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www.mccully.co.nz 4 April 2008


www.mccully.co.nz 4 April 2008



A Weekly Report from the Keyboard of Murray McCully

MP for East Coast Bays

Hawkes Bay DHB hits A-G’s Desk

Controller and Auditor-General Kevin Brady returns from an overseas trip next week to be greeted by piles of paper related to the Hawkes Bay District Health Board (DHB) scandal. Several pleas to investigate the affairs of the DHB have been on hold pending the report of the enquiry established by the Director-General of Health. But now the predictable white-wash is in the public arena, the A-G must determine whether to carry out his own investigation.

It should not be a hard call for Mr Brady. Governments initiate internal departmental enquiries when they intend to mount a cover-up. Such was clearly the case here. Foolish departmental chief executives and even more foolish individuals who agree to conduct an “enquiry” allow the Minister to deflect questions in Parliament by claiming that they cannot comment while they await the independent report of the chief executive in which they have full confidence etc etc.

The most spectacularly unsuccessful application of this model in recent times involved the Department of Labour (DOL), which employed the internal enquiry model to shield the Minister of Immigration from questions about an internal email in which officials agreed to “lie in unison.” Unremarkably the internal enquiry declared everybody involved to be completely innocent. It took a subsequent independent investigation by the Ombudsman to expose the whole shabby affair. The officials directly involved lost their jobs. And his foolish involvement in the affair was arguably the beginning of the end for DOL chief executive Dr James Bewildered.


The Hawkes Bay DHB scandal is not dissimilar. Here the Government has been stalling while the Director-General’s (D-G’s) internal enquiry completes its work. But as soon as the DHB directors spotted that the enquiry was a stitch-up and mounted a legal challenge, the Minister fired the board. In comes new DHB Commissioner Sir John Anderson who very very conveniently withdraws the legal challenge. Game over. All very tidy. Except, of course, that the matter still lies on the desk of the Auditor-General.

The problem for the Auditor-General is that, even if he regarded the internal enquiry process as robust (which would be a very big call when there is plenty of evidence to the contrary) there remains a very large, totally inescapable problem: the D-G’s enquiry did not examine the actions of the DHB management – the very public officials about whose actions the A-G is obliged to be most concerned. (The report says: “The Panel has not reviewed management’s conduct and performance as that is not the focus of this review. In particular the Panel has not conducted a detailed review of management’s conduct of the HBDHB’s procurement processes”.)

It worked like this: As more and more murk emerged around the DHB’s contracting arrangements, the Minister simply stated that he would widen his internal enquiry so that it could examine “any other matter arising in the cause of this investigation that ought to be considered.” This would, the Minister claimed, see any new allegations properly looked into. But remarkably (and very stupidly) they weren’t. The enquiry team specifically avoided examining the actions of the DHB managers. Which made the report a complete farce.

Remember, the serious allegations revolved around the lack of transparency and fairness in relation to a large contract. That contract was being negotiated between the DHB executives and the management of a large health contractor (whose chief executive, for reasons that still have not been explained, the Minister astoundingly decided to appoint to the DHB board).

The enquiry report outlines in detail the actions of the DHB board in preparing to deal with conflicts of interest. It finds that the contractor received copies of the contract documents months before other tenderers. It finds that the contractor proposed changes to the terms of the contract that could only advantage its bid. It finds that the contract was duly altered to advantage that contractor. And, almost unbelievably, it finds that the contractor actually helped draft the papers that went to the DHB board about the contract. But it makes no finding about the role of the DHB managers in relation to the above.

So who did the enquiry team think gave the advance copies of the tender documents to the contractor in the first place? The Tooth Fairy? Who did they imagine made the changes to the tender documents that the contractor had proposed? The Easter Bunny? And who did they imagine allowed the contractor to help draft the board papers in relation to the contract? Santa Claus?

And that, ladies and gentlemen, is the problem for the Auditor-General. The A-G has previously conducted a number of enquiries into contracting in the health sector – one or two of them at the request of the humble Member for East Coast Bays. His increasingly strident warnings to the sector seem to have been ignored.

Now he is being presented with an internal white-wash in which the review team sought to oblige the Minister by surgically removing any consideration of the actions of the DHB officials – the very people who get to handle the actual cash in the health system. It’s like writing an analysis of World War II but forgetting to mention the Germans. At the end of the day the A-G has a reputation to protect. And the worldwide headquarters of mccully.co is betting that Mr Brady will do just that.

Our Very Lucky Government

The Clark Labour Government has got to be the luckiest government on Earth. No, we're not talking about the fact that they inherited an economy that was booming, and which has kept booming until precisely the time they look likely to lose office. We're talking about the incredible luck they seem to have with the authorities: Police decisions to exercise discretions not to prosecute Prime Ministers; Solicitor's-General capable of exercising discretions of a most helpful nature to the Clark Government; Police decisions not to prosecute the Prime Minister’s chief of staff; and the Labour Party for exceeding their campaign budget on the taxpayer-funded pledge card. And now an Electoral Commission decision not to refer to the Police a blatant breach of Labour's new Electoral Finance Act by none other than the Labour Party themselves.

In the first test of the new legislation the Electoral Commission has ruled that Labour has breached the Act with a substantial taxpayer-funded booklet entitled "We're Making a Difference." You see, the Labour Party thought they had been really really clever. Having legalised the use of taxpayers’ money for pledge card style advertising, at the same time as putting the clamps on other political parties’ expenditure of their own cash, Clark's flunkies imagined they would be in the clear with the new booklet. But because Mark Burton and Annette King had no understanding of the legislation they were drafting it is now possible for a taxpayer-funded booklet to also be an election advertisement. And the Commission has had to rule that it is clearly election advertising. Because Labour's new law catches all such material in the whole of Election Year, it should have carried the authorisation by a party official required by the Act.

Despite the fact that this is an open and shut case, the Commission has decided not to refer it to the Police because it was "inconsequential." By the assessment of the assembled experts at the worldwide headquarters of mccully.co, the publication must have cost between $300,000 and $500,000. So if monetary criteria are at the core of the Commission's decision, then everything that is published for this year’s election will be "inconsequential".

Or perhaps it is “inconsequential” because it is the first breach referred to them. Which will obviously lead to some poor unfortunate soul breaching the Act with a $100 poster yet finding that this breach is not "inconsequential." How very very fortunate for the Labour Party. And how very unfortunate for somebody else.

So the Electoral Commission has now made a very large rod for its own back. By letting the very people who passed the new law off the hook over a full frontal breach involving a very large amount of taxpayers’ money, the Commission has called its credibility and independence into question. While, of course, preserving the very lucky record that our very lucky Government continues to have with the nation’s authorities in their various guises.

But Not Totally Clear

The Labour Party might have been let off the hook by the Electoral Commission, but they are not out of the woods yet. Having passed new laws to restrict election advertising expenditure for the whole of Election Year, Clark and her flunkies are now having sleepless nights about the "We're Making a Difference" brochure being lumped into their Election Year budget - something they thought they had avoided.

The consequences are fairly significant. Labour's expenditure cap under the new Act is around $2.4 million. And the booklet printed at taxpayers’ expense must have cost around 20% of that. Which will severely restrict the other advertising initiatives they will be able to undertake as a result of their new laws. Unless of course they plan to get Parliament to change the rules to accommodate them. Or the authorities to exercise another discretion in their favour. Anything, it appears, is possible.

ENDS

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