Corruption at council widespread, says Crown

Roading contractor Stephen Borlase and former senior Auckland Transport manager Murray Noone pleaded not guilty to charges of corrupting a public official by bribery. Photo / Doug Sherring

A rare prosecution of alleged corruption in the New Zealand public sector has heard of a claimed cascading culture of bribery that saw a senior Auckland Council manager collect $1.1 million and his subordinates taken for a $3000 lunch.

The alleged gratuities extended to honeymoon expenses in Florida for the daughter of a senior council staffer, dozens of overseas trips, and regular monthly payments of about $8000 into the pocket of former Auckland Transport senior manager Murray Noone by roading contractor Stephen Borlase.

Noone and Borlase yesterday pleaded not guilty to charges of corrupting a public official by bribery. Borlase, whose road maintenance firm Projenz is at the heart of the case, also declared himself not guilty of charges he inflated invoices.

Crown prosecutor Brian Dickey said part of the Crown's case is that Borlase arranged matters so the Rodney District Council - and later Auckland Transport - effectively paid to have their own staff bribed.

The case has drawn considerable interest from white-collar crime watchers as it wound through the system during the past three years, particularly given New Zealand's hitherto almost-spotless reputation for having an incorrupt public sector.

Yesterday, at the start of what is expected to be a seven-week trial at the High Court at Auckland, fringe mayoral candidate and self-styled anti-corruption campaigner Penny Bright sat for a while in the front row of the public gallery.

Dickey outlined what he described as a pattern of transactions: Projenz laying on expensive hospitality for Noone's staff; Noone invoicing Projenz for hundreds of thousands of dollars in allegedly sham "consultation" fees; and progressive larger contracts, first from Rodney District Council then Auckland Transport, being sent Projenz's way.

At the start of the period of alleged offending in 2005 Projenz was said to be barely breaking even on revenues of $1.2m. By 2012, just before the relationship was exposed and terminated, the small company was making annual profits of $3.8m from sales - almost all from contracts with Auckland Transport overseen by Noone and his team - of $8.2m.

Dickey said the Court would hear from nearly a dozen former staffers from RDC and Auckland Transport who would show - sometimes reluctantly as they were themselves implicated - that corruption was widespread and had become deep-rooted.

"The extensive provision of benefits to staff at all levels of their teams resulted in a culture where corruption flourished and was normalised, with no questions asked," he said.

"There was very little chance of disgruntled or principled employees speaking out as everyone was being 'looked after' or was compromised."

Dickey outlined a range of former council bosses, from the former RDC and Auckland Transport, who would testify, as well as a forensic accountant who pieced together Projenz's spending and found the bribes were tagged as the cost of doing business with the council.

Barrie George, Noone's deputy at both the RDC and Auckland Transport, is also scheduled as prosecution witness.

Originally charged as a trio, George pleaded guilty on the eve of trial to receiving $103,580 in bribes from Borlase - mostly comprised including 20 overseas holidays for himself and his family - and was sentenced to ten months home detention.

The trial, before Justice Sally Fitzgerald alone, continues.