$3m project on hold after cash doubts

BY PHIL KITCHIN

One of the Government's biggest Maori business development projects has been suspended, amid serious concerns about what it achieved with millions of dollars of taxpayers' money.

The project has been frozen and the Maori Development Ministry, Te Puni Kokiri, says that, if "fees were taken inappropriately, recovery action will be taken".

One of the agencies involved is now calling for an independent inquiry into how the public money was spent.

The Tekau Plus project, designed to develop 10 Maori businesses so each would earn $10m of foreign exchange within a decade, was run by two decorated businessmen and the Maori Trustee.

An investigation by The Dominion Post has revealed that fees running into tens of thousands of dollars were charged for work such as reading media articles, a business awards list and economic forecasts.

The project was suspended after Te Puni Kokiri raised concerns about perceived conflicts of interest, its value for money and whether it had complied with its contract.

The project was worth $3m and two-thirds of the money has already been paid out.

Te Puni Kokiri chief executive Leith Comer confirmed the project was suspended in November. It would not be reinstated until all issues were sorted out.

Tekau Plus is a partnership between the Government-appointed Maori Trustee, Maori business network the Federation of Maori Authorities (Foma) and the Poutama Trust, which provides business services for Maori. The project was run by Foma subsidiary Fomana Capital.

Tekau is chaired by the Maori Trustee, John Paki, who was reappointed to the role for five years by Maori Affairs Minister Pita Sharples in July. The Maori Trustee, who is independent of the Government, acts as an agent for owners of Maori land, usually by leasing the land, collecting and paying rent and other income to owners and investing trust money.

In letters to Tekau Plus – obtained under the Official Information Act – Mr Comer repeatedly told Mr Paki that he had failed to produce evidence that the project was achieving its contracted "outputs". In one letter in November, he told Mr Paki 16 times that Tekau had failed to provide documents and evidence required for a six-month period.

Mr Comer said a report on Tekau accounts revealed nearly $1.2m of taxpayers' money was paid to Fomana Capital – but there were no descriptions of the services it provided, what the money was spent on or what work was done by Fomana or third parties it hired.

Fomana manager, 15 per cent shareholder and director Paul Morgan was also on the Tekau board, and Fomana chief executive and 15 per cent shareholder Wayne Mulligan managed Tekau Plus.

One month after being supplied with more information from Tekau, Mr Comer still had concerns, the documents show. Without clear evidence that Tekau had done what it had been paid for, Te Puni Kokiri and the Maori Trustee would face scrutiny, he said.

PricewaterhouseCoopers (PwC) audited Tekau – but a copy of the audit says PwC did not assess the quality of Tekau's outputs or whether work it completed achieved the project's aims.

Foma told The Dominion Post an independent review of how taxpayers' money was spent was now required.

Mr Paki said it was Te Puni Kokiri's choice to suspend the Tekau Plus project, but the PwC audit had found that everything was financially "fine".

There were some minor questions of conflict of interest to be addressed, but he was confident the suspension would be lifted within a week. He did not accept Mr Comer's criticisms that Tekau continued to provide irrelevant justifications for how it had achieved its contracted aims.

Mr Mulligan said he was comfortable with PwC's report and proud of what Fomana had achieved on the project. He was confident those running it had always declared any conflicts of interest they may have had.

Specific concerns with the Tekau Plus project:

$340,000 was paid for a "clustering output" but Tekau provided a "troubling" lack of specific information.

In one three-month period, Fomana billed Tekau $60,000 for analysing seven media stories, eight economic updates, a business awards list, a 13-page essay and education programme reports.

For another three-month period, Fomana was paid $33,000 for "analysis and research" that included "developing a strategy for a clear strategy forward", reading media articles, economic forecasts and working through issues with "stakeholders".

$25,000 was paid for a review but Tekau's justification for the review had nothing to do with evidence asked for or the contracted output.

$50,000 was paid for a "communications output" but Te Puni Kokiri received no information showing "compliance with that output".

Tekau had referred Te Puni Kokiri head Leith Comer to irrelevant documents and e-mails for its output on "niche studies", for which it received $75,000. The "complete lack of information is of real concern", Mr Comer said.

Te Puni Kokiri's concerns had increased "markedly" because "none of the information sought has been provided".

- © Fairfax NZ News