

5.8
Officer 3 arrived in New York in January 2005. He was on leave without pay from NZDF while he waited to hear from the UN whether he would be offered the position he had applied for. Once he was offered the UN position, Officer 3 discussed the UN secondment with Officer 2 and the Military AdviserB. Officer 2 discussed with him the fact that she was receiving the UN's rental subsidy and NZDF accommodation assistance, and that this was contrary to the UN's requirements. She told him that she was uncomfortable about this. She also said that she had previously discussed the matter with the Military AdviserB.

5.9
Officer 3 then raised the issue with the Military AdviserB. He asked whether NZDF knew the situation that they were being put in. The Military AdviserB advised Officer 3 that he had informed NZDF and had been in touch with Personnel branch. The Military AdviserB advised Officer 3 to sign the declaration and get the contract. Officer 3 was told that he was just doing his job and that NZDF would sort it out. The Military AdviserB told Officer 3 to declare his UN rental subsidy and allowances to NZDF. In the meantime, he was covered by the Defence Force Order and he should comply with it.

5.10
Officer 3 had to sign various documents when he started with the UN. They included a declaration stating that he would comply with the UN Staff Regulations and Rules. This was a separate declaration to the one that was required to be made when applying for the rental subsidy. He did not apply for the UN's rental subsidy.

5.11
Officer 3 was uncomfortable signing the declaration, but considered that he was being instructed to do so by the Military AdviserB, who was his superior officer. He believed that refusing to do so and turning down the UN offer could have led to a perception by the UN that New Zealand was not meeting its expectations.

5.12
Officer 3 signed the UN declaration. At the point that Officer 3 signed his various UN documents in June 2005, he was not receiving any accommodation assistance from NZDF and had not applied for the UN's rental subsidy. However, his wife was receiving the UN's rental subsidy for the family and, as we discuss below, he later started receiving accommodation assistance from NZDF.

5.13
The issue of how the UN's requirements applied to Officer 3 are very complicated, because he was not receiving the UN's rental subsidy – his wife was. However, under the UN's staff rules, all staff members were required to inform the UN of any change in the situation as reported at the time of recruitment if this would affect their status or entitlements. The UN's requirements are unclear about whether Officer 3 or his wife was required to declare any accommodation assistance later paid to Officer 3 by NZDF.

5.14
No one from NZDF discussed with Officer 3 whether his wife should be declaring to the UN the NZDF accommodation assistance that he was receiving, even though Services directorate staff and Personnel branch staff were aware that she was receiving the UN's rental subsidy.

5.15
It is also important to note that Officer 3 was the third officer seconded to the UN by NZDF, and there was an existing Defence Force Order in force about seconded officers' conditions of service and entitlements. This Defence Force Order applied to Officer 3, and under it he was entitled to be paid accommodation assistance by NZDF.

Efforts to prepare a policy that would comply with the United Nations' requirements

From around mid-2004, Personnel branch staff were aware that the Defence Force Order did not comply with the UN's requirements and that the seconded officers were not declaring their accommodation assistance to the UN. Early drafts of the revised Defence Force Order proposed amending it so that it complied with the UN's requirements.

5.16
During 2004 and 2005, there was a high turnover of staff in senior positions in Personnel branch. Some staff were posted to other parts of NZDF from Personnel branch, and those staff were not always immediately replaced. Personnel branch was also working on significant projects in a short time frame – in particular, a Strategic Human Resource Plan, a Strategic Human Resources Framework, and a Human Resources Implementation Plan.

5.17
Personnel branch staff started reviewing the applicable Defence Force Order in 2004. The officer responsible for managing the review of the Defence Force Order was the Director of Military Personnel Policy DevelopmentB, although much of the work was delegated to a Personnel branch staff member. Some time in 2004, the staff member had obtained a copy of the Administrative Instructions and used them in preparing the initial drafts of the policy.

5.18
The Personnel branch staff member produced several drafts of the policy. One of the early drafts proposed to remove from the Defence Force Order the payment of NZDF accommodation assistance to seconded officers. She circulated this draft to Services directorate staff and the Military AdviserB. The Military AdviserB opposed this change, and recommended that NZDF retain its existing practices.

5.19
The Personnel branch staff member produced further drafts of the policy, including one in June 2005. This draft of the policy was in the form of a draft Minute to the Chief of Defence ForceB recommending that the Defence Force Order be amended. This draft recommended that NZDF continue providing accommodation assistance, but that seconded personnel be required to declare that assistance to the UN. In her draft, she recognised that this option would mean that the UN would cease paying its rental subsidy and that the seconded person's post adjustment would be reduced. She also stated in that draft Minute that the current provision of accommodation assistance to seconded personnel did not comply with the UN's requirements, because the seconded personnel were not declaring their NZDF accommodation assistance to the UN.

5.20
This draft policy was sent to the Military AdviserB for comment. He disagreed with the draft policy and proposed that a model used by another country be adopted. The other country's model involved a seconded person's UN pay and allowances passing through their bank account back to their home state. Their home state would then continue to provide their pay and allowances. This model did not meet the UN's requirements.

Reverting to the existing policy

Some time after mid-2005, Personnel branch staff changed the draft policy so that it continued existing practices. It also removed all references to the current Defence Force Order not complying with the UN's requirements and seconded officers not declaring their accommodation assistance to the UN.

5.21
Until around June 2005, the draft Minutes and draft revised Defence Force Orders prepared by Personnel branch staff were seeking to have a Defence Force Order that complied with the UN's requirements.

5.22
The next draft Minute to the Chief of Defence ForceB and draft Defence Force Order were finalised by Personnel branch staff in late November 2005. The draft Minute was substantively different from all previous drafts. It proposed that NZDF continue providing accommodation assistance to seconded officers and proposed extending the existing entitlements for seconded officers with dependants. All references to the UN's requirements, the fact that the existing Defence Force Order did not comply with them, and the fact that the seconded officers were not declaring their accommodation assistance to the UN were removed from the draft Minute.

5.23
The draft Minute to the Chief of Defence ForceB also included tables containing comparisons of entitlements and conditions of service of NZDF officers seconded to the UN in New York and NZDF officers posted to New York to NZDF positions. The tables showed that, without the payment of NZDF accommodation assistance, the seconded officers would have been paid much less than posted officers.

5.24
We reviewed these tables and found errors in them. In particular, the tables showed that seconded officers would be significantly worse off financially than NZDF officers posted to New York. As with the tables prepared in 2000, this conclusion was incorrect. As we discussed in Part 2, the seconded officers were in fact in a financial position that was generally comparable to posted officers. There was therefore no need to pay them NZDF accommodation assistance. The opportunity to identify the fundamental error in the Personnel branch advice of 2000 was missed, again because of incorrect calculations prepared by Personnel branch. As we discussed in Part 2, it appears that, until May 2010, no one in NZDF understood that seconded officers were in fact slightly better off financially.

5.25
There were also other errors in the tables – for example, one of the tables stated that an officer seconded to the UN with dependants was entitled to fewer holiday allowances than an officer without dependants, and that an officer seconded to the UN with dependants had a lower salary than an officer without dependants. The tables had different figures for the amount that seconded officers were entitled to by way of accommodation assistance under the operative policy. Neither figure was correct.

5.26
We asked Personnel branch staff and the Assistant Chief PersonnelC why the draft Minute to the Chief of Defence ForceB and draft Defence Force Order had been so radically changed, and why all reference to the fact that the existing policy did not comply with the UN's requirements had been removed.

5.27
The Director of Military Personnel Policy DevelopmentB told us that he discussed the early drafts with the Assistant Chief PersonnelC. The Director of Military Personnel Policy DevelopmentB told us that the Assistant Chief PersonnelC had advised him that he would not take a paper up to the Chief of Defence ForceB (the former Assistant Chief PersonnelA) if it contained any reference to the policy not complying with the UN's requirements. The Director of Military Personnel Policy DevelopmentB told us that the Assistant Chief PersonnelC said that he would discuss the matter with the Chief of Defence ForceB verbally but did not want any written reference to it in the Minute.

5.28
The Assistant Chief PersonnelC advised us that he did not have a conversation in those terms with the Director of Military Personnel Policy DevelopmentB. His recollection is of a discussion that acknowledged the potential for conflict between NZDF's policy and the UN's requirements and the need to ensure that they did not expose the Chief of Defence Force and NZDF by doing the wrong thing. He did not want to take a paper to the Chief of Defence ForceB that proposed a policy that did not comply with the UN's requirements.

5.29
The Assistant Chief PersonnelC told us that he understood that the revised policy was going to meet NZDF's duty to its staff and accommodate the UN's requirements. He told us he did not discuss the Minute verbally with the Chief of Defence ForceB. The Assistant Chief PersonnelC also advised us that he would only have had a general understanding of issues such as this, and that staff working on issues would have had more detailed understanding. Therefore, it was possible for him to have been unaware of the complete picture.

5.30
The Chief of Defence ForceB told us that he does not recall having a conversation with the Assistant Chief PersonnelC about the draft policy, and that he would not knowingly have approved a policy that did not comply with the UN's requirements.

5.31
The documents discussed above show that Personnel branch staff understood the problem and were working on solutions, until the direction of the policy changed significantly at a late stage to remove all discussion of the problem. But the documents do not show why that change was made. We have been given two different recollections of what appear to have been a critical conversation. The Director of Military Personnel Policy DevelopmentB understood that the new direction conflicted with the UN's requirements but thought that was what he was being instructed to do. The Assistant Chief PersonnelC told us that he thought the conflict had been resolved.

5.32
The Chief of Defence ForceB approved the amended Defence Force Order on 16 December 2005. The amended Defence Force Order continued the existing arrangements for seconded officers, and extended the entitlements for seconded officers with dependants.

Decision to pay Officer 3 accommodation assistance

After NZDF decided to continue with the existing arrangements for seconded officers, Officer 3 was paid accommodation assistance.

5.33
After the Chief of Defence ForceB approved the amended Defence Force Order, the Assistant Chief PersonnelC sent a letter to Officer 3 advising him that NZDF would pay him accommodation assistance. The decision to pay Officer 3 accommodation assistance had remained unresolved for more than eight months after he sought clarification of his entitlements and six months after his secondment started.

5.34
Officer 3, like Officer 1, was required to accept a UN secondment without knowing what his NZDF conditions of service or entitlements would be and how they would interrelate with his UN contract or how they would affect his wife (who received the UN's rental subsidy).

5.35
Because Personnel branch staff understood that the current Defence Force Order conflicted with the UN's requirements, they must have also understood that to pay Officer 3 accommodation assistance without him (or his wife) declaring that assistance to the UN may have meant that he would breach the UN's requirements.

5.36
Because the letter did not state whether he (or his wife) should declare the NZDF accommodation assistance, Officer 3 operated based on the earlier advice he had received from Military AdviserB and Officer 2 and did not declare his accommodation assistance. While this decision ensured that Officer 3 was in the same financial position as the previous seconded officers, it also continued the pattern of NZDF officers not complying with the UN's requirements. For the officers directly affected, the decision to continue with the same system effectively confirmed their understanding that NZDF condoned and expected this.

5.37
We note that at no stage in 2004 or 2005 did Personnel branch staff seek advice from the Directorate of Legal Services, either on the draft policy or the proposal to pay Officer 3. This is despite Personnel branch staff identifying that the Defence Force Order did not comply with the UN's requirements and that two seconded officers had not declared their accommodation assistance to the UN (which was contrary to the UN's requirements). We also note that the Directorate of Legal Services did not review the Defence Force Order before it was approved. At the time, there was no procedural requirement for a legal review before Defence Force Orders were approved.

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