Cover-up suggested for loan-shark cash

Work and Income is investigating a staff member who allegedly offered to falsify documents to cover up a grant given to an aspiring loan shark.

The Auckland employee, a work broker Work and Income (formerly Winz) refuses to name, made the suggestion to mask the $5000 start-up allowance in an email in March 2000 when he was a co-ordinator of Winz's Enterprise Allowance Programme, the Press newspaper in Christchurch reported.

A series of emails released under the Official Information Act (OIA) by the Ministry of Social Development reveals he made the offer after the grant was allocated against the advice of former Winz internal auditor Graeme Wislang.

Work and Income said it was shocked by the employee's suggestion to change official ministry documents and promised to get to the bottom of the controversy.

Ray Smith, the ministry's deputy chief executive, said he found out about the more-than-four-year-old issue only a few weeks ago.

He was shocked that a staff member would want to cover up how public money was being used.

Mr Smith also admitted the organisation had made a mistake in funding such a venture.

"We'd like to make it clear that the decision to grant this was wrong. The comments made by the staff member are entirely indefensible."

The writer of the emails was being asked to "explain his actions".

The investigation was unlikely to take long and could end in disciplinary action for the employee.

The OIA request that uncovered the emails was initiated by Mr Wislang, who left the ministry late last year.

He said although $5000 was not an overly significant amount, the emails provided insight into "systemic ministry attitudes and behaviours" after Winz was set up in 1998.

The released emails are conversations between the staff member and Mr Wislang.

In one, the co-ordinator said he did not think Winz would "attract egg on the face as there is no suggestion in the business plan that the working capital will be our money".

"I think that we are well covered should some Opposition upstart be wanting to throw the book at [Social Development Minister] Steve Maharey about what we provide money for.

"If you wish, I can have the vetting agent report amended so that any documentation seized under privilege will not show the true nature of our customer's business which ... is only an anathema to the suits in Karori, Fendalton and Remuera."

In other messages, the co-ordinator outlined the application for $5000 to set up a money-lending business and said the client's intention was to use the money as his "start-up stock" in the same way as a cabinetmaker would buy wood.

The client was "probably employable, used to work for IRD and is now into his church in a big way. He doesn't have the image of an office worker, being PI (Pacific Island) and overweight", the co-ordinator said.

In his response, Mr Wislang said support of the money-lending proposal was "problematic" and doubted the idea would be seen as "acceptable to the wider community use of government funding".

"Winz would be taking a risk in supporting this type of business, particularly when [in a sense] it lends money itself at no interest to many of the same group of people who might have to use this type of lender."

Mr Wislang said the idea that the $5000 would convert to $24,000 in a year, representing earnings by the loan broker of 480 per cent, suggested the client would not be shy with his interest rates.

"Apart from issues of social conscience, who's going to be mad enough to borrow money on those sorts of terms?"

In the final email, Mr Wislang was told the client had been funded regardless of his advice.

Mr Smith said it was entirely unacceptable that a staff member would consider using a document in the way proposed.

"I think the vast majority of staff are professional and caring in the way they work with clients.

"Someone doing something like this, it casts aspersions on all the people who try to get it right every day."

- NZPA