Editorial: Casino deal looks shonky

22:02, Feb 20 2013

Prime Minister John Key said it would be a "waste of time" re-running the tender process that resulted in his Government approving negotiations of a deal offering land and regulatory gambling concessions to SkyCity Entertainment Group for a $350 million convention centre.

Time is not being wasted. His ministers were reported to be trying to close the deal yesterday, almost before the ink had dried on Assistant Auditor-General Phillippa Smith's report on the inquiry that led to negotiations being stalled. Mr Key claimed that the report "totally vindicated" his Government's handling of the way the contract was granted.

True, the inquiry found no evidence to suggest the decision to negotiate with SkyCity had been influenced by "inappropriate considerations".

It did find "a range of deficiencies in the advice that the ministry provided". It found deficiencies, too, in the steps taken by officials and ministers leading up to that decision.

That tells us something shonky happened. The auditors were surprised to find no documented analysis or advice on the process that needed to be followed from a procurement perspective. Nor did they find any systematic consideration of the relevant principles and obligations that should guide the process. There was "too little focus on the disciplines that should govern commercial decision-making in the public sector".

SkyCity thus was treated "very differently" from rival bidders. The steps taken "were not consistent with good practice principles of transparency and fairness". The rebuke is unambiguous.

Mr Key's interpretation of these remarks is troubling. He says they refute claims his Government had struck a "cosy deal" with SkyCity. This ignores the finding that the dice were loaded (something that should lead to the immediate loss of gambling licences were it to happen in SkyCity casinos). Then he blamed officials for "a few procedural matters", a shabby attempt at buck-passing.

Being satisfied these were criticisms only of process, not of substance, misses the point. The process is intended to ensure competition and foster value for public money. In this case, all but one bidder was nobbled.