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Something smells off in the world of fishing quotas
By James Gardiner
2 November 2002
This article by James gardiner was originally published in the NZ Herald on 2nd November 2002
Ask a lawyer about New Zealand's fishing laws and watch the dollar signs flash in their eyes.
"Get a job at the Ministry of Fisheries, learn the system, get out and go in to private practice and you'll cream it," was the advice one young lawyer received from a colleague.
A dozen years ago the newly appointed Fisheries Minister Doug Kidd promised a tidy-up of the legislation.
He bemoaned its complexity, the fact that a host of statutes had to be taken into account and told the fishing industry they deserved a single act that clearly defined the rules.
New Zealand's quota management system had, after all, been hailed as a world leader.
Introduced on a trial basis for the deep-water stocks in 1983 and in earnest for most commercial species in 1986, it was supposed to prevent overfishing and conserve stocks by bestowing a property right on the fishing operator.
But 16 years on the system is still only partially implemented and is dogged by allegations of corruption and fraud involving the industry and ministry officials.
Those claims intensified this week with revelations that fisheries officer and former police detective Barry Nalder was paid substantial compensation to leave his job while trying to investigate fisheries corruption. Another former fisheries investigator has also come forward with claims of fear that their colleagues within the ministry would betray them to the people they were investigating.
As first reported by the Weekend Herald in May, fishermen who have missed out on quota because of the delays and peculiarities of Government policies believe they are being unjustly denied millions of dollars worth of fishing rights.
Auckland-based fisherman Neil Penwarden is one of a group who became so incensed they took their case to court, arguing they had been disadvantaged by the ministry.
Penwarden was looking for a share of the lucrative scampi market – a developing fishery worth more than $30 million a year. Most of the catch of these prawn-like crustaceans, around 1000 tonnes annually, is exported to Asia and the United States, where it fetches up to $55 a kilogram.
He entered the legal arena and eventually, with a legal bill topping $500,000, Penwarden's fishing company Barine Developments was told by the Court of Appeal it had, indeed, been treated unfairly by Government fisheries officials. The Ministry of Fisheries was told to go away and revise its plans on how to allocate scampi catching rights.
But Penwarden soon realised the ministry had other plans. As long as it reconsidered the allocation and took into account directions of the court it could essentially do pretty much what it intended in the first place.
Neil Penwarden realised his success in the courts was unlikely to translate into his company getting more scampi quota and he wanted to know why.
Armed with affidavits from former fisheries investigators alleging dodgy dealings within the industry, he went looking for political support but struggled.
Winston Peters appeared to take up the case in April, using parliamentary privilege to accuse the ministry of corruption and promising to produce the evidence. His allegations saw two senior ministry officials, deputy chief executive Stan Crothers and national compliance manager Dave Wood, declare that they believed they were the people he was talking about, something Peters has never confirmed.
A Government investigation apparently cleared both men of any wrongdoing but its findings are shrouded by legal privilege as is a report by Auckland barrister Peter Andrew, commissioned by the Crown Law Office.
The Serious Fraud Office declined to investigate on the grounds of insufficient evidence.
Anyone who has attended fishing industry conferences can tell you that the relationship between the key industry players and the Government watchdogs is unusual.
At times they are at each other's throats but the policy debates go on well into the social events of the evening.
Naturally, in an industry that represents around $2 billion a year in exports of some of the world's best seafood, the wining and dining at such conferences is invariably first-class.
In the past 20 years the industry has evolved into a structure of a single Seafood Industry Council. Previously there were two groups: The Commercial Fishing Federation for the smaller players and owner operators - blokes in jeans and black jerseys - and the Fishing Industry Association "suits" from the big companies.
Ministry officials, including policy staff, scientists and the enforcement officers, would attend, giving presentations on law changes, policy and compliance issues and would take part in workshops and general debates.
The same faces were at every conference, but sometimes they changed sides. Dozens of former ministry staff now work in the private sector as consultants, quota brokers and in compliance roles for major companies. Their expertise in applying and enforcing complex rules with sometimes draconian penalties is sought after. Their job is to ensure the companies don't break the law or, as the cynics might have it, don't get caught.
The complexities of today's fishing regulations date back to the Labour Government of the mid-1980s and its rush to privatise fishing rights.
The initial quota allocations in 1986 caused an outcry. At the time the newly discovered orange roughy fishery was booming and fishermen were literally racing out into the deep water to harvest the "orange gold".
When some were allocated quota based on what they had caught in previous years, others missed out. Some argued the allocations were unfair. Some had legitimate reasons for not fishing the previous year. More quota was issued on appeal.
In its haste, Labour had also forgotten its obligations under the Treaty of Waitangi.
Maori interests had not, and in 1987 successfully halted the introduction of species to the quota system and forced successive Governments into protracted negotiations with Maori over how to translate the treaty into commercial catching rights.
The Maori Fisheries Commission, Te Ohu Kaimoana, was created as the Crown initially agreed to buy up and hand over 10 per cent of all existing commercial quota. But that did not cover more than 100 non-quota species, things such as clams, crabs, some shellfish - and scampi - that were not in the system because the stocks were small or the fisheries undeveloped.
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Eventually, in 1992, National negotiated what became known as the Sealord deal to settle permanently all Maori commercial fishing claims.
That allowed for the plan to bring all species under the quota system, providing Maori were allocated 20 per cent of the quota. The fact that only 10 per cent of the main fishing quota already allocated had gone to Maori was resolved by a $150 million cash payment, enabling Maori to buy a 50 per cent share of New Zealand's largest fishing company, Nelson-based Sealord.
In 1996, the new Fisheries Act promised by Mr Kidd was enacted in 17 parts, 370 sections and 12 schedules. An act to "reform and restate the law relating to fisheries resources".
But the reform and restating was far from over.
The 385 pages are now plastered with amendments, repeals and re-writes.
Despite all the specifics, much power rests with the fisheries minister and his ministry.
One of the rules the new law created was to determine that the fishing years (which start in October) 1990 and 1991 would be the "catch history" years - to be taken into account when allocating future quota.
The ministry was concerned that the imminent introduction of new species to the quota system should not cause a race to catch as much fish as possible to create catch histories, as occurred in the 1980s.
But the problem that currently haunts the ministry is that the rules and regulations it applied in 1990-91, determining who could catch what, where and when, have came under scrutiny.
A senior ministry official, speaking on condition of anonymity because of the delicate legal and political situation, has conceded mistakes were made.
He says of the ministry that, "the left arm didn't know what the right arm was doing. Auckland [office] was doing one thing, Nelson another and then head office intervening.
"It's inevitable when you do that you're going to piss people off. The results of those decisions affect what people can catch. The law for putting it in the quota system requires that the criteria years of 1990-91 be the catch history years.
"[The discontented fishermen] are saying that before that you had this permitting regime and you locked us out so we couldn't build a catch history and you put this permitting regime in place for your mates so they were able to get in there and build a big catch history at the expense of us and by putting it in the quota system you're just building on your past corrupt practices."
The official is adamant there were no corrupt practices that he was aware of and no deliberate favouritism that can be proven but, inevitably, when policies are applied inconsistently and work to the advantage of some and the disadvantage of others, it creates a bad impression.
National, Labour, New Zealand First and even Act are potentially implicated. Labour (1984-90) brought the quota system into being and National, with NZ First help from 1996, carried it on through the 1990s. Act MP Ken Shirley was Labour's Fisheries Minister from 1987-90.
Winston Peters ceased making statements when the snap election was called. He has told the Herald the material he has is far more extensive than that provided by Penwarden.
One of Penwarden's lawyers, Ocean Law partner Sue Grey, says what happens to someone who goes to court and wins but cannot get a result is "a serious constitutional question".
"With this issue they tried to pass some regulations to validate what they'd done wrong. They knew they'd done it wrong so they passed the regulations to try to rectify it. The High Court came out and said the ministry's done it completely wrong and it's very unfair and it's unreasonable but because of the regulations we can't do anything. But the Court of Appeal said the same thing as the High Court, then went on to say that the regulations are unlawful."
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