Chairman backs Housing NZ chief amid hush probe

Housing New Zealand Corporation chairman Pat Snedden last night expressed confidence in chief executive Helen Fulcher despite indications she may have approved the gagging deal that has plunged the state housing agency into a crisis of public confidence.

He said she would stay at the helm during a formal investigation by the Auditor-General into claims of misleading accounting practices by a contractor.

And while Mr Snedden and his board earned a mild rebuke from the Prime Minister for not having alerted Housing Minister Chris Carter earlier to allegations of irregularities - it first heard of them in September last year - Helen Clark also expressed her confidence in Mr Snedden.

The senior executive who signed the deal, Gerard Coles, has been stood down on full pay until the investigation is over. The deal paid the complainant $3000 on condition that he did not approach any MP, minister or journalist about his concerns, which Housing New Zealand said it would investigate.

A letter Mr Coles sent to the complainant in December last year says that the chief executive had approved the deal.

Mr Snedden has repeatedly declined to say whether Helen Fulcher approved the deal and what discussions they have had about it.

That was a matter for the review the board had instigated, he said.

After a meeting with Mr Carter yesterday morning at Parliament, Mr Snedden was still intending that Housing New Zealand's external auditors Ernst and Young could undertake the review.

Asked about a conflict of interest in engaging the same auditors who had ticked the corporation's books to review the allegations, he said he would discuss it with them.

By 4pm Mr Snedden was back in Mr Carter's office announcing that the Auditor-General would undertake the inquiry - into the gagging settlement and the claims of irregular practices.

It is understood that Mr Snedden changed his mind after Mr Carter and the head of Building and Housing, Katrina Bach, counselled him against using its own external auditors for the inquiry, which is likely to take three to four weeks.

The terms of reference that the board has agreed to as a minimum would include:


* The statement of facts containing the allegations agreed between the former contractor and Housing Zealand Corporation on 23 November 2005.

* The context, content, advice received and all matters related to the finalisation of the settlement agreement.

* How the $3000 payment was agreed, what it was for and how it was initiated.

* The degree to which the chief executive was involved, if at all, in this settlement agreement.

* Any further issues the contractor wishes to place before the inquiry.

* Any issues as a result of this inquiry that are deemed relevant to it by the Office of the Auditor-General.

The complainant says $2.1 million of overspending was hidden in an account and then reintroduced into the books later when additional funds were available.

Mr Snedden said internal inquiries about the $2.1 million had been raised in the context of "whether it was material in signing off the 2005 account".

"We were assured ... that wasn't the case."

Helen Clark said at her post-Cabinet press conference that the board should have informed the minister of the allegations against it under the "no-surprises policy".

The person who made the allegations worked for about 40 weeks on contract as the programme logistics manager inside the property improvement team in Auckland, Housing New Zealand said yesterday.

A spokesman for Mr Carter confirmed that the complainant had telephoned the minister's office last year but the minister was not told of the call.

And he said the main complaint had been part of an employment dispute - the financial allegations were a smaller part of what he was saying and there was no discussion about a gagging deal.


HOUSING NZ CORP:

* Owns or manages 66,000 properties.
* Has assets worth $11.3 billion.
* Formed in 2001 when Labour restructured the former Housing New Zealand.
* Monitored by the Department of Building and Housing.