Wananga conflict of interest costs $127,000

The Government paid $127,000 to an adviser it wanted to improve financial practices at Te Wananga o Aotearoa, before realising a conflict of interest existed.

Tertiary Education Minister Michael Cullen confirmed the mistake yesterday, under questioning in Parliament from National education spokesman Bill English.

Mr English said Labour appointed Graeme McNally as a development adviser charged with improving financial and accounting structures at the wananga in 2002.

He was a partner at Deloittes - the same accounting firm that for four financial years until 2003 "gave the wananga a clean bill of financial health", Mr English said.

Deloittes carried out the audit of the wananga under delegation from the Auditor-General, required by statute to audit the wananga's financial accounts.

Mr English asked Dr Cullen to explain the conflict, highlighting the apparent irony that the contract was awarded to a firm which "should have uncovered all the financial mismanagement that the Auditor-General uncovered".

Dr Cullen relied: "I am advised that the conflict was not known to the minister at the time that Mr McNally's appointment was made ... When the conflict became clear, Mr McNally's appointment ceased."

Asked how long it took to uncover the conflict of interest, Dr Cullen said "rather too long", but would not elaborate.

Mr English also noted that Labour MP Shane Jones, now chairman of Parliament's finance and expenditure committee, was a member of the wananga audit and finance committee during the period covered by the Auditor-General's report.

He asked if Dr Cullen was aware one of Mr Jones' "responsibilities was policy on credit-card use, which the Auditor-General describes in a whole chapter of analysis as unacceptable?"

Dr Cullen said: "I am advised that he also resigned in frustration at the lack of progress being made ... as recently as June of this year."

Mr Jones said afterwards that he was appointed to set up a number of procedures and guidelines but in the end it was up to executive-level staff to ensure they were followed.