KEY POINTS:
Auckland Health bosses siphoned off $2.5 million cash from a restricted pool of funding meant only to be used for mental health.
Instead, they spent that and more money covering costs of other parts of the under-pressure health service - and to settle a major pay agreement with nurses.
The decision to do so was a major breach of spending rules and is a different picture to that painted by former health minister David Cunliffe, who last year held up Auckland District Health Board as an example of how health boards should operate.
The Herald on Sunday has also learned that Auckland is not the only health board abusing the protected funding pool. Deputy director general of health Janice Wilson named Otago as another area under investigation, and said other health boards would be reviewed this year.
Auckland District Health Board's mental health services have come under scrutiny after a number of high-profile cases ended in tragic outcomes.
In 2006, mental health patient Matthew Ahlquist was released into the community against advice of frontline staff. He was subsequently found not guilty of murder by reasons of insanity following the death of Colin Moyle, whom he brutally killed with a shovel then set alight.
Also that year, Shane Fisher took his own life while on day release from the secure in-patient unit Te Whetu Tawera. A coroner's hearing - which is to report back soon - heard evidence of under-resourced staff.
Sally Fisher, the mother of Shane Fisher, said she was "disgusted" to hear mental health funding had been taken from the service in the same year her son took his life.
Both the Mental Health Foundation and the Schizophrenia Fellowship expressed concern over the breach, and unspent funding.
Schizophrenia Fellowship chief executive Florence Leota said: "It's taking away from the vulnerable."
The new report was ordered by the Ministry of Health and prepared by accounting firm Deloittes after relations with the board soured over the misappropriated money.
It says the health board was not spending all the money it was given to provide a good mental health service, and began paying for overheads using the protected cash by changing the accounting methods it used.
It sought and gained permission from the ministry to do so, but only for the 2007 financial year onwards.
But the ministry found it had applied the same rules to previous balance sheets in earlier years.
A similar issue arose in 2007 when the board told the ministry it intended to pay a $3.25m wage settlement with PSA nurses out of mental health. The ministry told the board it could not, yet the March 2007 financial figures appeared to show that it had ignored the instruction. The health board went on to spend about $8m against ministry instructions.
In a written statement, Denis Jury, ADHB's chief planning and funding officer, said: "The ADHB recognises there have been issues in the past but we are addressing these."
MENTAL HEALTH DATA REVEALS MORE DEATHS
Increasing numbers of mental health patients are dying while under treatment - 152 in the last recorded year alone.
The figures were released in the annual report of the Director of Mental Health Dr David Chaplow.
In 2007, the most recent year on record, figures supplied by district health boards show 152 people died, although 43 of these were due to natural causes or pre-existing medical conditions. Among the 109 others who died, 42 were under legal orders for compulsory treatment.
The number of deaths was an increase on the 100 people who died in 2005, and the 107 who died in 2006. Most of the deaths were by suicide.
