KEY POINTS:
The husband of former health minister Annette King is accused of being involved in pressuring a health board whistleblower who spoke out about an alleged conflict of interest in a deal worth up to $50 million.
King's husband, Ray Lind, who was then chief operating officer at Hawkes Bay's health board, is alleged to be one of two managers who told the whistleblower "management had power... in terms of my future job security" after she highlighted concerns over the conduct of board member Peter Hausmann.
Hausmann was appointed to the board by King eight months earlier.
The whistleblower later lost her job as a board administrator in a restructure.
Following a personal grievance for constructive dismissal, the woman received a cash payout in a no-fault settlement.
Lind's alleged comments to her were central to her claim.
Lind, who now works for Hausmann's company Healthcare of New Zealand Ltd, has refused to address the comments directly - but told the Herald on Sunday he "categorically" denied "ever behaving improperly as a manager in relation to this matter".
Board chairman Kevin Atkinson, whom the whistleblower approached with her concerns, told the Herald on Sunday she was a valued employee.
"The board had very high regard for the competency and quality of the work the whistleblower did for the board," he said.
Hausmann's role came into question after the whistleblower discovered emails between him and senior health board managers discussing details of the process for the multi-million dollar contract which his company was bidding for.
Hausmann had earlier given the board an assurance he would not be involved in the contract process. The contract was to provide community services in Hawkes Bay and worth between $20m and $50m.
According to documents released under the Official Information Act, the whistleblower received an email from Hausmann on January 10, 2006, in which he discussed aspects of the process that would lead to contract negotiations between the board and Healthcare of New Zealand Ltd.
At that stage, management was preparing the terms of reference for the due diligence process that would be undertaken between the board and the company.
The email seen by the whistleblower showed that Hausmann was privy to the terms of references being drafted by management - effectively overseeing the establishment of benchmarks that Healthcare of New Zealand Ltd would have to meet to get the contract.
The whistleblower, in a chronology she wrote later for Atkinson, says she raised concerns with a senior manager at the board.
"Told me keep under my hat," the whistleblower's notes read. She then asked a second senior manager for clarification: "he seemed busy and a little distracted".
According to the notes, the whistleblower received a phone call from Atkinson and raised the issue while they talked.
The notes read: "The chairman was confused and reiterated to me how scrupulous the RFP [request for proposal] process had to be in regard to P Hausmann's role of board member and any business conducted with his company Healthcare of NZ. Said he should probably see the documents."
On advice from the Ministry of Health, Atkinson also recommended the whistleblower seek the protection of the Protected Disclosures Act, which gives public servants legal protection from repercussions and protects their identity if they raise concerns about public sector matters.
According to other documents, Atkinson also rang the new Minister of Health, Pete Hodgson, to alert him to the potential problem.
The whistleblower's identity became known in the office, according to her notes. She asked to have a meeting with Lind who said he wanted to protect her.
"R Lind told me that I had breached internal policy and he knew the PD act inside out and back to front."
On Thursday, January 18, the whistleblower again met with Lind and CEO Chris Clarke, who had returned from holiday to deal with the issue. In the meeting, according to her notes, Lind said: "This is very very serious. Is at ministerial level. We need to de-escalate this."
The whistleblower said she was uncomfortable with the meeting and wanted legal representation. Then, according to her notes, Clarke and Lind said: "I had to remember that management had power over me - in terms of my job security - so it would be best if I not protect anyone." The whistleblower was then asked if she wanted to take stress leave, which she didn't.
However, months later she was told her position was being merged with another, and she would have to apply for a new job.
The Herald on Sunday understands she took a personal grievance against the health board, claiming constructive dismissal. The case was settled, with a cash payout, on agreement that neither party was at fault. The whistleblower has since lodged a further personal grievance. This has yet to be resolved.
Both Clarke and Lind refused to comment directly on the claims made by the whistleblower in her chronology. Lind said: "I'd like to help you but I'm not able to discuss confidential matters relating to staff employment particularly where the Protected Disclosures Act is used."
Clarke said: "While I would very much like to respond, the employee sought the protection of the Protected Disclosures Act, which means that legally I must not comment."
Hodgson's office has also distanced itself from the issue. In a written statement last week, a spokeswoman said it would be "improper" for Hodgson to be involved in matters involving the whistleblower - even when there were questions around her treatment after making a disclosure. The Herald on Sunday asked if potential conflicts of interest affected decisions to appoint directors to health boards. The spokeswoman said that conflicts only arose once someone was actually on a board - not during the appointment process.
"It is up to district health boards to manage conflict of interest issues."
She did acknowledge that King, as then-health minister, did not follow the Ministry's own guidelines for appointing board members when she put Hausmann onto the board. The guidelines detail a strict "due diligence" process for health board appointments which includes an interview by a panel made up of the board chairperson, a ministry official and an iwi representative.
A critical part of the interview process focuses on conflicts of interest, and questioning of candidates "how they intend to manage any identified conflicts of interest".
The Herald on Sunday has learned that both the chairman of the health board, Kevin Atkinson, and ministry staff who were to have been involved in the process, did not know Hausmann was in the running for the board job until he was given it by King.
A spokeswoman for Hodgson said that while the guidelines were not followed, all legal requirements were fulfilled.
The shortcut was due to a desire to place Hausmann on the board before the pre-election period, which bans board appointments.
Timeline
December 2003: Ray Lind, husband of then-health minister Annette King, joins Hawkes Bay District Health Board as chief operating officer.
May 2005: The board decides to contract out community services - valued at $20m to $50m. Healthcare of New Zealand Ltd is among 10 private providers who bid for the contract.
June 2005: Peter Hausmann, Healthcare of New Zealand Ltd's managing director, is appointed to HBDHB by King. Guidelines for board appointments are not followed by King.
August 2005: Hausmann attends his first meeting with the board. Makes disclosure of interests.
December 14 2005: Healthcare of New Zealand Ltd is identified as preferred bidder for the community services contract. Hausmann assures the board he will not be involved in operational matters regarding the contract process.
January 10 2006: An email sent by Hausmann to executives at the health board, which deals with details of the contract process, is intercepted by a whistleblower.
January 12 2006: The whistle- blower raises concerns with the board chairman.
January 17 2006: Following a full meeting of the board, the whistleblower is told her disclosure is accepted under the Protected Disclosures Act. Whistleblower meets with Lind. According to her notes, he says she has breached internal procedures.
January 18 2006: Whistleblower is called into meeting with chief executive Chris Clarke and Lind. According to notes, she is told: "management had power over me - in terms of job security". Board members meet with legal counsel to arrange inquiry.
February 9 2006: Board's audit committee meets with lawyers and are told to consider a wider inquiry as evidence exists of contact between Hausmann and the board's executive.
March 8 2006: On the recom- mendation of the audit committee, the board votes to terminate the contract process with Healthcare of New Zealand Ltd.
The email trail
Hawkes Bay District Health Board launched its own inquiry into allegations of a conflict of interest by government-appointed board member, Peter Hausmann, in January 2006.
It followed allegations by a board administrator that Hausmann, managing director of Healthcare of New Zealand Ltd, which was one of 10 private providers competing for a large community services contract, had been involved in the contract bidding process. Hausmann told the board in December 2005 he would not be involved in any capacity with operational matters in the contract process.
The inquiry was launched after the whistleblower told the board chairman Kevin Atkinson of emails between Hausmann and the board's executive management team.
The emails came after the board recorded in its minutes in December 2005: "P Hausmann stated that he would not be involved in any capacity with operational matters involving Healthcare of New Zealand and the HBDHB." He went on to nominate two other Healthcare of New Zealand staff who would deal with management.
The emails led to the board hiring lawyers to investigate. A legal opinion written by the lawyers stated: "The documents present prima facie evidence of communications between Mr Hausmann and DHB management in respect of Healthcare NZ's interest in the RFP [request for proposals] process. That prompted the audit committee to question whether or not the RFP process and outcome is safe."
Hausmann did not respond to calls for comment, but a letter written by Healthcare of New Zealand chairman Doug Catley - a Wellington-based multi-millionaire - defends the company and its actions, and threatens the health board with legal action.
In the March 2006 letter, Catley described the effort gone to in pursuing the contract, adding: "Healthcare would not be so foolish as to endanger this investment by entering into a process that could undermine that investment." He urged the board to reverse its course, even suggesting the Office of the Auditor General be asked to investigate. "It is not too late to put a halt to this unwise course you have embarked upon, shake hands and resolve to move forward together."
The board's audit committee and its lawyers examined hundreds of pages of emails and other documents in its investigation. Among those is the January 10, 2006, email which the whistleblower brought to the attention of board chairman Kevin Atkinson.
The email was from Hausmann to Ashton Kent, the health board manager responsible for overseeing the contract process, and copied to Chris Clarke, the chief executive. The email enclosed "the TOR [terms of reference] updated following yesterday's meeting. I have also included the PDF with my notes from the meeting on the previous version of the document".
The audit committee and lawyers later discovered another email dated January 17, 2006, between Hausmann and Kirk, in which Hausmann says that terms of reference need to be more concise.
Hausmann's email reads: "The HBDHB board is one that needs to be constantly 'informed'. They are especially not good at connecting papers delivered over a 18 month period." The email went on to plan a strategy for putting the terms of reference before the board.
The board's lawyers suggested a full investigation including Hausmann and health board staff who had communicated with him. In summary, lawyer Magnus Macfarlane wrote: "There is a risk that the RFP process has been compromised. The greatest risk appears to lie in the commercial soundness of the outcome." Macfarlane said the investigation would have to include Hausmann's activity as a board member "given the undertakings provided by him".
Who's who
Annette King: King is currently the Minister of Police, State Services, Transport and Food Safety. She has been a member of the Labour Party since 1972, was elected Labour Party MP for Horowhenua in 1984 and since then has held a number of portfolios, including Health. Her 2005 Rongotai electorate majority was 12,638.
Kevin Atkinson: Born in Hawkes Bay, Atkinson has spent most of his working life in the technology sector. He is the principal and managing director of the software company, Information Management Services Ltd and currently chairman of the Hawkes Bay District Health Board, deputy chair of the Eastern and Central Community Trust, a director of Hawkes Bay Rugby and a trustee of the Hawkes Bay Medical Research Foundation.
Peter Hausmann: A physio- therapist by trade, Hausmann - who is married with three children - graduated from Massey University in 1982 and spent several years working in sales and management roles in the information technology sector. He is a director and shareholder of Healthcare of New Zealand Ltd, a government- appointed member of the Hawkes Bay District Health Board and chairman of the board of Freedom Medical Alarm Limited.
Ray Lind: Lind is the chief operating officer at Healthcare of New Zealand Ltd. He previously held the same post at the Hawkes Bay District Health Board. He has also worked as executive officer of the Wellington City Council, was general manager of special projects at the New Zealand Engineering, Printing and Manufacturing Union and was the owner/managing director of Ray Lind Consulting Ltd. He also served as a captain in the Regular Force of the New Zealand Army in the 1990s.
