Public Service Commissioner Peter Hughes today released the findings of a review into how public service agencies managed conflicts of interest while procuring the services of Ka Awatea Services Ltd (KAS) and Kawai Catalyst Ltd (KC).

The purpose of the review was to determine whether public service agencies had appropriately identified and managed any conflicts of interest in their contractual relationships with KAS and KC.

The review asked all public service agencies to look at whether they had entered into any contracts with KAS, KC, or with any of the directors of those companies since October 2017. Only four agencies were found to have had such contracts: Te Puni Kōkiri, the Ministry for the Environment, Kāinga Ora and the Department of Conservation.

Looking at those four agencies, the review found:

• Te Puni Kōkiri and the Ministry for the Environment failed to properly identify and manage perceived conflicts because they didn’t follow what were otherwise sound agency policies and processes.
• a minor perceived conflict with Kāinga Ora was not identified because the agency failed to ask about conflicts of interest during the contracting process.
• there were no conflicts of interest in relation to Department of Conservation contracts, but its contract management was poor.

Overall, the review found agency procurement and conflict management practices at the four agencies fell short of the standards expected of public service agencies. It also found tighter processes for assessing perceived conflicts of interest are needed in the agencies, including where conflicts involve Ministers, and that procurement practices need to improve, in particular the way those agencies manage contracts under $100,000.

The review found no evidence of favouritism, bias, or undue influence over agency decisions in relation to KAS or KC due to any connection with a Minister. The actions of Ministers, the directors of KAS and KC, and members of the public, were outside the scope of this review. However, the review did not identify any matter that would require referral to another oversight body.

The agencies under review have taken steps to address the specific issues that have been identified. However, the Commissioner will also now issue expanded conflicts of interest model standards to agencies, strengthening the controls around identifying and managing conflicts, and write to all chief executives outlining his expectations in this area. Additional training will also be provided for all public servants who work on contracts.

“Perceptions can erode trust and confidence so the Public Service must have high standards when procuring services on behalf of New Zealanders,” said Mr Hughes.

“Poorly managed perceived conflicts of interest can be just as damaging to public trust and confidence as poorly managed actual conflicts of interest.”

Mr Hughes said the review had shown the agencies involved need to take more care to identify, assess, and manage perceived conflicts. The model standards for managing conflicts of interest would be strengthened.

“How we manage those conflicts matters,” said Mr Hughes.

“It can either build trust in our public srevice or it can erode it, so it is fundamental that we get this right. And that is what we will do.”

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