King on Hausmann

 There is a very useful article in the Dom Post with commenting on her appointment of to the Hawke’s Bay District Health Board:

Former health minister Annette King is standing by her decision to appoint Peter Hausmann to Hawke’s Bay District Health Board, and says she was not advised against doing so.

That is a peculiar thing to say when it is later reported:

Former board chairman Kevin Atkinson, who was sacked with the rest of the board last week, told The Dominion Post he advised Ms King on two occasions – in person and over the phone – to delay the appointment of Mr Hausmann till the tender process was completed.

and

An internal ministry e-mail from a senior analyst to the ministry’s DHB governance manager, Bruce Anderson, dated August 28, 2005, and obtained under the Official Information Act, identifies the ministry’s concerns.

The ministry advised that Mr Hausmann’s position on the board, even if he did not take part in discussions about the contract, would not address the public’s perception of fairness and might deter other companies from bidding for the tender.

King goes on to say:

Ms King said Mr Hausmann was appointed with the expectation that his conflicts of interests would be managed.

“Most potential board members do have potential ,” she said.

“That is not the issue. It is how they are managed and the disclosure of them.

“If handled at a governance level appropriately, these are not a problem.”

The issue of conflicts of interests is a vital one for DHBs. If they do not manage them well, then you can end up with what happened in Auckland with a massive laboratory testing contract cancelled by the High Court. So this is not a minor issue.

But Annette misses the major point. Yes many DHB members have conflicts of interests – but these are generally the result of DHB elections. Voters tend to vote for anyone with Dr in front of their name. The whole point of the Ministerial appointees is to balance the Board up with people not conflicted. And sure some Ministerial appointees may have minor conflicts but this was the largest possible conflict one could have – heading up a company which would tender for a $50 million contract.

Managing such a conflict is always going to be very very tough, even if everyone behaved perfectly (and there seems to be some evidence they did not). You see it is not just about having the DHB select the best company for the contract, but being able to manage that contract afterwards. If the contractor doesn’t perform as well as expected, it is a awful situation to manage if the contractor’s CEO sits on your own board.

I don’t subscribe any evil ulterior motives to Annette King in her appointment of Hausmann. I just can’t understand why she would have done it. The Board Chair was advising against it (and it is very very rare to appoint a Director against the wishes of a Chair), the Ministry of Health raised issues about it, and she knew he was going to be tendering for a major contract. Why create all these problems which could have been avoided by simply not appointing Hausmann or appointing him to another DHB where he wouldn’t have been conflicted?

Let me put it another way. If Annette King had not insisted on appointing Hausmann, does anyone think the DHB would have ended up sacked as has now happened?

This is not to say Hausmann himself is to blame (I do await the reports with interest though), for he was placed in a position by King where fallout like this was almost inevitable.

UPDATE: Tony Ryall has read in the House from some explosive e-mails, and has also alleged they were not given to the inquiry but recovered by forensic experts in London. I’ll blog the Hansard when it is available.

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