KEY POINTS:
A fresh investigation is under way into a second conflict-of-interest allegation involving the health board already at the centre of a row with the Government.
Again, the investigation focuses on the relationship between Hawke's Bay District Health Board and board member Peter Hausmann, who is also managing director of service provider Healthcare of New Zealand Ltd.
The Herald on Sunday revealed last week that a whistleblower had alerted board chairman Kevin Atkinson to a potential conflict of interest after finding emails between Hausmann and managers at the DHB.
The emails discussed setting the terms of reference to establish benchmarks Healthcare of New Zealand would have to reach to win a contract worth up to $50 million. They came after Hausmann had given the board an assurance he would not be involved in discussions on the possible contract. After legal advice, the health board cancelled the contract process.
Hausmann was placed on the board in 2005 by then-Health Minister Annette King, who failed to follow Ministry of Health guidelines for appointing board members.
Health Minister Pete Hodgson immediately announced an inquiry - a step which has been heavily criticised by the health board, the National Party, Healthcare of New Zealand and Hausmann. They all want the Auditor-General to probe the allegations.
Now, the Herald on Sunday has discovered that the DHB has asked its lawyers to examine the awarding of another contract - this time a $1.1m contract to train caregivers. The contract went to Wellcare Education, a subsidiary of Healthcare of New Zealand Ltd , to train 16 long-term beneficiaries as homecare workers.
Papers released under the Official Information Act show concerns were raised with the board over how the contract was awarded. A memo from board member Diana Kirton to fellow members in May 2006 states: "My concern is that Peter Hausmann acknowledged the need to avoid being involved in contracts but at the very same meeting was involved in discussion with staff that resulted in the company of which he is general manager being awarded a contract worth more than $1 million."
The Wellcare Education connection was what worried Kirton. Hausmann is a director of that company. Although negotiations had been going on for months, including a meeting involving Hausmann in September 2005, he did not declare his involvement with the company until February 2006, when he asked that the conflict-of-interest register be updated to include Wellcare Education.
In an email dated May 26, 2006, Hausmann told chairman Kevin Atkinson he alerted board management as soon as he believed it was relevant. He maintained that the contract was led by the Ministry of Social Development.
This was backed in a February 7, 2006, email from Hawkes Bay DHB chief executive Chris Clarke: "HBDHB had no role in the selection of the provider of training."
This comment is likely to form part of the inquiry. The Ministry of Social Development's deputy chief executive for Work and Income, Patricia Reade, told the Herald on Sunday: "The decision to go with Wellcare as the industry partnership provider was solely the decision of the Ministry of Social Development based on a strong business case... The district health board were consulted but it was the ministry's decision."
Health Minister Pete Hodgson said the inquiry into the ditched community services contract could be widened to include the latest concerns. "The terms of reference for the Ministry of Health review includes leave to investigate 'any other matters'."
Increasing calls for investigation
Sunday: The Herald on Sunday reveals that a $50 million contract process was cancelled after a whistleblower alerted the Hawke's Bay District Health Board to emails between board member Peter Hausmann and management. She says she was told "management had power... in terms of my future job security" - and later lost her job. It is also revealed that then-Health Minister Annette King fast-tracked Hausmann on to the board. Health Minister Pete Hodgson orders an inquiry. A health board chairperson and lawyer will investigate.
Reaction: National Party deputy leader Bill English says the Auditor-General's office should do the inquiry.
Monday: Prime Minister Helen Clark and Hodgson play down the inquiry, saying nothing will be found. Reaction: English says Clark and Hodgson must be clairvoyant.
Tuesday: Health board chairman Syd Bradley and a Wellington lawyer are appointed to run the inquiry.
Reaction: English says Bradley, a Labour-appointee, isn't independent. He labels the inquiry a "sham" and "farce".
Wednesday: The health board also raises concerns and calls for the Auditor-General to investigate.
Reaction: National health spokesman Tony Ryall says this shows a lack of confidence in Hodgson.
Thursday: The whistleblower is named as Deborah Houston, the board's former administrator.
Friday: Hausmann states he has been vindicated by comments at the health board that he was instructed to work with management.
Reaction: The health board says Hausmann has misinterpreted the comments and that a full inquiry by the Auditor-General is critical.
