Recent Christchurch City Council annual reports appear to have breached international accounting standards by not disclosing chief executive Tony Marryatt's role with Civic Assurance.
Christchurch financial analyst and commentator Alan Robb says in a written opinion sent to The Press that Marryatt and the council should have listed his dual role in the "related party" sections of the council's annual report. The involvement in Civic of Marryatt, who became a Civic director in 2008, is not disclosed in the annual reports for the 2008-09 and 2009-10 financial years.
Robb told The Press such breaches were "not a trivial matter".
The 2010-11 annual report, which has just been made public, lists Marryatt as a director of Civic and of Riskpool, a mutual liability fund for councils which has Civic as its fund manager.
The report says the council bought $19,000 of goods or services from Civic during the year and charged it $1000 for goods or services it supplied.
It also says the council bought $343,000 of goods or services from Riskpool.
However, it does not mention a $1.21 million premium paid to Civic for $1.8 billion of coverage of the council's above-ground assets in the 12 months to June 30 this year.
Marryatt said he did not prepare the annual accounts and was not an expert in international accounting standards.
"There's nothing being hidden," he said.
"The ruling I had in my previous job [as Hamilton City Council chief executive] was that it was only deemed to be part of my remuneration if I was appointed by the council.
"In this case, I was not appointed to Civic by the council. I am there as Tony Marryatt, individual.
"As the auditor-general will say, there is a potential for conflict, but it's how that is managed."
City councillor Tim Carter has written to the Auditor-General's Office asking for an investigation of the council's placement of insurance with Civic and the potential for conflicts of interest that Marryatt might have.
One of his questions for the auditor-general was whether Marryatt's paid directorship should have been disclosed in the annual reports.
Carter said yesterday that he did not wish to comment on Robb's views because the auditor-general had now begun an investigation of the questions he raised. Marryatt has admitted staff technically breached their delegated spending limits by signing the Civic deal to keep him "out of the loop".
Carter believes Marryatt should not be overseeing both sides of the quake damage claim, expected to be more than $650m, which looks likely to become New Zealand's largest local authority insurance claim.
In his opinion, Robb said International Accounting Standard (IAS) 24 outlined related-party disclosures that could arise between councils and other organisations through councillors and also senior management.
Transactions that needed to be disclosed included buying and selling goods and services, leases, transfers of research and development, loans and provisions of guarantees.
"To me, the significance... is that a related-party situation is not dependent on there having been a formal appointment of a councillor or senior executive to the other body," Robb said.
"This is relevant in the city council-Civic Assurance situation, where the council chief executive is on the board of Civic in his own right and not as a council appointee.
"There is still, in my view, a related-party situation.
"Accordingly, I believe the council's annual reports fall short of the disclosure required by IAS 24."
- The Press
Which memorial design do you like most?Related story: Christchurch earthquake memorial designs unveiled