A lack of checks on money handed out under the Whanau Ora scheme is being questioned as it is revealed Dunedin gang members used $20,000 to buy cannabis.
Earlier this year it was revealed police had uncovered that Mongrel Mob members had misused the Whanau Ora money intended to support anti-family violence work.
Whanau Ora Minister Tariana Turia said at the time that she was not worried if gang families had access to funding under the scheme.
Korrey Teeati Cook, 36, was jailed for four years for dishonestly converting $20,000 of trust money, conspiring to sell cannabis and possessing cannabis for supply.
Cook and nine other men were arrested following an electronic surveillance operation.
At the time of the offending he was on bail for violence charges.
Judge Michael Crosbie said Cook had begun the offending with his "eyes wide open", the Otago Daily Times reported.
In calls intercepted by police, Cook told other gang members the Dunedin Notorious Mongrel Mob was a model for how other gangs could access Whanau Ora funding.
WHANAU ORA 'IN ITS INFANCY'
Prime Minister John Key said Whanau Ora was in its infancy and working with high-risk families.
He did not see a need for an investigation because there had not been any "proven substantial issues".
"The advice I've had is the programme is working, it's in its very early days, they are collecting more data on the outcomes."
There were checks but that needed to be built up over time, he said.
"We've seen the odd example where a funding grant has gone wrong and the system has picked that up."
He said he was satisfied the system was not being abused to "the best of the information I have".
But it was early days, he said.
"The overall success is something that we'll just take a bit more time to measure."
FUND 'STILL EVOLVING'
The Whanau Ora fund that gives families grants of up to $20,000 is "still evolving" and is not ready to be properly evaluated, a review found.
The review was presented to Turia and Maori Affairs Minister Pita Sharples on September 14.
It included the findings of two reports conducted by interviewing families who had received grants.
The report found the Whanau Integration, Innovation and Engagement Fund (WIIE) processes were "still evolving".
"There was insufficient readiness for a more 'traditional' formative or process evaluation."
The fund distributed $4.9 million in 2012/11, $7.7m in 2011/12 and was forecast to allocated $6.4m in 2012/13 increasing to $8.4m in later years.
"Whanau appear mostly positive about their WIIE fund experience however there are operational improvements that can be made," the review said.
That included collecting better data to ensure performance measures were met.
"Whanau stories are a powerful device to convey what whanau transformation looks like. On their own however, they do not provide convincing evidence of the WIIE results nationally."
NZ First leader Winston Peters said the report was as indecipherable as the Whanau Ora scheme which was "touchy-feely" but ignored the real plight of Maori.
"Struggling Maori families need help in vital areas such as health, education, housing and employment, not taxpayer funding for rugby games and sausage sizzles."
Whanau Ora was a tragedy for Maori and other taxpayers, he said.
Had the Fund report been independent it would have called for the the scheme to be scrapped, Peters said.
"There is no basic data available on participation levels, and glaring monitoring gaps on where millions of taxpayer dollars are going."