Ministry ignored Maori trust tip-off

Last updated 05:00 07/06/2014

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Health Minister Tony Ryall has issued a rebuke to his ministry, which has had to apologise for failing to follow up a tip to its fraud line about a Maori trust now at the centre of allegations of misspending.

Te Roopu Taurima o Manukau Trust chairman John Marsden has been stood down while the Ministry of Health brings in forensic accountants to examine the trust's accounts.

The trust is mostly funded by the government, to the tune of about $30 million a year, but serious questions have arisen over payments made to contractors, and Marsden himself.

Consulting firm PwC will begin a forensic audit of the trust's books on Monday, but preparation for the audit has already unearthed evidence that the ministry failed to act months earlier.

National Health Board acting national director Michael Hundleby has apologised for the blunder.

"During preparation for this audit, evidence was found of an anonymous call on Tuesday, 3 December, 2013, to the Fraud Hotline alleging a staff member at Te Roopu was involved in inappropriate financial dealings," he said.

"The complaint details were recorded; however, that information was never passed on to the auditors assigned to the Te Roopu financial audit.

"The ministry regrets this failure and steps are currently under way to ensure this does not happen again."

Ryall said the situation was not acceptable. "It is unacceptable that the Ministry of Health did not follow up the allegations.

"I have asked for a full and detailed explanation of why this happened and what is being done to prevent it from happening again."

Appropriate action would be taken based on the findings of the PwC audit, he said.

NZ First leader Winston Peters, who first brought the allegations to light, said the admission was appalling.

"At the first hint of any irregularity the ministry should have had an audit surveillance team at Te Roopu.

"Instead, genuine and well-minded staff members risked their jobs, and lost them, to raise legitimate complaints. The ministry did nothing and has done nothing to protect them."

Peters has called for an independent inquiry from the auditor-general.

It has been alleged that Marsden appointed himself the change director while he was a fulltime employee at another organisation. Invoices show the trust paid him $29,813 before tax for his services in April 2012.

Other alleged irregularities included payments of more than $360,000 to what appeared to be a bakery to carry out building and property maintenance work.

Internal accounts show that Hungarian Twister was contracted by the trust and was paid $360,662 over two years for property maintenance. The trust is now thought to be more than $1 million in the red.

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- The Dominion Post


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