Former Auditor-General Martin Matthews. Photo / File
COMMENT:
There's a lot to be said for Japan's ritual corporate accountability.
When the nuclear dust had settled after the Fukushima meltdown in March 2011, Masataka Shimizu, president of Tokyo Electric Power Co, publicly apologised for the disaster and resigned.
The buck – in this case a US$15.3 billion ($24.2b) full-year loss from the disaster and early recovery efforts – stopped with him.
It didn't matter that Fukushima Daiichi was commissioned 40 years earlier, or that it's just one of 190 power stations TEPCO uses to deliver as much as electricity as Italy uses annually.
The risks – though very low – of a tsunami breaching the plant's sea wall, or that the plant's back-up generators could be flooded, had been known for decades.
"I take responsibility for this accident, which has undermined trust in nuclear safety and brought much grief and fear to society," Shimizu said in May 2011.
"Whatever happens, there must be change."
That clarity and remorse was missing at Parliament last week when former Auditor-General Martin Matthews petitioned a powerful cross-party select committee for compensation for the loss of his job in 2017.
Notably absent was any sense of accountability on his part for a multi-year, $700,000-plus fraud by a senior Ministry of Transport executive – suspected just months before Matthews departed as the ministry's chief executive and confirmed weeks before he left the building.
But the six MPs comprising the Officers of Parliament committee paid rapt attention – as they should.
They have the unenviable task of cleaning up a constitutional mess created in the final months of the previous government.
It is up to them to show whether Parliament can really hold itself to account.
Not only did our esteemed parliamentary leaders – from all sides – ride rough-shod through the rules of natural justice when they decided to push Matthews out of the job in August 2017.
On the way through they also casually torched specific legislative protections afforded to the country's independent watchdogs, such as the Auditor-General, the Ombudsman and the Parliamentary Commissioner for the Environment.
Those officials get that protection because, by the nature of their roles, they will have to hold their employer to account from time to time.
For example, in 2013 the Auditor-General's office, then headed by Lyn Provost, found the government's process for picking SkyCity to build Auckland's international convention centre was neither transparent nor even-handed.
In 2016, Provost found "serious shortcomings" in the way an $11.5 million deal to set up a Saudi sheep farm was presented to Cabinet. Using a private contract to help advance a free-trade agreement in the region was also a concern.
For the record, the Public Audit Act 2001 says an Auditor-General, or his or her deputy, can only be removed from the role for disability affecting the performance of their duties, bankruptcy, neglect of duty, or misconduct.
Yet, only six months after giving him the job, the Officers of Parliament select committee brought in an outside reviewer in May 2017 and then decided Matthews hadn't been up to the job after all.
As well as a "stunning" lack of proper process, former Law Commission president Geoffrey Palmer noted in a submission that any review of Matthews' appointment was "plainly wrong" given the specific protections provided by the Public Audit Act.
Former Supreme Court judge Ken Keith warned of the "dreadful precedent" that would be set for Parliament's powers to remove any senior office holder if the Matthews decision was allowed to stand.
Timing is important in all of this. By September 2016, when Matthews was interviewed for the Auditor-General role, his former colleague Joanne Harrison had been arrested and the Ministry of Transport and the State Services Commission had received reports on the scale of the fraud and concerns about her activities dating back to 2013.
Matthews' handling of the fraud investigation was raised at his interviews for the Auditor-General role, although the extent of that disclosure and whether it included his handling of earlier complaints against Harrison is disputed.
Parliament approved the appointment in November 2016. The following month Matthews was sworn in and he started in his new role on February 1, 2017.
But three weeks later Harrison was sentenced. Details of the fraud were released and complaints soon emerged from former MoT staff that Matthews had disregarded earlier warnings about Harrison.
In mid-May, then Labour leader and current Justice Minister Andrew Little asked David Carter, then Parliament's Speaker and chair of the committee that ousted Matthews, to review his appointment as Auditor-General.
A week later, on May 23, Matthews requested a review of his appointment, a move endorsed by Carter. Like Matthews, the politics that had developed around the appointment were "certainly a concern for me," Carter told the new committee last week.
And, two months later, when this juggernaut was nearing top speed, Solicitor-General Una Jagose advised the Speaker that a court was unlikely to challenge the removal of an Auditor-General if Parliament had lost confidence in their appointee.
"Arguably" concerns about Matthews' prior career history and performance, or any failure by him to disclose relevant material when he applied for the new role, fell outside the statutory criteria for removal, Jagose noted in written advice on July 26.
But she said a lack of confidence in Matthews would be a "proper basis for removal" if those concerns had a reasonable basis.
"Ultimately in our view it is for the committee and Parliament to determine the extent to which the statutory criteria have been met or are relevant."
That may be true as a matter of fact, but the absence of any note of caution in Jagose's advice is disappointing. Letting politicians decide whether legislative protections for senior, independent office holders are "relevant" seems remarkable; you may as well give children matches to play with.
If it sounds like a shambles – it is.
Much has been made of the pace the committee acted after receiving Maarten Wevers' critical report in June 2017 on Matthews' unsuitability for the role, and what weight the committee actually gave to the rebuttal Matthews provided a week before his resignation was demanded.
That, and the lack of natural justice in the process, will have to be considered, as will Wevers's belief that Matthews had more information on the frauds at the time of his interviews which he chose not to share with the committee.
But I hope the committee also looks back to the very start of the appointment process.
The State Services Commission, Audit New Zealand and the Serious Fraud Office had been aware of the Harrison case since April 2016.
By July they had reports from Deloitte, Audit NZ and Peter Churchman QC showing how Harrison had committed the frauds, the way MoT processes had been breached, and how she had "groomed" two other ministry workers to assist her.
Things look obvious in hindsight and Harrison was a skilled manipulator. But surely at the time, shouldn't the senior public servants aware of those reports have been asking whether there were broader issues with the culture and practices within the ministry Matthews was running?
As Wevers reported a year later, and told the new committee last week, the MoT was not as tight a ship as he would have expected under someone with Matthews' experience.
Yet Matthews's application for the Auditor-General role proceeded through September and October 2016. Harrison pleaded guilty in early November and a week later Matthews' appointment was recommended to Parliament.
Matthews's anger at the way he was forced out of the role – a career dream – was palpable last week.
Having agreed with the appointment of Wevers as the reviewer and pledging to stand or fall by his findings, he now disputes them.
He clearly doesn't get it.
He was chief executive at the Ministry of Transport when Harrison stole more than $700,000 from taxpayers over three years, doing a lot of harm to other people's careers along the way.
Matthews wasn't the only one duped by Harrison, but he was in charge. Rules hadn't been followed, and some staff had tried to raise red flags. He had preferred Harrison's explanations over their concerns.
Legislation to protect whistle-blowers was subsequently tightened after the MoT experience, as were financial controls at the ministry.
As Wevers told MPs last week, Matthews's "misplaced trust" in Harrison had had serious consequences.
"To my mind, Mr Matthews seemed not to have not taken ownership of what had transpired on his watch."
Parliament must now ask the same question of itself.
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