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Report into Conflicts of Interest at HBDHB


Report into Conflicts of Interest at Hawke's Bay DHB
17 March 2008

The review into the management of conflict of interest at Hawke's Bay District Health Board (HBDHB) has found the Board failed the most simple test of good governance.

Director-General of Health Stephen McKernan says the review found that if the Board and the Chair had applied common sense and good practice, the matters at the heart of the review would have been managed before they became issues.

The review was commissioned in July 2007 following concerns about the way conflicts of interest were managed in two commercial initiatives involving the HBDHB and a board member.

"The report shows that in relation to Mr Peter Hausmann, neither the Board, the Chair nor Mr Hausmann managed his conflicts well," says Mr McKernan.

"Board members can do business with a DHB - what is important is that the appropriate measures are taken to declare adequately and manage the conflicts of interest - that was not done. The Board had very weak systems and processes for determining how conflicts of interest should be managed.

"The Review Panel found a culture of mistrust and dysfunction between the board and senior management and that this is a significant roadblock to good performance."

The Review Panel has also recommended a series of measures to bring HBDHB up to a level of governance expected of public bodies. "The need for such basic measures speaks volumes."

For a copy of the report go to:



Report into Conflicts of Interest at Hawke's Bay DHB
Questions & Answers

How would you summarise the findings of the Review?
The Panel found the Board's handling of conflicts of interest in general could not pass even the lower threshold of good practice. There were inadequate processes and procedures, no adequate training and no Board Governance Manual to guide new members. Had the Board applied good practice and common sense to the matters at the heart of the review, they could have been managed and resolved before they became issues.

The Panel measured the Board's actions using a test of good practice. Why didn't you use the tougher test of best practice?
This wasn't a court case and the Panel was not dealing with strict laws of evidence - the test was a lot easier and that was: did they follow good practice? In the view of a very experienced panel that reviewed a lot of information and heard many submissions from those involved, the answer is that the Board failed to meet a much lower test of its performance.

Was the appointment of a Commissioner warranted?
The review panel had very specific terms of reference relating to particular events - the Minister's view is far broader and we cannot comment on his decision. However, the Panel would have recommended that at the very least, a monitor was needed to help address the issues found if the review had not been overtaken by events.

Was the Ministry of Health involved in the production of the report?
No. The Review was commissioned and funded by the Ministry and legal support and advice was provided by Crown Law. The Ministry which took special measures to maintaining the integrity of the process and contact with the panel was restricted to five senior Ministry people who were responsible for supporting the Panel and responding to their requests.
As a party to the report, the Ministry was entitled to see drafts and make submissions. The drafts were seen only by the people involved and the Ministry made no submissions to the review. The first time anyone else saw the final report was Saturday morning (15 March).

What does this say about the relationship between the Board and the DHB's senior management team?
It confirms what most observers would have picked up - the relationship was dysfunctional and it affected the management of the conflicts that existed. The Panel also noted a consistent theme in the Board's submissions of it blaming management and accepting little responsibility itself.

What are the key lessons from the Review?
The fundamental question about governance, the issues identified, and the remedies suggested speak for themselves and show the Ministry of Health was right to commission this work. In addition, there are some good reminders for all Boards - governance is a mix of many factors - technical, ethical and public perception - all need to be managed and all need to be worked at.


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