Nanaia Mahuta was Associate Minister for the Ministry of the Environment when a consultancy owned by her husband, Gannin Ormsby was paid $25,000 for a year's work. Photo / Mark Mitchell
The Public Service Commission had concerns about a recent review of contracts conducted by the Ministry for the Environment, emails released under the provisions of the Official Information Act suggest.
The contracts, signed in late 2020, were between the Ministry for the Environment (MfE) and companies owned and controlled by family members of Government Minister Nanaia Mahuta. In mid-2022, concerns over the conflict of interest risk the contracts entailed prompted the MfE to conduct a review.
That review was provided in draft form to officials at the Public Service Commission (PSC), the government agency which sets standards for and provides advice to public agencies on matters including the identification and management of conflicts of interest.
However, correspondence between officials indicates that while Kate Salmond, the Public Service Commission’s chief adviser, integrity and investigations, had concerns about the draft version of the MfE’s review. It appears that alterations were not made as a result of her concerns.
In particular, Salmond warned MfE report author John O’Connell, the ministry’s principle risk and assurance adviser, about the draft’s emphasis that the ministry had followed PSC advice back in 2020 when it signed a contract with Gannin Ormsby, the husband of Minister Mahuta, who was then Associate Minister for the Environment though with no purview over the relevant area of work.
Back then, the PSC’s advice was that “being the Minister’s husband should not preclude his involvement, but that a conflict of interest is present”. A robust management plan was recommended.
The problem, however, underscored by correspondence between Salmond and O’Connell, was that when the MfE official sought that advice he failed to disclose that a second contract was anticipated, for two other Ormsby family members. And furthermore, though the contracts had been planned for months, and the Mahuta family connection was known to officials at the MfE, the advice from the PSC was sought urgently, and only after the contracts were already drawn up.
Gannin Ormsby’s contract with MfE was worth $25,000, the agreement was signed with his wholly owned consultancy, Ka Awatea Services (KAS). The second family contract, undisclosed to the PSC, between MfE and Gannin Ormsby’s nephew Tamoko Ormsby and Tamoko’s wife Waimirirangi Ormsby, was worth $65,000. The agreement was signed with the couple’s wholly owned consultancy Kawai Catalyst (KC). Both figures exclude GST.
Concurrent with the MfE review, details of contracts between KAS and three other public agencies, and the political fallout, prompted first the Opposition and then the Government to ask the PSC to undertake a probe of its own on the matter.
In September, a PSC probe was announced; its findings are expected to be released to the public next week. The PSC’s views, articulated in July to the MfE, may point to some of the issues it will highlight in its wider review.
The MfE draft review placed considerable weight on officials having sought PSC advice in 2020 in advance of signing a contract with Gannin Ormsby’s Ka Awatea Services. However, Salmond’s feedback questioned that emphasis.
“...I am not sure it’s entirely appropriate to place so much emphasis on PSC’s advice in relation to the conflict of interest. As you and I discussed, PSC was only aware of one family member…and the appointment of the other two changed the nature of the issues,” Salmond wrote to O’ Connell.
“In addition, MfE knew about the conflict for months but only asked PSC for the urgent advice in October [2020] once the contracts were already drawn up and near final. Given the speed with which the advice was prepared and that it was not based on the full facts, it seems odd to put much weight on the idea that MfE followed it,” Salmond noted.
The review in both draft and final form noted both that the PSC had not been told of the second family-connected contract, and that the timing was very rushed. However, it also quoted the PSC’s advice that had been given, and included the summary: “The Ministry [for the Environment] therefore followed the PSC’s advice, subject to whether we had “strong conflict of interest arrangements and management in place.” None of this was altered in the final text.
Asked why the PSC’s feedback was not reflected in the final text of the review, an MfE spokesperson said: “The Public Service Commission’s advice was mentioned in the review as one factor in the number of measures taken to manage the perceived conflict of interest. As mentioned…the report also focused more widely on the appointment process.”
Salmond was also surprised that the MfE draft review did not set out benchmark guidance for conflict of interest management and weigh the processes that were followed against that standard.
“We had expected your report to focus on conflict-of-interest guidance (eg the Commission’s Conflict of Interest Model Standards and the Office of the Auditor-General’s Conflict of Interest Best Practice Guide). Your report differs from this (i.e. it doesn’t set out the facts, assess them against a benchmark, make findings on compliance and offer recommendations to improve).
The spokesperson said the MfE undertook the internal review to find out whether procurement and appointment guidelines remained fit-for-purpose, and to identify if any potential improvements could be made. She said it was not intended to solely focus on conflict-of-interest management. She also noted that when publicly released, the Ministry included an annex with a key timeline for the procurement process and it has also proactively released key documents.
The final text also enumerates changes and improvements the MfE has made since the appointment process in 2020.
The MfE emails were released to the National Party. National’s public service spokesperson Simeon Brown said correspondence, including the PSC’s qualms over the draft text which were “not addressed in the final report”, underscore the need for a wider PSC inquiry into the matter.
In September, Minister Mahuta also expressed her concern over the broader situation: “In at least three of the government departments, it is evident there is an inconsistent approach to the way conflicts of interest have been managed by them. That is a matter at departmental level. That’s why I’m pleased that the Public Services Commissioner is looking at this.”
The purpose of the wider review, announced in September, is to determine whether Public Service agencies “have appropriately identified, assessed, managed and documented any conflict of interest in their contractual relationships with KAS and or KC or their directors (Gannin Ormsby, Tamoko Ormsby, and Waimirirangi Ormsby).
Its scope, laid out in letters sent to public agencies, excludes “[forming] any views in relation to the actions of Ministers, KAS, KC, the directors of those companies or any other individual member of the public.”
In addition, it will not examine any individual appointments by the Cabinet or employment agreements, including Waimirirangi Ormsby’s 2019 appointment to the working group which produced the contentious He Puapua report, a roadmap of ideas to achieve Māori self-determination.
Mahuta has said that she has been “assiduous” in declaring conflicts of interest.
In late 2020 and early 2021, four government agencies - MfE, Kainga Ora, the Department of Conservation, and Te Puni Kōkiri/the Ministry for Māori Development - awarded contracts to KAS and KC worth a total of $230,000 (excluding GST). One contract was a grant, the others were awarded on a sole source basis.
Both Kainga Ora and DoC have undertaken internal reviews of the awards and the processes followed. A spokesperson for DoC said the department had completed its review, and expected to release this when the PSC concludes its wider process. A Kainga Ora spokesperson said the crown agency would provide more information on its review and findings in the first half of December.
It was believed that Te Puni Kōkiri had similarly undertaken a review. However, a TPK spokesperson clarified: “Te Puni Kōkiri looked into the $28,300 grant it awarded to Ka Awatea Services in 2021 as part of due diligence to inform responses to various requests for official correspondence received…[it] has not conducted a formal internal review…”
The completed MfE review found “[no] reason to challenge the direct procurement method used to hire both KAS and KC. Neither did it find any evidence or indication that the appointments were made because of the family connections to Minister Mahuta, and it found no evidence of any political involvement in the process.
It did, however, highlight a litany of deficiencies including: a poorly planned process that involved the ministry’s procurement and legal teams “too late to provide timely advice…”; failure to obtain the Chief Executive’s approval as set out in the procurement plan; inadequate escalation of risk to senior management; and, little separate discussion of the conflict of interest risk in hiring “the nephew of the rōpū member [Gannin Ormsby] and his wife”.
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