Setchell found other public jobs closed to her
The Environment Ministry communications manager sacked because her partner works for National Party leader John Key found the door closed as she sought other public service jobs.
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Ms Setchell's partner is Mr Key's senior press secretary, Kevin Taylor.
She declared the relationship in her Environment Ministry interview. It did not become an issue till minister David Benson-Pope's office phoned chief executive Hugh Logan the day she started work, to ask if Beehive talk was true.
Mr Logan had not known of the relationship, but was told by Mr Benson-Pope the next day that the minister did not think he could be "free and frank" with her because of it.
Two days later, Mr Logan told her she would have to move to a less sensitive position or leave. She left with an undisclosed payout.
A report by former state services commissioner Don Hunn finds Mr Logan did not manage the conflict of interest, despite advice from present commissioner Mark Prebble that it was possible to do so.
Mr Logan's failings mean he will not receive a bonus of up to 15 per cent of his $330,000 to $340,000 salary package.
Dr Prebble also took the rare step of punishing himself for failing to ensure that commission staff who dealt with the issue while he was overseas were made aware of Mr Benson-Pope's comments. He has docked 2.5 per cent of his $420,000 salary - about $10,000.
He insisted Mr Hunn's report found no evidence that Mr Logan acted against the principle of public service neutrality, but rather failed as a fair employer. "It's still not clear to me that she needed to move jobs."
But National Party state services spokesman Gerry Brownlee said Ms Setchell's difficulty in finding other public service jobs, despite being invited to apply, showed she had been blacklisted because of her relationship.
"You're headhunted for a job, issues around conflict of interest are dealt with, you're appointed to a job, a minister packs a sad and you're sacked.
"That's a bad, bad sign for our public service. It means we're not politically neutral and Dr Prebble needs to be doing something about that."
Ms Setchell's application for the education job also faltered.
State Services Minister David Parker and Prime Minister Helen Clark said yesterday that they had confidence in Dr Prebble. Mr Benson-Pope resigned from Cabinet in July for misleading the public by denying knowledge of the calls from his office to Mr Logan.
The environment minister had to resign for misleading the public about his role in Ms Setchell losing her job. He initially denied knowing about political adviser Steve Hurring phoning ministry chief executive Hugh Logan with concerns about her relationship with Kevin Taylor, National Party leader John Key's chief press secretary. Mr Benson-Pope was aware of the calls and told Mr Logan he would "be less free and frank" in meetings if Ms Setchell was present.
Mr Benson-Pope's political adviser started events by phoning Mr Logan about rumours that Ms Setchell was Mr Taylor's partner. There were several calls between Mr Hurring and Mr Logan on May 28 – Ms Setchell's first day at the ministry – and Mr Hurring told Mr Benson- Pope that day. Mr Logan gained the impression during exchanges with Mr Hurring that Mr Benson- Pope was "exceptionally annoyed", though Mr Hurring disputes that. He lost his job when Mr Benson-Pope resigned.
The state services commissioner has paid back 2.5 per cent of his $420,000- plus salary for failing to ensure staff were fully briefed on Mr Benson-Pope's comments to Mr Logan. When Mr Prebble was overseas in July, and his deputy Iain Rennie compiled a report on Ms Setchell's departure, the "free and frank" comment was missing. Dr Prebble also failed to mention it in a July 20 piece for The Dominion Post: he said Mr Benson- Pope had "no involvement" in the decision.
The Environment Ministry chief executive will not receive a bonus on his $320,000-$329,000 salary because of the way he handled Ms Setchell's employment, and bears the brunt of the blame for what went wrong.
Despite being urged by Mr Prebble to manage any conflict of interest, Mr Logan sought to move Ms Setchell into another role. She considered this for some time before leaving with a confidential payout on June 22.
The career communications professional disclosed her relationship with Mr Taylor when she was interviewed for the position of external relations manager this year.
In between getting the job and starting, restructuring saw the post retitled communications manager with a salary of $126,887.
Three days after she started, Mr Logan told her of concerns about the possible conflict of interest. She asked him to express confidence in her to Mr Benson-Pope, but he refused.
She was particularly upset that Mr Logan would not acknowledge her disclosure of the relationship from the start, and felt that her integrity was being questioned.
She considered taking an alternative job that was offered, but eventually declined and left the ministry with a confidential settlement. Mr Logan, Dr Prebble and report author Don Hunn stressed yesterday that she acted with integrity throughout and bore no blame.
She is now communications manager at Victoria University.
The Dominion Post