Integrity Briefing: Gifts, Graft, and a $12bn defence spend-up

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The New Zealand Defence Force (NZDF) has been caught with its hand in the cookie jar – or more precisely, in the corporate box. An inquiry by the Auditor-General has revealed that since 2016 NZDF personnel have accepted over 2,500 gifts and hospitality offerings from the Defence Force’s commercial suppliers, valued at nearly $419,000.

These weren’t token Christmas hampers for the office. We’re talking about tickets to international rugby and cricket matches, being hosted on yachts during the America’s Cup, concert passes, fishing charters, expensive smartwatches, gift vouchers, free booze, lavish dinners – the works. In the annals of public sector ethics, this is way out of bounds. It is “out of step with good practice in the public sector,” as the Auditor-General drily noted.

At a time when New Zealand is ramping up military spending to levels unseen in a generation, this scandal shines a floodlight on systemic conflicts of interest, corruption risks, and ethical failures in the NZDF. It raises the question: as billions of taxpayer dollars get pumped into defence, whose interests are being served – the public’s or the military-industrial insiders’?

The Gift horse: Undue influence in the ranks

The Auditor-General’s findings, released on Monday, read like a how-to manual for undermining integrity. Between 2016 and 2025, NZDF staff logged an eye-popping parade of perks from companies angling for Defence contracts. Nearly 80% of these were officially justified as “building business relationships”. In other words, defence brass claimed that chugging wine at corporate-hosted functions and accepting luxury sports tickets was just part of nurturing good supplier relations.

Let’s call that what it is: a dangerously cosy relationship between buyer and seller, blurring the line between professional duty and personal benefit. The gifts may not have been outright bribes, but as the head of the Auditor General's investigation, David Lemon, has said: the “risk of a perception that [decisions] are influenced” is blatantly obvious.

Similarly, Auditor-General John Ryan warned, “the practices we have seen… risk the public and Parliament losing confidence in the decisions made to contract with those suppliers”. In plain terms, if Defence staff are being regularly wined and dined by vendors, how can we be sure contracts are won on merit, not on who gave the flashiest freebies?

Examples from the inquiry illustrate how normalised this culture became:

• Lockheed Martin, the US defence giant (supplier of our new Hercules transport planes), shouted three senior NZDF personnel dinner, at a cost of $260. Not to be outdone, Northrop Grumman (another American arms behemoth) took three officers out for a $240 dinner. This is the same Lockheed Martin that proclaims “success depends on its commitment to integrity” and that it “refuse[s] to allow our integrity to be compromised by our desire to succeed” – a line delivered with a straight face, no doubt, after picking up the tab for Defence Force fine dining.

• An Auckland base commander accepted 30 gift boxes valued at $3,000 from a contractor in a single year (plus a $1,000 framed picture and a ticket to a fundraiser the year before). Another officer at the base got $400 worth of concert tickets from the same firm. That’s not building a relationship – that’s straight-up courting.

• KPMG (a consulting firm vying for Defence contracts) routinely plied senior officers with rugby tickets. In one case, they handed out multiple tickets to an All Blacks vs Ireland test match (worth $600) for top brass, and even chucked the Deputy Chief of Army a $100 rugby ticket as a sweetener. It seems no rank was too high or low to escape KPMG’s hospitality – Newsroom’s Jonathan Milne reported that KPMG had “as usual, [given] rugby tickets to any senior officer who would accept them”.

• Beca and EY (major defence contractors/consultants) treated NZDF executives to a day on the America’s Cup yachts on Waitematā Harbour. Meanwhile, Boeing took four officers out for lunch and dinner, racking up a $1,420 bill; Dell gifted a Defence manager a $3,900 conference ticket and a separate golf outing; HP donated an $894 VR headset to the Force. Even the brewery Garage Project gave an Air Force squadron leader four cases of craft beer worth $590.

• In one bizarre entry, NZDF’s “fleet sports officer” received expensive TomTom smartwatches (worth $1,100) – and claimed the donor was unknown. An anonymous benefactor gifting high-end tech to military staff? If that doesn’t scream red flag, what does?

The pattern is clear: Defence suppliers have been grooming their government customers with concert tickets and trinkets. This isn’t just “how business is done” – it’s how corruption starts. Maybe it’s not a briefcase of cash slid across a table, but a fancy dinner here, a corporate box there, and pretty soon you’ve got an “old boys’ network” of mutual back scratching.

It creates an environment where officials might start seeing their vendor “friends” in a fonder light when contract decisions are on the line. That’s exactly why the public sector has strict rules on gifts and hospitality – rules the NZDF has paid only lip service to.

“Building relationships” or corrupting them?

NZDF’s top brass have defended the practice, insisting there was “no evidence… of inappropriate influence” on any contract decisions. They claim these supplier engagements are vital for maintaining “constructive working relationships with commercial suppliers… particularly in the context of future procurement”. In other words, we need to play nice with the arms dealers so we can buy nice arms.

Let’s unpack that: The Defence Force is essentially saying military procurement is a schmooze-fest by necessity. Yes, defence procurement often involves close interaction with industry, but close interaction does not have to mean accepting personal freebies. Professional relationships can be maintained without personalised gift packages and VIP tickets.

The Auditor-General flatly rejects NZDF’s blithe justification, noting it’s difficult to reconcile the risks of these gifts with any legitimate purpose. He stressed that while there might be “limited circumstances” where accepting a token gift in a cultural or international context is appropriate, “it is unlikely… to be necessary for staff in a public organisation to accept a gift or hospitality from a commercial supplier in order to build a successful business relationship”. If an event is that important to attend, the Auditor-General adds, the public organisation should pay for it itself.

The core issue is one of culture and accountability. NZDF had policies on gifts – in fact, they’ve had a policy since 2004, updated in 2023. They maintain a gift register and even report to Parliament’s Defence Select Committee each year with a list of gifts received. But clearly, rules on paper didn’t translate into ethical practice.

The Auditor-General diplomatically wrote that NZDF “has not paid sufficient attention” to these risks. Translation: the NZDF’s leadership either didn’t care enough to enforce a higher standard, or worse, they condoned this cosy culture as the way things get done.

It speaks volumes that an external watchdog had to step in and say, “enough.” Where was the Ministry of Defence oversight? Where was the State Services/Public Service Commission ensuring that defence, like other agencies, followed the spirit of public service ethics? (Of course, the Defence Force sits somewhat outside the core public service constraints – a gap that now looks like a gaping hole.)

And what about Parliament’s role? Those annual gift lists were apparently tabled in plain sight on a website – yet it seems no MP or official sounded the alarm until now. Democratic oversight was asleep at the wheel.

In theory, the government has clear guidance for agency heads on gifts and hospitality. So, perhaps it’s time for a scan across all public agencies to ensure compliance. And while NZDF might not fall directly under the Public Service Commissioner’s remit, it should still have strong rules in line with other government agencies. Ultimately, it’s on the Chief of Defence Force to lay down the law from the top. In other words, leadership and tone matter: if NZDF’s top brass had zero-tolerance for this stuff, the troops would fall in line. Instead, the tone seems to have been permissive.

The good news (such as it is): once media scrutiny began and the Auditor-General came knocking, NZDF did make some belated improvements. They launched a new gifts policy in late 2023, tightened some procedures, and claims to have cut down on the more egregious hospitality (indeed the OAG found acceptances dropped post-2023).

But even after the new rules, in just a matter of months NZDF still clocked up 390 accepted offers – worth another $40,000 – including plenty of dinners, coffees, and yes, more sports tickets and corporate box invites. 77% of those recent gifts were still justified as “building business relationships”.

The Transparency International contradiction

Perhaps the most damaging aspect of this scandal is how it exposes the failure of New Zealand's integrity monitoring systems. Transparency International's “Government Defence Integrity Index” gave New Zealand the highest “A” rating across every risk area in 2015, including procurement, with the assessment by the local chapter of Transparency International noting “strong ethics culture of the NZ Defence Force” and praising the “strong financial compliance and corruption mitigation policies for contracting”.

In 2021, New Zealand again topped the defence rankings with a score of 85, with Transparency International declaring that “New Zealand's extremely robust defence governance standards help to minimise corruption risk throughout the sector”. Air Marshal Kevin Short, who later moved directly from Chief of Defence Force to Managing Director at Lockheed Martin New Zealand, boasted that the results showed “the integrity and transparency that exists within the New Zealand defence and security sector.”

Yet the Auditor-General's investigation covers the period from 2016 to 2025—precisely the timeframe when Transparency International was giving NZDF clean bills of health. Most of the gifts (84%) were accepted in the period before November 2023, when NZDF finally introduced a new policy, meaning the bulk of this activity occurred while Transparency International was praising NZDF's integrity systems.

This raises serious questions about the methodology and effectiveness of international integrity assessments. How could such systematic acceptance of gifts from suppliers occur in an organisation rated as the world's least corrupt? The answer appears to be that the assessments focused on formal policies and structures rather than actual practices and culture.

Julie Haggie from Transparency International New Zealand now acknowledges that “certainly the core public service is a complete no to gifts these days” and expresses surprise that “agencies that may sit slightly to the side like the defence force think that it's still okay to be receiving gifts”. But this belated recognition only highlights how the integrity community failed to detect problems that were hiding in plain sight. This discrepancy highlights the need for Transparency International to reassess NZDF’s practices in light of these new revelations

NZDF's defensive response and lack of cooperation

The NZDF's response to both the investigation and subsequent media scrutiny reveals an organisation still in denial about the seriousness of the issues raised. The Auditor-General specifically noted that his inquiry “has taken us longer to complete than we anticipated” because “relevant information was not made available to us until April of this year when NZDF provided its comments on our initial draft report”.

This delayed disclosure forced additional work and engagement that “could have been avoided had all relevant information been made available to us earlier in our work.” Such obstructive behaviour during an official investigation suggests an organisation more concerned with managing public relations than addressing integrity risks.

When media outlets sought clarification about specific gifts, NZDF refused to answer questions about why staff had accepted smart watches and fishing charters, and how they came to be offered those gifts. Instead, a spokesperson provided only a general statement.

The NZDF's public statements consistently emphasize that “No evidence was found of inappropriate influence of NZDF officials or decisions in relation to commercial contracts”. But this misses the point entirely. The Auditor-General explicitly noted that his investigation did not examine whether there was direct influence — the problem is the appearance of influence and the systematic undermining of public confidence in procurement decisions.

The Defence spending connection

This integrity scandal couldn’t have come at a more pivotal moment. New Zealand is in the midst of a defence spending bonanza, the likes of which we haven’t seen since the ANZAC frigates in the 1990s.

The new coalition government in Wellington has unveiled a Defence Capability Plan 2025 that will pour $12 billion of investment over the next four years into the NZDF. That includes $9 billion in brand new money, shooting to lift defence expenditure from barely 1% of GDP to above 2% of GDP within 8 years. So, New Zealand is effectively doubling its military spend to hit a target traditionally pushed by Washington and Nato.

Where is this money going? The wish-list is long and pricey: new missile systems, drone fleets, replacement naval helicopters and transport aircraft, high-tech surveillance kit, upgraded Army vehicles and weapons, even space capabilities. In short, a top-to-bottom modernisation to create a “modern, combat-capable NZDF” as the Defence Minister put it.

To justify this splurge, officials cite an “increasingly threatening strategic environment” – code for China’s rise and global instability – and the need for greater self-reliance and alliance capability in case things heat up in the Asia-Pacific region.

Reasonable people can debate the strategic merits of this military upgrade. But what’s not debatable is that big money attracts big interest – and big risks. With a $12 billion kitty on the table, arms companies from around the world are salivating at the prospect of New Zealand contracts. Those very “critical suppliers” who have been lavishing gifts on NZDF officers – the Lockheed Martins, Babcocks, Airbuses, Boeings, Thales and others – are lining up for multi-hundred-million dollar deals. If ever there was a time to worry about the military-industrial complex infiltrating our decision-making, it’s now.

Consider this: The NZDF itself identified its “key strategic partners” in industry, naming many of these foreign defence giants. We know these firms maintain swarms of lobbyists and sales reps whose job is to charm, cajole and convince officials to buy their products. The Auditor-General’s report reveals those efforts in action – from Lockheed hosting NZ officers at dinners to Babcock treating staff on multiple occasions. This is the defence industry lobbying machine working exactly as intended. And unless we impose stricter boundaries, that machine will shift into overdrive as the new money flows.

Public scrutiny, unfortunately, has been minimal. Outside of defence circles, how many Kiwis even know their government just committed to spending an extra $12 billion on the military? There’s been little robust public debate about why we suddenly need to double defence spending (beyond vague references to “geopolitical risk”). The coalition government announced the plan as a fait accompli, and aside from a few media stories, it largely slid under the radar. After all, bread-and-butter issues like the cost of living dominate headlines, not frigate upgrades or anti-ship missiles.

The lack of debate is troubling because it suggests a democratic deficit on a hugely consequential decision. We’re talking about shifting billions of dollars of national wealth into defence – money that won’t go to health, education, or housing. One commentator wryly observed, “It’s amazing that we can’t feed our kids anything more than corporate slop but we can snap our fingers and find billions for war.” The trade-offs are real, yet there’s been scant opportunity for the public to weigh in on whether they agree with this prioritisation.

Even within Parliament, scrutiny has been less than fierce. The Opposition (such as it is) has been relatively quiet – perhaps because the previous Labour government also acknowledged the need for more defence spending (albeit framed in softer terms like disaster relief and climate response).

The Greens have been a lonely voice of scepticism; their defence spokesperson Teanau Tuiono called the gift revelations “alarming” and openly “worry[ing] about the impact on our independent foreign policy” if our military brass are effectively on the corporate take. Tuiono put it bluntly: “I hope [officers aren’t] selling out [NZ’s] foreign policy for a few rugby tickets… But how much does that actually influence the way they procure things?”. That’s exactly the uncomfortable question the public should be asking.

This militarisation has been driven by an effective lobbying campaign from industry groups and consultants who stand to profit massively from increased procurement. Phil O'Reilly, managing director of Iron Duke Partners lobbying firm, has actively promoted the defence budget as “a big opportunity to effectively involve New Zealand industry and build our own private-sector defence industry capability”.

The NZDF's cosy relationship with suppliers revealed in the gift scandal takes on new significance in this context. Key suppliers who provided gifts include many of the same companies that will benefit from increased spending.

The New Zealand Defence Industry Association (NZDIA) has become increasingly embedded in government decision-making, with Cabinet Ministers regularly appearing at their events and officials holding unprecedented “workshops” with industry before even releasing the Defence Capability Plan. The pattern of systematic cultivation through gifts and hospitality appears to be part of a broader capture of the defence establishment by commercial interests.

Most concerning is the revolving door between NZDF leadership and industry. Air Marshal Kevin Short went directly from Chief of Defence Force to Managing Director at Lockheed Martin New Zealand, while his predecessor at Lockheed was another former Air Vice-Marshal, Graham Lintott. These are the same individuals who would have overseen the gift policies while in uniform, then immediately moved to companies that had been providing gifts to their former colleagues.

At its core, the NZDF gift scandal and the wider defence spending spree pose a question about what values we want our military and government to uphold. Transparency, honesty, and serving the public interest should rank high on that list. Unfortunately, the NZDF’s behaviour has underscored a serious ethical deficit. And the government’s headlong rush into big defence contracts, with minimal public oversight, risks compounding the problem by entrenching a military-industrial elite operating with impunity.

Dr Bryce Edwards

Director of The Integrity Institute

Further reading:

Auditor General: Letter to New Zealand Defence Force: Managing gifts and hospitality

Jonathan Milne (Newsroom): Military suppliers respond to Defence Force gifts probe

Glenn McConnell (Stuff): Defence Force staff accepted smart watches and fishing charters from suppliers

RNZ: NZDF receives hundreds of gifts from commercial suppliers

RNZ: Defence Force staff accepted gifts from commercial suppliers

RNZ: Why taxpayer-funded organisations should be wary of gifts

1News: NZDF accepted nearly half-million in gifts, probe finds