Audit Office on Hawke’s Bay District Health Board

March 3rd, 2008 at 8:42 am by David Farrar

Donna Chisholm in the SST quotes from an report on the Hawke’s Bay District Health Board. Now I can’t find the report online, but it doesn’t look great for the Government which has effectively sided with and the management, by dismissing the entire Board.

Chisholm states the Audit Office reports finds the following:

  • There was a contract to Wellcare Education, a subsidiary of Hausmann’s company Health Care New Zealand, for a pilot project to train 16 long-term beneficiaries as homecare workers in a partnership with the Ministry of Social Development.
  • A total of 11 failings were found in the process.
  • The $1.1m contract included a $256,000 payment to Wellcare, over two years. Board members say they have never been able to establish the reason for this.
  • Management kept the Board unaware that the contract had been proposed until one month after it had been agreed and signed – despite the fact it involved on of their own board members
  • It is understood Hausmann’s discussions with senior staff about the contract began as early as August 2005, six months before he declared his conflict of interest.
  • The contract processes did not comply with either the board’s procurement policies or public sector good practice and there was no evidence of formal conflict of interest procedures being undertaken.
  • Management could not explain why an open tendering process had not been used.
  • No reasons or justifications for the selection of Hausmann’s company were recorded in files.
  • The contract was signed without evidence of a completed approval process.
  • Payments were made before services under the contract were delivered when they should have been tied to milestones which reflected completed work.

Now bear in mind this is only a report into the $1.1 million contract. We are yet to see the report into the $50 million contract.

UPDATE: Local MP Craig Foss has several relevant blog posts on this issue, citing board minutes and written questions about the fact the contract was not tendered, and how the CEO told the Board initially it had been.

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23 Responses to “Audit Office on Hawke’s Bay District Health Board”

  1. tim barclay (886 comments) says:

    This raises some very serious issues which still lack an explanation. I consider the circumstances surrounding this contract should go to the Serious Fraud Office. It also begs the question why did Annette King appoint this Hausmann person (her husband’s employer) to the Board and who had a blatant conflict of interest and by-passing all the usual procedures. At the very least the Hausmann contract should be voided like the Auckland Hospital one. This screams for an explanation and none is being provided. Simply issuing threats to people who question things only increases the curiosity levels to screaming point. Now the Minister has sacked the Board who were being shut out of the process and questioned things. I have difficulty believing things are as bad as they look.

    [DPF: Her husband did not work for Hausmann at the time she appointed him]

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  2. Linda Reid (415 comments) says:

    we don’t have a sfo anymore. Annette King canned it.

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  3. Frank. (607 comments) says:

    It only strengthens the belief that this is the most corrupt government in our history, supported by a corrupt bureaucracy.

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  4. Inventory2 (10,342 comments) says:

    We won’t see an Audit Office report into the Healthcare New Zealand contracts (Peter Hausmann’s company; Chief Operating Officer Ray Lind, husband of Annette King); because the House was told on 18 July 2007:

    Hawke’s Bay District Health Board—Conflict of Interest
    3. Hon TONY RYALL (National—Bay of Plenty) to the Minister of Health: Why did he say, regarding the conflict of interest allegations at the Hawke’s Bay District Health Board, that “I feel anxious about troubling the Auditor-General over something which is almost nothing.”, and is he confident that the investigation headed by Syd Bradley, who was appointed to chair the Canterbury District Health Board by the Hon Annette King, with whom he reportedly has a “strong relationship”, has the powers to appropriately investigate these matters?

    Let’s hear that again – Hodgson’s words: “I feel anxious about troubling the Auditor-General over something which is almost nothing.”

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  5. Inventory2 (10,342 comments) says:

    Go to Craig Foss’ blog – http://craigfossmp.blogspot.com/ – he catalogues written questions he has asked about Helathcare NZ and Wellcare NZ (both are Hausmann’s companies), and also links to minutes from the HBDHB concerning this sordid affair.

    Also, just heard Clark on the 9am Radio Network news saying she supports Cunliffe’s decision. That’s good – it gives the opposition another target!

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  6. calendar girl (1,242 comments) says:

    Tim – I don’t disagree with with the need for a full enquiry. Something as potentially serious as this may ultimately need a Royal Commission.

    But the preliminary facts also have to be kept meticulously correct at this point. Firstly, King did not appoint her husband’s employer. Her husband joined Hausmann’s company only after this saga within the DHB had travelled some distance.

    Secondly, whether Hausmann had a “blatant conflict of interest” at the time of his appointment to the DHB may be a moot point. What if that conflict became known only after the appointment? I simply can’t tell at this stage.

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  7. Linda Reid (415 comments) says:

    The board resisted Hausmann’s appoint because they could see the obvious potential for a conflict of interest.

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  8. Inventory2 (10,342 comments) says:

    calendar girl – Hausmann’s company was well known as a service provider to District Health Boards – PRIOR TO his appointment by King to the HBDHB. Given that the HBDHB had significant contracts to award in the area in which Hausmann operated, there was an immediate POTENTIAL for conflict of interest. That Hausmann subsequently had e-mail correspondence with senior DHB management over the contracting process WITHOUT THE KNOWLEDGE of the Chair of the DHB and was subsequently awarded contracts suggest a serious abuse of process.

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  9. Right of way is Way of Right (1,122 comments) says:

    There are more and more questions being raised about this issue daily, and it is really starting to develop more than a whiff of corruption. So far we have seen evidence of nepotism, undeclared conflicts of interest, evidence of a rift between the board and management, and a very quick decision initiated by the minister using a course of action that is at odds with the action taken over other health boards that seem to be performing far worse than Hawkes Bay, namely Capital Coast and Waitakere.

    It is also apprant that best practice has not been applied by management, nor has the conflict of interest been managed at all.

    The Board, quite rightly it would appear, has raised the issue. So again, Mr Cunliffe, why has the Board been sacked for doing the job it was elected to do, namely, provide community oversight of Management.

    For a Government trailing badly in the polls, and one who has long espoused the values of transparency and openness, this is a very bad look indeed.

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  10. David Farrar (1,899 comments) says:

    I would caution people about using one c word, when another is more appropriate. I have seen nothing which suggests corruption. I have seen much though which represents conflicts of interests badly managed.

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  11. Tauhei Notts (1,724 comments) says:

    When a Labour Party cabinet minister quotes expenditure that he has authorised, and uses the GST exclusive sums, be very aware. They almost always use GST inclusive except when they are very embarrassed by the amount of the expenditure.

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  12. bwakile (757 comments) says:

    In a socialist world the word “corruption” has no meaning.
    There is only “selected outcomes” for the chosen few.
    “Selected outcomes” is just a flash word for “the transfer of money”.

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  13. GerryandthePM (328 comments) says:

    In her interview with Paul Holmes on NewstalkZB this morning, Clark said, in justifying Cunliffe’s need to sack the Board, “I don’t really care what the rights and wrongs of what was going on within the Board are…”.

    She doesn’t care?

    Like she didn’t care about the rights and wrongs of what Phillip Field was doing when he was a Minister of the Crown?

    Oh dear!

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  14. Bevan (3,924 comments) says:

    In her interview with Paul Holmes on NewstalkZB this morning, Clark said, in justifying Cunliffe’s need to sack the Board, “I don’t really care what the rights and wrongs of what was going on within the Board are…”.

    I heard that too. Shows how much she respects democracy.

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  15. tim barclay (886 comments) says:

    The only justification I have seen so far for the sacking is the Board became dysfunctional because some very serious issues were not being resolved. Though the Minister could have sacked Haustmann, set up a process to resolve the “issues”, suspended the Haustmann contract and give the Board a few months to get its house in order. Instead nothing was done to resolve the issues so the Minister simply sacked them leaving everything about some very serious issues unresolved.

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  16. Inventory2 (10,342 comments) says:

    Gerry – Taito didn’t do wrong – remember? He was only guilty of helping his constitutents!! Well, at least he was until he rained on Helen’s parade when Parliament resumed last year – that was the clincher.

    But you’re right – what Clark is saying is that Cunliffe’s decision is what matters, not whether or not he had any justification at all for making the decision or whether it was the right or wrong decision. That strikes me as a total abbrogation of Prime Ministerial responsibility. I’m guessing that the first question asked by National tomorrow will be John Key to Helen Clark, and will go along the lines of “Does she have confidence in the Minister of Health; if not, why?”

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  17. PhilBest (5,125 comments) says:

    To those people above who caution us from being too strong over this issue (use of C-word, etc.), I would remind you that it would only take ONE scandal of this nature to doom a “National” administration. Remember Tuku’s underpants? I don’t blame Tau Henare for having been out for Mallard’s hide ever since. These bastards deserve no mercy.

    It is really good that Craig Foss is doing the blogging thing so well. This guy bears watching.

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  18. Inventory2 (10,342 comments) says:

    PhilBest said “It is really good that Craig Foss is doing the blogging thing so well. This guy bears watching.”

    Agreed Phil – and in the context of the Baygate fiasco, it is good that he has used his blog to share information. I hope that National let Foss and Tremain get some airtime when Baygate is aired in the House this week,

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  19. cubit (356 comments) says:

    National really need to perform in the house this week over this issue. They must mount an attack that is withering. The local MP’s must be involved and Ryall needs to be at his best. Health is the issue for the year and this particular episode is the first stage of the health campaign.

    King needs to be brought into the affair, Hodgson must be associated with the debacle and Cunliffe must be denied any wriggle room.

    Themuck needs to be dragged out and slung firmly in the direction of the Treasury benches. This shameful debacle must not be allowed to be overtaken by some trivial diversionary foray.

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  20. RRM (9,933 comments) says:

    Yup, all operational problems in hospitals or their boards can be traced back to the corruption of the evil “Liarbore” party. Of course…

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  21. gd (2,286 comments) says:

    as DPF will have noted I posted on this matter last week and without knowing the AG report was due predicted there would be dirty work at the cross roads.

    The fact that the SFOs being disbanded and rolled into the Police is a bad omen that white collar crime is simply not beinmg taken seriously.

    What we need is a combined SFO Audit Office sweep of every DHB looking at their contract and tender process They should shake the trees and see what falls out.

    I volunteer to be on the shaking out squad. Would be like shooting apples in a barrel given what we know so far.

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  22. Right of way is Way of Right (1,122 comments) says:

    David, whilst I agree the use of the c-word, namely corruption, may not be warranted at this stage, any practice involving out elected representatives, and those they appoint, must be demonstrably above board in all respects. A conflict of interest, not managed, but apparently taken advantage of, is by definition corruption. Using influence to obtain a desired outcome not in keeping with the accepted practices is by definition, corruption. You cannot be a little bit corrupt. The value is an absolute, you either are not, or you are!

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  23. kehua (225 comments) says:

    There are any number of `C` words that spring to mind during this debate.

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