MBIE operation targets unlawful practices in construction

A coordinated operation led by the Ministry of Business, Innovation and Employment (MBIE) has visited 147 construction businesses across the North Island as regulators target unlawful activity and non-compliance in the sector

The large-scale operation, known as Operation Rimu, involved site visits to construction companies to check compliance with employment, immigration, company and tenancy laws.

Operation Rimu was led by regulatory teams from MBIE, including the Labour Inspectorate and Immigration Compliance and Investigations, with Tenancy Services and the Companies Office on standby during inspections.

MBIE has a wide-ranging remit, which covers portfolios such as building and construction as well as immigration.

Site visits were carried out at construction businesses in Auckland and across the North Island, including Napier, Morrinsville, Pōkeno, Wellington, Tauranga, New Plymouth and Hamilton, as well as across the Auckland metropolitan area.

‘Whispers in the industry’

Initial findings suggested potential breaches of minimum employment standards, cash wage payments and inadequate record keeping at several companies.

Simon Humphries, Head of the Labour Inspectorate, said several construction company directors acknowledged awareness of unlawful practices within the industry.

“They said there were whispers in the industry, particularly in Auckland residential construction, about instances of businesses being significantly undercut to a degree that raised suspicions about the legitimacy of competing contracts,” he said.

Sector flagged as high-risk

MBIE said the construction sector remains a high-risk area for regulatory non-compliance. In 2025, Employment New Zealand received 516 complaints relating to the construction sector, with 56% coming from the Auckland region.

Humphries said intelligence from regulators and partner agencies suggested organised crime groups were involved.

“Working with our regulatory partners, we know organised crime groups are exploiting weaknesses in the sector to launder money and exploit workers, setting up businesses in ways that undercut those operating legally and tilting the playing field against good, lawful business,” he said.

Police highlight labour hire risks

Detective Superintendent Greg Williams, Director of the National Organised Crime Group at New Zealand Police, said labour hire practices in the construction sector had been identified as a high-risk area for money laundering and worker exploitation.

“Working with MBIE regulators and other partners, we can gain a wider view of unlawful activity, better identify offending trends and weaknesses in the system, and take action much faster,” Williams said.

Williams said agencies were also working with the industry to strengthen processes and reduce the risk of exploitation.

Migrant worker checks

Immigration Compliance and Investigations teams also focused on whether employers were meeting their obligations to migrant workers.

Steve Watson, General Manager Immigration Compliance and Investigations, said the operation included checks on accredited employers and workers’ visa conditions.

“The compliance and investigations teams will deal with unlawful workers and the employers who exploit them by holding them to account,” he said.

Immigration compliance teams may take further action where breaches are identified, including suspending or revoking employer accreditation.

Examples of good practice

Despite these concerns, Simon Humphries said the teams also found examples of robust employment practices that met industry standards, along with positive engagement with education.

Ongoing investigations

Operation Rimu forms part of a broader collaborative effort between MBIE regulators and partner agencies, including New Zealand Police, to address serious criminal activity and regulatory non-compliance within the construction sector.

Earlier stages of the operation included desk-based audits of numerous construction companies carried out by the Labour Inspectorate. Information gathered during that work is now supporting ongoing investigations and compliance activity across multiple agencies.

MBIE said the operation reflected a greater emphasis on integrating teams across its regulatory system and working with partner agencies to respond to harmful behaviour in key sectors.

“The operation reflects MBIE’s increased emphasis on integration, bringing together teams from across its regulatory system and working with partner agencies, to provide a more coordinated response to harmful behaviour in key business sectors and ensuring New Zealand’s markets are fair and lawful.”