Editorial: Disregard for the rules is alarming

19:02, Feb 20 2013

It has become the practice of auditors-general to report the facts of sensitive matters and leave it to readers of the office's reports to connect the dots. Such is the case too with Deputy Auditor-General Phillippa Smith's investigation of the circumstances surrounding casino operator SkyCity's selection as the preferred builder of a new convention centre in Auckland.

Ms Smith's conclusion - that the process was hopelessly compromised by ministerial and bureaucratic meddling - is worrisome. The dots are more troubling still.

The most alarming of the facts are these: In June 2010 officials met to evaluate expressions of interest from five potential tenderers for the project. Of the five, SkyCity's was ranked the lowest because its proposal too closely resembled a casino extension and too little resembled a convention centre. Yet, a year later, SkyCity was announced as the winner of the process.

What changed in that time? First, Economic Development Minister Gerry Brownlee met with SkyCity to canvass potential changes to its bid. Then officials from the Economic Development Ministry engaged in what Ms Smith terms "extensive and detailed" discussion with SkyCity as it put together the detailed proposal that was eventually chosen as the preferred option. Mr Brownlee did not meet the other potential bidders for the project and officials did not engage with the other tenderers in the same way. Instead, they were told that decisions had been delayed.

The net effect of these ministerial and official interventions was to tilt the playing field in SkyCity's favour.

Ms Smith did not find any evidence of corruption or what she calls "inappropriate considerations" influencing decision-making. Her finding is supported by another of the report's revelations - that the proposed tradeoff between funding of a new convention centre and a relaxation of the gambling restrictions that apply to SkyCity was driven by Prime Minister John Key, not the casino operator.


In fact, SkyCity seemed remarkably unenthusiastic about the project, having to be continually prodded to supply information and meet deadlines.

The report makes it clear, however, that the process by which decisions were made fell far short of the desired standard. That is important not in itself but because adherence to proper process helps to ensure that public moneys are spent wisely and that New Zealand remains relatively free of corruption.

Ms Smith offers no view as to why experienced, senior officials chose to ignore official guidelines as well as internal warnings that the process they were overseeing was deeply flawed.

However, it appears that the prime minister had what he thought was a good idea and officials attached greater importance to making it happen than to complying with the rules and guidelines for public sector purchasing and funding.

That is the way politics operates in Russia, China, India, Africa and other parts of the world in which corruption is endemic. It is not the way it should operate in New Zealand.

The Dominion Post