Reporting financial mismanagement and contact with foreign officials: a PERSEC case study

This case study looks at the possible consequences of not reporting financial mismanagement to the NZSIS at the time of the incident. 

Other themes include:

• reporting misuse of a credit card
• reporting contact with foreign government officials while overseas.

Scenario – what happened

Teina is a 38-year-old, single woman with a background in government sector administration roles.

Recently, through hard work and a flair for accounting, she has become an assistant accountant in the travel services area of a government department, holding a TOP SECRET (TS) security clearance. 

Last year Teina used her work credit card to cover some personal expenses. However, she noted her mistake to managers and promptly paid the money back. 

Teina received a warning but the incident was taken off her formal record at the end of the year because it didn’t happen again. 

Recently, Teina successfully applied for an offshore posting in the Middle East, taking part in a vetting interview to renew her TS security clearance. 

The interview was unremarkable, neither Teina nor her supervisors, colleagues or referees mentioned the credit card incident and the routine credit checks did not present any further problems.

Teina went ahead with her new posting and has said to friends that she is happy and enjoying herself overseas. 

The NZSIS was asked to interview Teina after receiving a report she had been seen socialising and dining with a known officer from a foreign intelligence service.

Under questioning, Teina admitted using the agency’s work credit card last year hadn’t been a careless mistake after all. 

She explained that she had deliberately used it to cover the petrol costs and grocery bill of a family member. At the time, she didn’t have enough personal funds to cover the bills herself.

She also told the NZSIS vetting officer she was in serious financial difficulties, with unsecured debts of nearly $50,000. 

Teina said she was often called on and felt obliged to cover her family’s bills and, as a result, frequently struggled to juggle her own finances.

In the interview, Teina was shocked to find out the real identity of her new boyfriend and never suspected his intention for a romantic relationship wasn’t genuine or that he was trying to get government information out of her. She admitted that he had bought her expensive gifts and had wined and dined her. But it was a welcome change, given her difficult financial situation.

Lessons learned – what should have happened

Teina and her managers made two wrong decisions in this scenario.

Teina’s managers should have:

Reported Teina’s misuse of a credit card to the agency CSO

Any financial mismanagement by a security clearance holder such as Teina’s misuse of a credit card should have been reported to the agency CSO by Teina’s managers, and then to the NZSIS by Teina’s CSO at the time of the incident. 

Following such an occurrence, a change of circumstance report should be submitted to the NZSIS, and the agency may initiate a ‘review for cause’ to be conducted by the NZSIS. 

In addition, a permanent record should be kept by CSOs recording the history of all breaches and violations. This information should also be provided to the NZSIS at the time of a vetting review or upgrade.

Teina should have:

Reported contact with a foreign official while she was overseas

Security clearance holders must report to their CSO when they have ongoing, suspicious, persistent or unusual contact with foreign officials or nationals whilst overseas. 

In addition, contact with embassy and/or foreign government officials within New Zealand must also be reported. The CSO must also require them to complete a contact reporting form to be assessed by the CSO, which may be sent on to the NZSIS. 

This functions not only to allow the CSO, and the NZSIS, if appropriate, to investigate the intentions of the foreign contact and protect the clearance holder if necessary, but also to ensure that the employee is not falsely implicated in an espionage or subversion attempt. 

Page last modified: 5/08/2019