KEY POINTS:
The Auckland District Health Board did not investigate until it was too late a board member's interests in the company that won a $560 million medical testing contract, High Court documents allege.
Lawyers for Medlab, an unsuccessful bidder for the eight-year contact, say that on July 12 last year the board suggested a check be made to "qualify" the position of Dr Tony Bierre and that there was "no influence/no insider info".
A day later, it was told the "ADHB and Tony Bierre have addressed any conflicts by an approach that exceeds all statutory or ethical obligations".
Medlab lawyer Adam Ross said the board accepted the answer, despite the fact there appeared to be no documentary evidence of a full disclosure of interests.
"The error made is that the DHBs [Auckland and the city's other two health boards] did not consider the conflict/insider information problem until they were almost committed to signing the contract with Labtests.
"By then it was too late. The momentum to get the deal done meant that, realistically, it would have been impossible to withdraw from the contract at that late stage," Medlab submissions before Justice Raynor Asher say.
On July 14, the boards awarded the contract to Labtests Auckland, a paper company in which Dr Bierre bought a 16.67 per cent share on the same day. He resigned from the Auckland board a few weeks later.
Medlab, the incumbent medical test provider, is fighting the contract in the High Court. It claims the Auckland board changed its expectations of a successful medical testing provider without telling the company.
It also says Dr Bierre - who did not act illegally - used his inside knowledge of changing board tender requirements to secure the contract for Labtests.
Medlab submissions claim Dr Bierre had advised the Labtests consortium in March last year of the best way to beat Medlab to the contract.
"Change the business model or paradigm sufficiently so the incumbent [Medlab] finds it difficult to adapt and is seen to be trying to maintain the status quo."
It is claimed Dr Bierre was "putting to effect" information learned during his time on the Auckland board and its audit committee in 2005, when the board had been reviewing its laboratory testing strategy.
As Medlab submissions wound up yesterday, lead lawyer Jack Hodder said the board had played fast and loose with "a critical decision for health care in the Auckland region".
The hearing is expected to finish next week.
