Ministerial conflicts of interest

June 9th, 2015 at 10:00 am by David Farrar

An interesting OIA release from the Cabinet Office on conflicts of interests in the last 18 months. The numbers are:

  • Cabinet Office informed of a conflict – 149
  • PM formally advised of a conflict – 140
  • A Minister has declared an interest – 38
  • A Minister has had papers withheld due to conflict of interest – 30
  • A Minister has transferred responsibility – 30

It’s good to see this information coming out, albeit reluctantly. It seems to show that Ministers are regularly working with the Cabinet Office to notify them of potential conflicts, and have them managed.

Hat Tip: No Right Turn

Why standing down a Minister for their brother is absolutely wrong

May 8th, 2015 at 7:00 am by David Farrar

The ODT reports:

Prime Minister John Key has rejected calls by Labour to stand down a minister whose brother is facing indecency charges.

Mr Key said the minister informed him on April 1 about the charges and offered to stand down.

The Prime Minister sought advice from the Cabinet Office as to whether a conflict of interest existed.

He said “further, deeper advice” was sought by the Cabinet Office and that advice confirmed there was no conflict of interest.

He would not say where the further advice came from but it could have been from the Solicitor General, a QC, an academic or another specialist in such matters. “I am quite confident the position is correctly assessed and thorough,” Mr Key said. …

Labour leader Andrew Little said if the public thought there was a conflict of interest, then the Prime Minister should act accordingly.

“If a family member is embroiled in an issue which may be seen by the public as conflict of interest, the Prime Minister must take every action required as soon as possible.”

Once again Andrew Little is wrong, and it is very disappointing he uses the fact a sibling of a politician has been charged as a way to score political points.

Most people accept you should not stand down a Minister because a family member has done something wrong. Would you argue John Tamihere should not have been a Minister because his brother was in jail for murder? No.

Now a few have argued that it is different if the Minister holds a portfolio in the justice sector, such as Justice, Police, Corrections etc. Again, they are wrong. They are not wrong that it may create a conflict that needs managing, but they are absolutely wrong that the way you manage that is by the Minister standing down.

Let’s say the person charged is the brother of the Minister of Justice. Should they stand down because their brother has been charged? Well if you stand down the Minister of Justice because their brother has been prosecuted, then you’re saying that they may have been able to interfere in the case if they had not stood down.

Now that is wrong. The Police and Crown Law have statutory independence in their functions (apart from a few small areas where the Attorney-General plays a role). No Minister can interfere in decisions around police investigations, charges, bail, prosecutions, trials, convictions, sentencing, or parole.

The proof of an independent justice system is when (as has happened here) the Police can and do investigate the sibling of a cabinet minister, and do decide to prosecute them and charge them. The fact this happens while the Minister remains in office is a strength, not a weakness.

If a minister who holds a portfolio in the justice sector has a family member charged with an offence, the only thing that needs to be done is to make sure that the Minister is not briefed or in the loop in any way on the prosecution. As Ministers are not briefed on such things anyway, that should not be difficult.

Let’s hold Ministers responsible for what they do. Not for what family members may do.

Much ado about nothing

February 12th, 2013 at 1:14 pm by David Farrar

Hamish Rutherford reports at Stuff:

Maurice Williamson is under pressure to stand down as Building and Construction Minister, because of his role as a director of a company associated with collapsed construction group Mainzeal.

Associated with! Sounds bad. Did Maurice make Mainzeal collapse? No the company is what is known as a supplier!

The National MP for Pakuranga is a director on Holyoake Industries, an air conditioning specialist which had worked on a number of projects with Mainzeal, which collapsed into receivership last week.

Yes. Companies work together on building sites. Plumbers and electricians work together. Architects and builders. Still yet to see what the issue is.

Labour Party deputy leader Grant Robertson said it was inappropriate for Williamson to hold the building portfolio while he was potentially making decisions concerning Mainzeal.

”He [Williamson] is the director of a company which has had a long and deep relationship with Mainzeal,” with projects the two companies had worked together on including the Supreme Court,” Robertson said.

”Our concern is that if he is making decisions about the future of Mainzeal, that may well have an effect on Holyoake industries.”

This is really desperate stuff. The Minister is not making decisions on the future of Mainzeal. The receivership is a matter for directors, shareholders and staff.

Labour and Green MPs have generally never worked in business. This allows them to claim any MP with any business interest is somehow conflicted. In their ideal world I guess no MP would have any business background.

Let us look at this issue. Grant Robertson is saying that it is possible that Maurice Williamson may make a decision on Mainzeal and that this theoretical decision could possibly have an effect on Holyoake and hence the Minister must resign his portfolio.

Are you serious?

In a statement Williamson said he had instructed officials that he would ”not receive papers on and would withdraw from discussions about heating and ventilation” because of his association with Holyoake Industries.

”I will continue to deal with issues related to Mainzeal, where that does not conflict with my declared personal interest.”

As is appropriate. But to claim that he can’t deal with any issue re Mainzeal because he is involved with a company that has done some work with Mainzeal is just ridiculous. It’s like saying if you are involved in a trucking business you can’t deal with any issues around supermarkets because they get their food delivered by truck.

A spokesman for prime minister John Key declined to comment other than to say it was ”not a story”.

Or shouldn’t be.

I would make the general point that I do think it is best for Ministers not to have outside directorships – for a number of reasons. But if you have them, you declare them and recuse yourself on issues affecting them – as Maurice has done. Calling for his resignation on the basis of he may make a decision on Mainzeal that may affect Holyoake is just silly politics.

UPDATE: This has just fizzled even more. PM has confirmed in the House that Holyoake is not a contractor or sub-contractor to Mainzeal. Basically they once worked on a couple of building sites together!

Pathetic claims over a second cousin

October 10th, 2012 at 11:55 am by David Farrar

I’m sorry, but how is this even news? Stuff reports:

A new Christchurch school, which will be run by a relative of Education Minister Hekia Parata, is waiting on government approval.

The school, Te Pa O Rakaihautu, was endorsed by the ministry just weeks before work began on the overhaul of the city’s education in October last year.

It is understood the final application is lodged and awaiting approval. Te Pa is chaired by Parata’s second cousin, Rangimarie Parata Takurua, sparking accusations from Labour of a conflict of interest.

I know it is the opposition’s job to try and invent scandals, but this one is pathetic.

A second cousin?

Can anyone out there tell me they seriously think a second cousin is a conflict? How about third or fourth? I’m not sure even a first cousin would be. Hell, I haven’t even met all my second cousins.

It will be a character school, which is similar to a charter school. Both are state-funded and have the power to develop their own way of teaching.

Te Pa was endorsed in September last year by former education minister Anne Tolley before Parata took over the education portfolio after the November general election.

So what is the issue, and why is this even worth the space?

Labour associate education spokesman Chris Hipkins said there was a clear conflict of interest that should have been revealed.

He said the ministry was working to “clear the decks” for privately run schools.

This is a public school! The Labour paranoia against the private sector is infectious.


Fisking Trevor

April 6th, 2010 at 11:24 am by David Farrar

Trevor at Red Alert says:

The case in point, if the facts as alleged by Norman are accurate, is a pretty clear cut one. David Carter as a farmer in Canterbury has a case currently before Ecan to increase his water rights and therefore the value of his land. He takes part in the Cabinet debate and decision to scrap Ecan and short circuit the system for the decision relating to his farm. About as obvious a conflict as one could get and certainly well over the perceived conflict test.

Now I know Trevor doesn’t let the facts get in his way, but this one is particularly untrue. The facts:

  1. David Carter has no case or application before ECAN to increase his water rights and indeed never has. Total fiction. This is a matter of public record.
  2. The consent to take water from the Hurunui River for his Cat Hill farm is an existing historical one that was transferred into Carter’s name when he bought the property 4 years ago. It has not changed since then.
  3. The Cat Hill property will not be affected either negatively or positively if the Hurunui Water Project proceeds as the farm due to its topography and the fact that it is outside of the catchment zone cannot and would not be irrigated further.
  4. Trevor’s claim that there is a conflict of interest that needed to be declared is utter bullshit. He knows this himself as he has said “If the facts are accurate” which are weasel words for when you know they are not.

Canterbury Regional Council Conflicts of Interest

December 22nd, 2009 at 1:00 pm by David Farrar

Th Auditor-General has just ruled that four members of the Canterbury regional Council illegally voted on a resolution that affected them financially (more than normal members of the public).

The report is very interesting for those who deal with conflicts of interests, and doesn’t reflect well on the Councillors. They are somewhat lucky that the AG decided not to prosecute on this occasion.

Hansard Quotes

March 5th, 2008 at 9:11 am by David Farrar

Some quotes from Hansard relating to yesterday’s question time in the House:

Hon Tony Ryall: Is the Minister aware of the email that shows that chief executive Chris Clarke instructed staff to send draft tender documents to Mr Hausmann—who had indicated he would be a bidder—some weeks before the tender process opened, and before any other bidder saw the documents; and is this acceptable behaviour?

Surely this is a joke. No CEO would have draft tender documents sent weeks early to a potential bidder, and even more so if they are on your Board.

Hon Tony Ryall: Is he aware of this email that shows that Mr Hausmann, appointed by the Labour Government, having received this confidential draft tender document, proposed changes that would benefit his company, and is that what he would expect of someone being appointed to the board of that very district health board?

If I got inside information on a government tender, I wouldn’t suggest changes to it. I’d delete it unread.

Hon Tony Ryall: Is he aware from this email that the chief executive agreed to alter the tender documents in precisely the terms proposed by Mr Hausmann, at a time when no other bidder had such access, and is that a proper and ethical process?

Now Tony must be kidding again. Surely no CEO would actually let the party planning to put in a bid for the tender, rewrite the tender document to better suit them.

Hon Tony Ryall: Is he aware that the final document that went out to all tenderers incorporated the changes proposed by Mr Hausmann, whose company was the eventual successful party, and does he think that all potential bidders were fairly treated equally in this process?

Maybe he isn’t kidding.

Hon Tony Ryall: I seek leave to table the emails and documents mentioned in my questions.

Leave granted.

Well if the e-mails have been tabled, I guess we can judge for ourselves if Tony was just making this up or these e-mails do actually show what is claimed.

But wait that isn’t all. In the next question, we learn that these harmless e-mails (move on move on nothing to see here – read the official report when we are happy with it) may not quite have been voluntarily handed over the the inquiry team:

Hon Tony Ryall: Is the Minister aware that the material revealing secret emails between Hausmann and the executive, in which Hausmann changed the tender documents to his advantage, was withheld from the inquiry by both parties and came to light only after independent forensic analysis in London of the back-up tapes; and what does that say about the balance of truth in this inquiry?

Now this must be incorrect. Surely a DHB with obligations under the Official Information Act wouldn’t simply delete embarrassing e-mails.

Hon Tony Ryall: Would the Minister have confidence in the chief executive of the Hawke’s Bay District Health Board if it was confirmed to him that this information was withheld and came to light only because of specialised forensic analysis in Britain of the back-up tapes, which were mysteriously damaged?

The back-up tapes were damaged? What an unfortunate coincidence. Please do not connect the dots. The dots have nothing to do with each other.

King on Hausmann

March 4th, 2008 at 2:13 pm by David Farrar

 There is a very useful article in the Dom Post with Annette King commenting on her appointment of Peter Hausmann 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.


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 conflicts of interest,” 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.

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 Audit Office report on the Hawke’s Bay District Health Board. Now I can’t find the Audit Office report online, but it doesn’t look great for the Government which has effectively sided with Peter Hausmann 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.