Media statement
8 February 2013

Auditor-General will not inquire into purchases of rolling stock by KiwiRail

The request
In August 2012, the Auditor-General received a request from Clare Curran MP to inquire into four purchases of railway rolling stock by KiwiRail in recent years. In all four cases, rolling stock was purchased from China Northern Locomotive and Rolling Stock Industry Corporation (CNR). Correspondence from Ms Curran in November and December 2012 raised further concerns about the value for money of these purchases and the effect of the purchases on the future of KiwiRail’s workshops in Hillside, Dunedin.

Our assessment
To assess whether the questions raised by Ms Curran warranted a full inquiry, we met with some relevant staff and obtained background information from KiwiRail on each purchase. The work involved in large purchases of this kind can extend over several years; we have therefore reviewed a substantial amount of documentation dating back to 2005. Because of the passage of time and the change in ownership of the company in 2008, we were careful to then take the time to locate and access the relevant records and people at KiwiRail who had been involved. Given the highly technical nature of the purchasing process, we used specialist assistance to complete our assessment.

Conclusion
We have carried out enough preliminary work to be satisfied that there is nothing to suggest that decisions to purchase locomotives and wagons from CNR were made for anything other than normal business and commercial reasons. The processes followed by KiwiRail appear reasonable, the relevant evaluations have been carried out properly, and we have seen no evidence to suggest improper influence over these decisions.
We have therefore concluded that further investigation, in the form of a full inquiry, is not warranted. Please see our website for further details:

http://www.oag.govt.nz/media/2013/kiwi-rail

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