Housing NZ faces new allegations

Fresh allegations of accounting problems and budget blowouts have been levelled at Housing New Zealand Corporation by a former senior manager.

The Herald on Sunday has received documents from former Healthy Housing manager Brian Capaloff alleging unauthorised and excessive spending, and a lack of procedures to handle the problems.

Mr Capaloff is the second person in a senior role to come forward about problems at the state housing provider, which manages an $11 billion property portfolio.

The Auditor General's office launched an investigation after the Herald on Sunday revealed a former contractor at the corporation was paid to keep quiet after raising concerns with bosses about serious accounting problems involving millions of taxpayer dollars.

Senior executive Gerard Coles was immediately stood down for his role in gagging the whistleblower while the Auditor-General investigated the "gagging letter", and allegations that accounts were manipulated and management reports supplied to Housing Minister Chris Carter "untrue".

Mr Capaloff came forward after reading of the inquiry, saying the whistleblower's difficulties in raising concerns echoed his own as head of the government's flagship Healthy Housing project.

It was set up in 2001 as a joint project with district health boards to identify areas of ill-health relating to housing conditions and improve the quality of homes.

Housing NZ responded to the allegations on Friday night, upholding some of Mr Capaloff's claims stating it was unable to address others because they involved an employment issue.

In an email to Housing NZ staff when leaving in September 2003, Mr Capaloff claimed:

The Healthy Housing budget blew out by $5m - almost 50 per cent - in its first year

There were no procedures to handle the increased spending

Houses were built without authorisation and authorised jobs were not completed.

He has also provided documents showing he alerted senior managers to the problems, and complained he was not being given the support to manage the issues.

"Poor financial management is not a new thing," he said. "While I was there, I expressed concerns about the lack of procedures. There was no audit trail."

Mr Capaloff has since returned to the United Kingdom.

Housing NZ spokesman Tom Bridgman defended accounting procedures at the corporation but conceded there was a blowout in 2002 and problems with procedures at the start of the programme.

A higher number of overcrowding cases than expected led to spending rising from $11.7m to $17.9m. Extra cash was approved by the board.

On accounting issues, Mr Bridgman said: "There were refinements to processes and procedures following the pilot."

He said there was also "confusion" around processes. "In terms of delegation, the Healthy Housing pilot necessarily cut across existing areas of operational authority and accountability and this did lead to some confusion."

He said Healthy Housing was a pilot project with its own practices and procedures that had since been incorporated into the corporation's delegations and authorities.

Whistleblower report ready

The whistleblower who was "gagged" by Housing NZ bosses says a draft report into his allegations appears to substantiate his claims.

The man, who will not be identified, said he spent five hours going through the report with the Auditor General's office and he was "relatively happy with it".

Asked if it stacked up his allegations, he said: "I think it pretty well does." The 'Hush Money' investigation began after the Herald on Sunday revealed senior Housing NZ executive Gerard Coles had sent the man a contract in which he would agree to not approach MPs, ministers or the media with serious concerns about alleged manipulation of millions of taxpayer dollars in return for $3000.

In a statement yesterday, the Office of the Auditor-General said its report into allegations would be presented to the board of Housing NZ by June 12.

It said extra time was needed to complete consultation with those involved and to allow the Auditor-General to complete internal quality assurance processes.