An investigation by the public services watchdog into how Government departments managed conflicts of interest with consultancy businesses owned by family members of minister Nanaia Mahuta has found a number of flaws.
However, the review found "no evidence of favouritism, bias, or undue influence over agency decisions" due to any connection the businesses had with a minister.
The inquiry by the Public Service Commission ran a ruler over all Government departments to identify which had entered into contracts with Ka Awatea Services Ltd (KAS) and Kawai Catalyst Ltd (KC), businesses owned by relatives of Mahuta, or any of their directors since October 2017.
Four agencies were found to have such contracts, all of which had been identified prior to the review: Kainga Ora, the Ministry for the Environment, the Department of Conservation and Te Puni Kokiri Ministry of Māori Development.
The review found:
- Te Puni Kōkiri and the Ministry for the Environment failed to properly identify and manage perceived conflicts because they didn’t follow what were otherwise sound agency policies and processes.
- a minor perceived conflict with Kāinga Ora was not identified because the agency failed to ask about conflicts of interest during the contracting process.
- there were no conflicts of interest in relation to Department of Conservation contracts, but its contract management was poor.
"Overall, the review found agency procurement and conflict management practices at the four agencies fell short of the standards expected of public service agencies," a statement from the commission said.
"It also found tighter processes for assessing perceived conflicts of interest are needed in the agencies, including where conflicts involve Ministers, and that procurement practices need to improve, in particular the way those agencies manage contracts under $100,000."
However, the inquiry found "no evidence of favouritism, bias, or undue influence over agency decisions in relation to KAS or KC due to any connection with a Minister".
"The actions of Ministers, the directors of KAS and KC, and members of the public, were outside the scope of this review. However, the review did not identify any matter that would require referral to another oversight body."
The agencies under review have now taken steps to address the issues, the statement said.
"The Commissioner will also now issue expanded conflicts of interest model standards to agencies, strengthening the controls around identifying and managing conflicts, and write to all chief executives outlining his expectations in this area. Additional training will also be provided for all public servants who work on contracts."
National's public services spokesperson Simeon Brown said on Tuesday the review highlighted agencies have "developed a culture of carelessness" with contract procurement and the management of conflict of interests, "undermining public confidence".
"The findings of the report show the Ministry for the Environment had several opportunities to address issues with their procurement processes into awarding a contract to Ms Mahuta’s husband Gannin Ormsby," said Brown.
"Instead of being driven by effective and robust procurement processes, the ministry was driven by its own deadlines.
"Even more concerning, Kāinga Ora did not even ask about any conflicts of interest during its procurement process with Mr Ormsby’s company, a basic requirement for government agencies.
"It is deeply concerning that the report found agencies failing to comply with the procurement guidelines and rules set out by the Public Service Commission. The report begs the question of how widespread these failings are in the public service."
He questioned whether agencies would follow new guidance by the Public Service Commission since they didn't follow the original advice.
"Public Service Minister Chris Hipkins needs to step up and explain why agencies are failing to practice effective and robust procurement processes and how agencies deal with conflicts of interest," Brown said.
The probe was initiated after Mahuta wrote to Public Services Minister Chris Hipkins in September. She raised news stories outlining potential conflicts of interest between government departments and the businesses.
"It has concerned me for some time that even though I have declared conflicts of interest and noted they have been managed in accordance with the Cabinet Manual, these stories are still persisting," she said at the time.
Mahuta said "that of all the issues that have been raised, I had no say in approving, at contract level, any of the matters that have been raised in the public domain".
Brown had previously written to Public Services Commissioner Peter Hughes asking him to look into complaints of conflict of interest at the four agencies. Hipkins then asked him broaden his inquiry to look across all agencies.
