'Culture of mistrust and dysfunction' at DHB

A conflict of interest inquiry into Hawke's Bay District Health Board has slammed it for failing "the most simple test of good governance", but also criticised Government appointee Peter Hausmann for not making full disclosures about work sought by his company.

Director-General of Health Stephen McKernan has just released a long-awaited inquiry into conflicts of interest at the troubled board - sacked by Health Minister David Cunliffe last month - which exposes systemic failures to follow good practice.

The inquiry was launched in July after it was revealed the board had canned plans to contract out millions of dollars worth of community services after concerns were raised about the involvement of Mr Hausmann in the early tender process.

Mr Hausmann is managing director of Healthcare NZ, which was tendering for the contract. He was appointed to the DHB by then Health Minister Annette King in mid-2005 - several months after he had been involved in the company's bid.

The report finds that Mr Hausmann did not participate in board discussions on the proposed contract between his appointment in June 2005 and December 14 that year, but did not make an initial main disclosure of his Healthcare NZ interest till the September 2005 meeting.

At that time, he said Healthcare NZ would submit a proposal for the tender, but did not disclose that he and Healthcare NZ had the request for proposal two months before other tenderers.

The report says such involvement for a potential tenderer was "unusual" and Mr Hausmann now acknowledged he should have disclosed his interest earlier.

But the report saves most criticism for the now sacked board, finding that it did not have even the low level procedures in place to manage conflicts of interest.

It finds in particular that former chairman Kevin Atkinson knew of Mr Hausmann's involvement in the proposed tender in December 2004 and should have ensured Mr Hausmann made a more full disclosure at the Septemebr 2005 meeting.

The board decided at its December 2005 meeting to accept Healthcare NZ's proposal, but canned the proposed contract altogether in early 2006 after a whistleblower raised concerns about emails from Mr Hausmann to management overseeing the contract.

Mr McKernan said there was nothing stopping DHB members doing business, but the HBDHB had "very weak systems and processes for determining how conflicts of interest should be managed".

"The review panel found a culture of mistrust and dysfunction between the board and senior management and that is a significant roadblock to good performance."

Dysfunction, along with a burgeoning budget blowout, was a major factor cited by Mr Cunliffe when he sacked the board and appointed Sir John Anderson as commissioner last month.

Though the review did not examine the boards sacking, the review panel said the problems it uncovered would have led it to recommend a monitor for the troubled DHB.

HAWKE'S BAY TIMELINE:

June 2005: Health Minister Annette King appoints Healthcare NZ managing director Peter Hausmann to Hawke's Bay District Health Board.

January 2006: Whistleblower Deborah Houston alerts board chairman Kevin Atkinson to an e-mail from Mr Hausmann to a staff member about a proposed community services contract worth millions about to go to tender. The board cancels the tender process on legal advice.

July 2007: Mr Hausmann requests a review. Ministry review into allegations begins.

February 2008: New Health Minister David Cunliffe says he is concerned at the rapidly deteriorating situation at the DHB, citing money problems and tensions between board and management.

February 27: Mr Cunliffe sacks the board and appoints commissioner Sir John Anderson.

February 28: The Dominion Post is prevented from reporting the findings of a draft report by the review panel set up to investigate conflicts of interest after the director-general of health and Healthcare NZ win a court injunction.

Friday: Two former board members announce they have asked police to investigate Mr Hausmann's actions, a move he said was farcical and a waste of time as he had done nothing wrong.

Today: The findings of the eight-month review are released.