Cera staff to be investigated over private company dealings
Revelations that Canterbury Earthquake Recovery Authority (Cera) staff tried to do commercial property deals for their own company will be investigated by the Prime Minister's Department and the State Services Commission.
A Stuff investigation revealed on Saturday that three Cera staff employed to facilitate investment in the Christchurch rebuild tried to arrange property deals through their own company for a finder's fee (in one case $300,000).
Greater Christchurch Regeneration Minister Gerry Brownlee has told Stuff the Department for Prime Minister and Cabinet (DPMC) and the State Services Commission (SSC) would investigate the private arrangements.
He was prevented from commenting fully because a process had to be worked through, he said.
"I had no inkling of this [the private dealings] at any point until Friday when your story was breaking . . . I don't think this is in any way tidy at all," he said.
He knew of no other private business dealings by Cera staff and "it's sort of interesting that this is a body that went through 10 select committee hearings", Brownlee said.
The Stuff investigation revealed Murray Cleverley, who was manager of the Greater Christchurch Investment Strategy, and two investment facilitators, Gerard Gallagher and Simon Nikoloff, were running a private business whilst being paid by taxpayers to attract investment to the city.
The three were shareholders in the company Project and Investment Management (PIM) through which Gallagher attempted to facilitate a property deal with investors. He copied Cleverley and Nikoloff into correspondence.
Cleverley is a property investor and the chairman of the Canterbury and South Canterbury District Health Boards. Nikoloff and Gallagher work for Cera's successor Otakaro Ltd, which is tasked with delivering the Government-led anchor projects and managing Crown assets, including surplus land in the central city and the residential red zones.
The Cera staffers said they were entitled to do private deals and a company they set up to do so was formed "with the full knowledge of our employers".
State Services Commissioner Peter Hughes said the issues were, on face value, a matter of concern.
"In general, having a private business in the same area as a public servant's official responsibilities would be highly problematic and is most likely to be unacceptable.
"It would be completely unacceptable for any public servant to use their position to advance private business interests," he said.
Public servants were not prohibited from having private business interests or investments or secondary employment but they had to be fully disclosed and any conflicts of interest had to be identified and actively managed.
"Every agency is expected to have policies and procedures for identifying and managing issues with actual or potential conflicts of interest."
Otakaro Ltd chief executive Albert Brantley declined to answer written questions on Monday. The questions would be answered at an appropriate time, he said through a spokesman.
A former professor of professional ethics at Canterbury University Duncan Webb, who is currently Labour candidate for Christchurch Central, said the dealings by the Cera staff appeared to be "one of the most appalling and fundamental conflicts of interest that I can possibly imagine".
"You cannot be a property manager and purchaser for Cera on the one hand and be a property dealer on the other. I think it's an outrage. It doesn't pass the sniff test let alone any analysis."
He said the potential problem was not only using information acquired in a public servant capacity for private gain: "There will be collateral advantages to other relationships. This is the classic problem of an indirect benefit. Everyone knows it but nobody speaks it. When you are holding public office and dealing with public funds exercising public power you have to absolutely above reproach.
"I don't know what's going on here but for that very reason arrangements like this must be avoided at all costs."
Webb said that even if such an arrangement falls short of the legal test for corruption, if it gives the appearance of corruption that will fundamentally undermine confidence in Government.
A spokesman for the DPMC said the department would not expect any individuals working with Cera to have gained a private benefit from any external business dealings connected to their work in the public sector.
"The Department must be fair to all parties and needs to ascertain the facts before making any further comment."
This would take some days as Cera went out of existence in April last year and relevant material would need to be sourced from archives.
The Standards of Integrity and Conduct issued by the State Services Commission state that public servants must be trustworthy and:
• Never misuse their position for personal gain
• Ensure their actions are not affected by our personal interests or relationships
• Avoid any activities, work or non-work, that may harm the reputation of their organisation or of the State services.