Two scattered things

There seemed something strangely apt about the power going out on a lecture about the current Treasury/government craze for “wellbeing”

(Having said which, I expected the lecture itself would be interesting and stimulating –  Arthur usually is even when, as often, I disagree with him.  I hope it is rescheduled.)

Out of the blue the other day, I received a copy of a new book by Simon Burnett, a New Zealand journalist resident in Germany, about an episode in recent New Zealand financial history that I’d almost entirely forgotten.

Blunder: How ANZ and ING squandered 800 million dollars in a Wall Street casino—and ignited a revolt of small-time investors

As the blurb puts it

Between 2003 and early 2008, fifteen thousand financially illiterate people in New Zealand were persuaded to invest their savings in packages of hyper-speculative securities. They were told that these were safe alternatives to bank deposits. The investments crashed. The shell-shocked investors, mostly elderly and risk-averse and in no position to recover from financial disaster, banded together, formed a national committee, set up regional groups, took the battle on to the streets, and won.
The securities, known as CDOs, were packed into two mutual funds (or unit trusts) managed by the New Zealand arm of the Dutch financial giant, ING. Its joint-venture partner and half owner, the Australia and New Zealand Banking Group (ANZ), was a major sales agent. When the CDOs tanked and the funds tanked with them, the ANZ and ING began a desperate cover up, blaming unforeseen circumstances. This was baloney and the investors knew it.


This is the story of the biggest, most sustained, investor revolt in New Zealand history, told not by a financial expert but by one of the ANZ/ING investors who himself took part in demonstrations. The author unravels the financial complexities that neither the ANZ nor ING apparently were aware of.
The scandal was regional, but the lesson is universal: it illustrates just what can happen when financial institutions do not check what they are investing in and pass on the risks to unsuspecting customers.
Financial commentator and economist Gareth Morgan wrote that, “For anyone investing their savings with the financial sector in New Zealand—especially with some of the biggest brands in the business—I commend this book to you as a good background on what you can expect if you do not do your homework.”

I haven’t read the book, but hope to.  Too few of the episodes in our economic and financial history are well-documented, and if this book makes some contribution to such a literature I welcome it.

Gareth Morgan has written the preface to the book.  There are plenty of things I disagree with Gareth about, notably financial regulation.  But he has been around, and his willingness to write the preface suggests there is something to the book, as a story, even if you don’t go as far as he does on policy.  Here is some of Gareth’s view.

And in New Zealand there is a sequel. In a flurry of belated regulatory responses to events here—not just the ANZ/ING debacle, but also the mass destruction through the finance company sector—a licensing regime is being brought down on financial advisers and a rewrite of the Securities Act is being attempted in order to rein in the malfeasance.
But industry’s capture of the regulator is so complete that the financial adviser
regulations are little more than window dressing. Not one of the offences committed by this sector during the GFC would have been prevented under the licensing requirements that are being implemented —indeed the worst offenders have been exempted most of the qualifying requirements the Code Committee for Financial Advisers has implemented.

There are no grounds whatsoever for the public to increase its confidence in this sector, no chance the new regulations will ensure it has a duty of care to it, and the book “Blunder II” will be required in a few years to outline why the malpractice has continued.

And were the FMA to ever investigate such an episode, we were reminded again this week that they can arbitrarily slap suppression orders on, stopping people talking about thet directly affects them and their customers –  even stop them talking to parliamentary committees.

I’m pretty ambivalent on Nicky Hager too, but here is some of his endorsement

“This is why Simon Burnett has done a great service in writing this book: explaining an important New Zealand story as part of the world-wide crisis, distilling the lessons and holding ING, ANZ and their senior staff to account. He has done a huge amount of work to piece the story together and to make it into an interesting, readable book. It is also pleasing that he tells the story of the ordinary investors who complained and fought and protested, in the face of misleading information and resistance from the respectable sounding companies involved, until they found out the truth and got some justice. The book is a fine piece of investigative journalism.”

The book looks to be well-documented, and from the bits I dipped into seems to read easily enough. I suspect I would probably part company from the author on any policy implications, but probably not on the ethics of what went on.

UPDATE: In a comment below the author notes:

At the moment, the book is exclusively on Amazon as an eBook. A paperback is scheduled for the end of August. Anyone who wants to can get a PDF copy from me free. Just email me at

Confucius Institutes, the PRC, and all that

Last week there were screenings in Auckland and Wellington of Canadian journalist and filmmaker Doris Liu’s documentary “In the Name of Confucius” .  Each screening was followed by a Q&A session with the filmmaker herself, who has been on a bit of a roadshow promoting the film (which is funded by the Canada Media Fund) and its message (which has now also been screened at the British Parliament and at various parliaments in Australia).

From the promotional material

Culture. Language. Power.  On average, China opens one Confucius Institute per week in partnership with school boards and academic institutions around the world, with a goal of opening 1000 by 2020.  Yet, a growing number of schools are also starting cut ties with the program, alarmed by concerns ranging from human rights violations, financial incentives and censored content to national security and espionage.

In the Name of Confucius is a one-hour documentary about the Chinese government’s multi-billion dollar Confucius Institute (CI) program and the growing global controversy at academic institutions around the world as scholars, parents and others question the program’s political influence and purpose.

The Confucius Institute (CI) programme began in 2004, and there are now three of them in New Zealand (made possible as part of the 2008 China-New Zealand “Free Trade” Agreement), one each at Auckland, Victoria and Canterbury universities.  Given the substantial amounts of money involved –  the universities get to extensively leverage their brand with PRC money –  and the sensitivities of the PRC authorities on all manner of things (try the Rockhampton fish story for example), it was to the credit of Victoria University that they allowed their facilities to be used for the Wellington screening, even with the strange disclaimer that “This external event does not necessarily reflect the views, thoughts and opinions of the university”.    Perhaps naively, I’d associated universities with the contest of ideas, evidence etc, rather than with any single view held by “the university”.

(Reflecting an official PRC perspective, the film featured a clip of the head of Hanban –  the PRC government agency responsible for the CI programme –  stating that the CIs meant that it was “like foreign universities work for us”.)

The documentary centres on two main Canadian stories.  The first was the defection of a Mandarin language assistant (the main strand of what CIs do), Sonia Zhao, whose defection and subsequent human rights complaint (based on the then formal PRC prohibition of anyone with Falun Gong connections being a Mandarin language assistant) contributed to the closure of the Confucius Institute at McMaster University in Ontario.   Zhao herself had been a Falun Gong practitioner who, on her telling, had been unaware of the prohibition until presented with her draft contract, and was then fearful of imprisonment or other punishment in China.    She recounted the instructions the assistants received that –  in Canadian government classrooms –  they should avoid issues like Taiwan and Tibet, change the subject if possible, and otherwise parrot the Party line.

The second story was around the battle, ultimately successful, to convince the Toronto public schools system (apparently the third largest in North America) to end its association with the Confucius Institute/Confucius classroom programme.  It featured rather gruesome footage of little Canadian kids singing a song, drawn from CI resources provided by the PRC authorities for Toronto schools, in praise of Chairman Mao “leading his people forward” (no mention presumably of the tens of millions of deaths ascribed directly to government choices?).

The section focused on the Toronto debate featured footage of vociferous protests outside the meetings (on both sides, mostly from the ethnic Chinese community, with those in favour of the CI programme apparently organised by other PRC front organisations), some pretty arrogant bureaucrats (including one who had clearly enjoyed being “wined and dined” –  his words –  by Beijing), and some dramatic footage of the impassioned debate at meetings of the school district board of trustees.    There were the competing perspectives: one Chinese immigrant tried to claim that Tibet’s status was really just like Quebec’s.  That sparked a feisty response from one trustee about the possibilities for independence referenda in Tibet, to which the response was ‘oh, we don’t need referenda, because we know no one wants independence”.    And, on the other side, other ethnic Chinese noted that for all the CI claims to promote Chinese culture, it was the Communist Party which had set out to destroy so much of Chinese culture.     At the end there was an overwhelming vote (20 for, 2 against) to end the Toronto school district’s association with the Confucius programme.

The documentary was primarily about the Confucius Institute programme.  But it was also –  particularly through the lens of the Sonia Zhao story –  about the brutal and systematic PRC persecution of the Falun Gong.    The filmmaker –  herself a Chinese immigrant to Canada only about 10 years ago – has some involvement with Falun Gong herself, and indicated that she has family members back in the PRC who are active practitioners. One could only admire her courage in speaking out, although wondering about the risks she might be exposing her family still in the PRC to.

Here is an extract from a pamphlet Falun Gong people were distributing in central Wellington last week

falun gong

Or you could read an Australian (ABC) article.

This is the sort of regime that we allow to put its people into our schools.

Falun Gong isn’t, to put it mildly, my cup of tea.  But that isn’t the point.   States shouldn’t get to compel, or proscribe, religious/spiritual practices in this day and age (cuius regio, eius religio was from hundreds of years ago) and, when they nonetheless still choose to do so, we should not be actively aligning ourselves with such regimes (one could add regimes like Saudi Arabia to such a list), let alone allowing them to put (ideological “sound”, politically safe) people in our schools.   The PRC has now removed the explicit prohibition on Falun Gong people from the websites describing these Mandarin language assistant roles, but it makes no practical difference, given that the practice of Falun Gong is prohibited in the PRC and the government actively persecutes (and in some cases, it appears, murders) practitioners.

As it happens, and to her credit, the director of Victoria University’s Confucius Institute attending the screening of “In the name of Confucius” in Wellington.  Rebecca Needham was, until recently, a fairly senior MFAT official, including former New Zealand Consul-General to Guangzhou.  As I noted recently, in the weird conflation of roles and interests that swirls around Wellington over the PRC relationship, even though her current job (directly on the payroll of Victoria University) involves implementing a programme largely funded by the PRC, she is still shown on the MFAT website as one of the group of public sector experts on China (the only non public servant on the list).

When it came to the Q&A session, Needham made a couple of points:

  • to the extent that events were portrayed accurately in the film, they bore no resemblance to the way the Confucius Institute at Victoria (or others in NZ) were run, and
  • that the Victoria Confucius Institute was completely transparent and non-political.

Since I had met her once before, and she had then volunteered a willingness to talk and answer questions, I emailed her and asked whether she could be specific about any differences in how the New Zealand CIs were run, and whether there were any prohibitions on Falun Gong teaching assistants.

She invited me to come and talk it over, and we met in her office yesterday. Despite her offer to talk, she was clearly a bit uneasy about talking to me, and so I offered to keep her remarks off-the-record, and simply use them as background to my own descriptions etc.  In the course of the discussion, Tony Browne – former New Zealand Ambassador to China, chair of the Confucius Institute and senior consultant (unpaid) to Hanban (the PRC agency behind Confucius Institutes –  dropped in.  I’ve also written previously about the multiple hats Browne wears.

To recap, the main focus of the Confucius Institute, despite its location in a university, and use of the university brand, has almost nothing to do with the traditional role of a university.  They neither teach undergraduates, nor conduct research.  It is mostly a programme of (at PRC government expense) putting native Chinese speakers (typically young graduates from good Chinese universities) into our schools, to support Chinese language (and related) programmes. (There are also “cultural” programmes that look as though they should be better done, if at all, directly through the PRC embassy, not with a local university imprimatur).   A different cohort of these young people come out each year, and they are based in various towns and cities (in Victoria’s case, the North Island up to and including the Bay of Plenty), working in local schools alongside New Zealand registered teachers.  Apparently, no textbooks or the like are provided by Hanban, the Confucius Institutes, or the Mandarin Language Assistants themselves (presumably reducing the likelihood of kids in our schools singing songs celebrating Chairman Mao).

Apparently the hope of Hanban has been to localise Chinese language teaching over time (presumably, in turn, reducing the substantial cost the PRC taxpayer –  in a much poorer country than NZ –  bears).  Even if that is the hope, it isn’t the situation at present, whether in New Zealand or in other countries where CIs are operated.

The recruitment process for the Mandarin language assistants who come out here involves the New Zealand Confucius Institute staff making the final decisions (sensibly enough –  they need people who will fit in, living in perhaps a small New Zealand provincial town for some time). But they make those decisions from a list provided to them by PRC universities.    We can be pretty sure that all of those people –  after all, coming to pursue an official government agenda just by their presence – will have well-vetted. No Falun Gong will have survived the vetting process, but nor will anyone calling for (say) independence for Tibet, free and open elections in the PRC itself, respect for Taiwanese democracy, or freedom of religion or freedom of expression.   That is just the way the PRC is, and he who pays the piper calls the tune.  New Zealand staff needn’t concern themselves with this sort of pre-vetting.

Now, of course, these are young graduates.  Some might be politically passionate, but probably most aren’t –  more concerned with seeing the world, shopping, the opposite sex, developing their English, or whatever, all the while adopting the only safe PRC position (keeping your head down, and your speech tightly constrained).  So I’m not suggesting that when these people come into our classrooms they are generally consciously actively propagating some PRC agenda or worldview to our kids.  But it doesn’t change the fact that they are approved representatives of a heinous regime, and they (and the Victoria staff) have chosen to be complicit with that regime, no matter how often they repeat the line that “we just do language and culture”.     Are they helping some New Zealand kids in the process?  Yes, no doubt.  (And having myself spent time growing up in Kawerau, I was half-pleased to see that kids in places like Kawerau and –  still poorer –  Murapara are getting support in their Chinese language learning.)

But it doesn’t make the system right.  I suggested to the director that it really wasn’t much different than if, say, a cohort of Hitler Youth (which pretty much everyone had to join, whether a zealot or not) had beeen coming to the UK in the mid-late 1930s each summer to teach German language and culture, at the expense of the Nazi regime.  There is nothing wrong with learning German, or Chinese, but the people who work on those programmes (from university vice-chancellors down) make themselves complict in the evil.

If we want to encourage Chinese language learning in New Zealand, how much better if we spent our own money on it?   That is what we do when we want to improve science or maths or English or economics teaching.   It is what self-respecting people do, not mendicants.  We don’t (that I’m aware of) have a government-facilitated programme to bring in native French or German or Spanish speakers for our schools, but if that were regarded as a worthwhile part of secondary education I’d have no particular objection. But spend our own money, recruit people directly ourselves, and recruit them from places (in the Chinese case, eg Taiwan, Singapore, or even semi-free Hong Kong) where we can reasonably confident that a foreign government won’t have prescreened for political suitability and safety.  Particularly not a foreign government like that of the PRC.   (And this is all the more so for courses for our public servants, of the sort the CI conducts.)

You can read the Victoria University Confucius Institute material for yourself: there is plenty of it on their website.   You can also see that the talk about it being “just” language and culture (and doesn’t “culture” encompass “the way we do things” –  the PRC not being a model for most New Zealanders), they are quite open about the political nature of what is going on.  The handbooks for schools might mostly be branded as “Victoria University” products (Vic has many institutes and schools) and perhaps that helps marketing and recruitment in the provinces.  The Annual Reports are a bit different.   We find photos of a Vice-Premier, of a visiting Communist Party secretary.  We read that a counsellor from the PRC Embassy sits on the board of the Confucius Institute, and that one of the CI staff is involved in programmes “to raise China literacy in the public sector”  (we ask the PRC government to help “educate” us on China?   And the Nazi Party to educate us on Germany in the 30s?)   In fact, in the 2017 Annual Report there is a celebratory photo of Xi Jinping on page 2 –  clearly not embarrassed that this tyrant, just taking power for life and further clamping down on any freedoms in the PRC –  launched the Victoria CI in 2010.

The PRC doesn’t have any doubts about the point of the Confucius Institute programme.  But you have to wonder why New Zealand universities, government departments, and decent individuals are so willing to allow themselves to be used by such a dreadful regime.  Language learning generally is a good cause, but ends aren’t all the matter. Means matter too.

The presence of Confucius Institutes clearly isn’t the biggest issue that should be worrying people in the supine, even slavish, way our authorities approach the PRC.  Rather more important is when, for example, the Leader of the Opposition (who as a minister signed us up for a “fusion of civilisations” with this dreadful regime) can claim, apparently with a straight face

He also said he continued to back National MP Jian Yang who was forced to defend himself after confirming that he had taught ‘spies’ in China.     “Before me being or becoming the leader, he has asked and answered quite decisively the questions around all of this … he is a highly valued member of parliament,” Mr Bridges said.

(This of a man hardly heard from in the English language media since the allegations surfaced)

or a Defence Minister who was reported the other day, at a function to celebrate the People’s Liberation Army 91st anniversary, that New Zealand was a “strategic partner” of the PRC.

If you want to update on what sort of regime it is that we allow to put its people in our schools, that we solicit foreign aid from, and have our universities celebrate, I recommend that new Der Spiegel piece on the open-air concentration camp that the Chinese province of Xinjiang has become.  Or an update on the organ transplant abuse situation, that someone sent to me a few days ago.  Perhaps you are inclined to look the other way, or just ignore this issue, as I was until quite recently.  If so, at least I suggest you check out the calibre of some of the people involved in leading the fight against this practice.  Yes, governments need to have relationships with the PRC (stiff formal ones ideally), but we shouldn’t be beggars, and we shouldn’t give our good name to voluntary association with such a regime.