Rainy Day reading —The Spinoff : Ministry of Transport fraud case

The ever-deepening storm centred on the Joanne Harrison fraud case just became a hurricane. Yesterday’s State Services Commission investigation report is likely to trigger a new chain of events that could extend well beyond embattled Auditor General Martin Matthews, writes Peter Newport

### thespinoff.co.nz July 21, 2017
Politics
The Ministry of Transport fraud case: Why the rot goes deeper than Joanne Harrison
By Peter Newport | Contributing writer
The State Services Commission investigation, published yesterday, makes one thing very clear: Joanne Harrison influenced the exit of four fellow Ministry of Transport employees who tried to tell their bosses that she was a fraudster. She managed to hire friends and steal over $700,000 from the ministry despite numerous staff attempting to call attention to her actions. This all happened while she was reporting directly to then-chief executive Martin Matthews, who is now our auditor general – albeit on temporary leave. The Commission has now apologised and is offering compensation to those former staff members. Its report also highlights many other issues at the Ministry, arguing that the 17-year-old legislation that covers whistleblowers needs to be changed and improved.

A second investigation, into whether Martin Matthews is a suitable person to continue as auditor general, is due from Sir Maarten Wevers in the coming days. Matthews is currently constructing his response to the unpublished, but complete, Wevers investigation. He has been given until the end of this week to complete it.

The Harrison case has some similar dynamics to the Todd Barclay drama. It’s become less about the initial problem than how it was handled. Who told the truth and who tried to obscure or even bury the truth. The difference with the Harrison situation is that she is now in jail and the truth is coming out – fast.

The Spinoff has been looking at exactly who did what, and when. That job has been made easier by a new, recent MOT whistle-blower who has produced and provided to us a detailed timeline noting all the evidence, which we publish here, utilising material released by the Ministry of Transport and available to view here. The same whistle-blower has shared a bizarre insight into Martin Matthews’ statements during his time at the Ministry of Transport.

But first, a quick tour of the jigsaw puzzle of documents that reveal a picture of Martin Matthews being given not clues, or hints, but what appear to be multiple solid facts that highlighted Joanne Harrison as a Grade A con artist and thief.
Read more

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Comment received from russandbev
2017/07/21 at 10:52 am

The recent revelations about what happened to the whistleblowers in the Ministry of Transport have, I’d suggest, application in Dunedin. Think of the parallels. In the MoT case a manipulative person with a barely-hidden track record of fraud and vindictiveness as well as a well developed sense of entitlement goes about systematically defrauding a government department of close on 3/4 million dollars. Not through some incredibly complex fraud, but one of simply creating business that didn’t exist and creating invoices from them for services that were never provided. Not exactly something that would take a lot to investigate.

Whistleblowers blow the alarm whistles to their managers and nothing happens and the further up the chain the questions were asked, the more dismissive the denials became. Meantime the fraudster moves against the whistleblowers. The Head of the Ministry moves on to even more wondrous things as Auditor General (is that ironic or is that ironic?) and the Minister dismisses all suggestions of wrong-doing. Even the Speaker of the House who employs the Auditor General doesn’t want to get involved.

Now found that the whistleblowers were entirely vindicated by their concerns and they get private and public apologies and a confidential settlement to, in part, recompense them for their treatment by both a fraudster and by management and governance failures. The Protected Disclosures Act [2000] is supposed to protect whistleblowers in BOTH public and private sectors.

Now, I don’t think anyone is suggesting fraud in the case of Aurora/Delta and that should be made plain. However look at the track record of these companies. A fearful record of stupid property speculation costing many many millions which is still going on thanks to Yaldhurst. A willingness to go along with borrowing to supply dividends to the DCHL and the DCC. Decades of ignoring maintenance on the Aurora network closely linked to the governance requirements to minimise costs, maximise profits and supply dividends to build vanity projects by the owners and now the spendup of northwards of 3/4 billion dollars on urgent maintenance bought about these years of neglect.

And then think of the years and layers of denials that these things happened over. When Richard Healey found he could no longer keep working in the company because of all that was being hidden, he gets vilified by EVERYONE that should have listened. EVERYONE is in denial including his past Managers who continued to receive their grossly inflated salaries and those in governance – many of whom refused to even sit down with him and discuss his concerns.

Am I the only one to see the parallels in how a Ministry or a City company deals with whistleblowers? I wonder if we will ever see similar end results in the case of Richard Healey?

{Link added. -Eds}

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Reply from Elizabeth
2017/07/21 at 1:02 pm

Not involving Aurora:

Charges of Constructive Fraud have been brought, by joinder, against Delta Utility Services Ltd in the Christchurch High Court by the caveators (original property owners of the Noble Subdivision) at Yaldhurst. The case proceeds.

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█ Transparency International New Zealand
http://www.transparency.org.nz/

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Posted by Elizabeth Kerr

This post is offered in the public interest.

Topical debates on Corruption in New Zealand

At Twitter:

It shouldn’t be career ending to get done over by a crooked employee but it should mean you can’t be Auditor-Generalhttps://t.co/wvMn1dehUU

— Matthew Hooton (@MatthewHootonNZ) May 22, 2017

A convicted fraudster apparently headed an inquiry into workplace harassment just months before she was arrested https://t.co/FqTA5VgyRZ pic.twitter.com/fAKwp0hsuI

— nzherald (@nzherald) May 22, 2017

Other media items:
22.5.17 Can the Auditor-General be trusted to combat corruption?
21.2.17 NZH: Ex Ministry of Transport manager jailed for $726k fraud
26.8.16 Former Ministry of Transport fraudster denied bail

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Read Bryce Edwards’ full opinion piece linked below, and the associated reference links.

It’s Worth Your While Dunedin
Because you know instances of this bigger story, and you know them well.

The following is an abridgement.

This website has bolded some words provided by Mr Edwards and the commentators he cites. Words that bloggers increasingly have a ‘steam problem’ to include in everyday use of the English language.

So much for district heating schemes, eh.

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### NZ Herald 2:48 PM Tue May 23, 2017
Political Roundup: The unaccountability of elites
Politics
By Bryce Edwards
OPINION —How much accountability is there in New Zealand politics and public life? Not enough, it seems, going on recent controversies. Mistakes by those in authority can lead to disasters and misfortunes of various magnitudes. Yet a number of recent examples – ranging from the Pike River tragedy through to the Havelock North water contamination crisis – suggest that there is often a worrying lack of consequences or accountability for the authorities involved.
Following on from yesterday’s Political Roundup column about managers failing to prevent serious fraud in a government department (Can the Auditor-General be trusted to combat corruption?); an obvious question is whether New Zealand has a culture in which there’s a lack of accountability for elites who make serious mistakes.
This need for this question is further underlined by Peter Newport’s strongly argued opinion piece, Is fraudster Joanne Harrison’s old boss really fit to lead NZ’s top public watchdog? In this must-read piece published yesterday, Newport details all of the whistle-blowing attempts to alert Ministry of Transport managers to the crimes being committed in the government department, and how those whistle-blowers then lost their jobs, seemingly as a result. Reading Newport’s account, it seems that much of the fraud was entirely preventable. He asks: “Where was human resources? The Public Service Association? The police? The SFO? The auditor general? The chief executive? This all happened in a modern New Zealand government ministry. In the full light of day.”
He concludes that “the chief executive, and his successor, have consistently refused to properly investigate either what she got away with or the further systemic failings behind the scenes… It’s disgusting. Where does the buck stop and who gets the whistle-blowers their jobs back?”
….[break]
Part of New Zealand’s democratic deficit relates to a lack of a culture of accountability in public life and governance. According to Karl du Fresne, “Accountability, the long-established principle that someone should be seen to take responsibility for serious mistakes, is frequently talked about but rarely practiced” – see his column, Accountability the price of keeping the system honest. He makes some important points about the apparent decline in standards of accountability in political and public life in New Zealand, pointing out that the end result, is “public confidence in ‘the system’ continues to be steadily eroded.” This is a major democratic problem, says du Fresne: “If no one ends up accepting personal responsibility and incurring a penalty, there’s little incentive to make sure it doesn’t happen again. […] Part of the problem is that “genuine political commentary and critical analysis in New Zealand has been eroded almost to the point of non-existence over the past few decades”. This is the view of Bob Gregory of the Victoria University of Wellington, who links the decline of accountability to the decline of public debate and information…..
….[break]
So, does all of this lack of accountability mean that New Zealand is possibly more vulnerable to corruption than people assume? This is discussed by former parliamentary staffer Grant McLachlan in his opinion piece, NZ should raise the bar on corruption. McLachlan suggests that New Zealand isn’t well protected from corruption: “Our processes to deal with corruption are flawed. […] When a judge in our highest court doesn’t declare a conflict of interest, the Attorney-General shouldn’t offer the judge a golden handshake to save the taxpayer the cost of an inquiry. When a dodgy mine explodes killing 29, out-of-court payments should not influence the dropping of a prosecution. The Protected Disclosures Act was meant to protect good faith whistle-blowers when reporting ‘serious wrongdoing’. Poor internal processes, however, have resulted in witch-hunts and whitewashes.”
….[break]
Finally, does the culture of misinformation and opaque politics play a part in limited accountability? Graham Adams thinks so, and says that there’s good reason for being appalled by the deception that comes out of government these days. He says “Kept in the dark and fed endless bullshit, it’s difficult for even engaged citizens to make sense of much in New Zealand’s public and political life” – see: Information underload: We’re all mushrooms now.
Read more

█ Bryce Edwards, until recently a lecturer in Politics at the University of Otago, researches and critiques New Zealand politics, public policy, political parties, elections, and political communication. His PhD, completed in 2003, was on ‘Political Parties in New Zealand: A Study of Ideological and Organisational Transformation’. He is currently working on a book entitled ‘Who Runs New Zealand? An Anatomy of Power’. He is also on the board of directors for Transparency International New Zealand.

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Posted by Elizabeth Kerr

This post is offered in the public interest.

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