Editorial: Use of public money must be transparent

OPINION: Today The Dominion Post reveals that funding for a $3 million taxpayer-funded project to turn domestic Maori businesses into export earners was abruptly suspended last November by Te Puni Kokiri because of concerns about the way public money was being spent.

Among the issues of specific concern to the Maori Development Ministry were: perceived conflicts of interest, value for money and contract compliance.

Documents obtained by the paper under the Official Information Act show the ministry was right to act as it did. But they do not explain why TPK signed off in the first place on a project that its chief executive Leith Comer now concedes was loose and wishy washy.

The project had the laudable aim of helping 10 Maori businesses to become exporters with foreign exchange earnings of $10 million each within a decade. If it had leveraged off the expertise of successful Maori businesses it might have had a chance of success, but much of the money appears to have been spent on paper shuffling.

Fomana Capital, the company running the project, billed Tekau Plus, the partnership formed to oversee the project, tens of thousands of dollars for reading and analysing media stories, developing a strategy "for a clear strategy forward" and consulting "stakeholders".

At one point Mr Comer complained in a letter to Tekau Plus chairman John Paki, also the Maori Trustee, that Tekau's accounts showed Fomana Capital had received $1.2 million of taxpayer money but there were no descriptions of the services it provided, what the money was spent on or what work had been done by Fomana or third parties hired by it.

In another letter, he told Mr Paki 16 times that Tekau had failed to provide documents and evidence required for a six-month period.Tekau is a partnership between the Maori Trustee, the Federation of Maori Authorities (Foma) and the Poutama Trust, a Maori business advisory service. Its principals include some of the most powerful figures in Maoridom – Mr Paki, Foma director Paul Morgan, top of The Listener's power list for Maoridom last year, and Fomana chief executive, Wayne Mulligan. Mr Morgan and Mr Mulligan both hold 15 per cent stakes in Fomana.

However, the standards of the project fall way short of the accountability and transparency required of organisations dealing with public money.

Mr Comer says "if fees were taken inappropriately, recovery action will be taken". Foma chairwoman Traci Houpapa says an independent inquiry is required into how taxpayers' money has been spent and what was achieved with it.

She is on the right track. Private organisations in receipt of public money have an obligation to account for the way it is spent. Government organisations dishing out public money have an obligation to put proper controls and benchmarks in place. Auditor-General Lyn Provost should be asked to conduct a thorough inquiry into both Tekau Plus's use of the money and Te Puni Kokiri's stewardship of it.

- © Fairfax NZ News