ZQN7 - Councillors silent on $630,000 to two former council staff

Following a year long investigation into $630,000 of payments made by QLDC to two former staff members (via ZQN7), Crux has been met with a wall of silence from elected councillors. This is in spite of a council report last week revealing multiple failings in how the money was paid out.

CEO Mike Theelen - told Crux that $630,000 paid to ZQN7 aligned with council financial rules - but now the council's own report says this was not the case.

CEO Mike Theelen had made repeated statements throughout 2020 to Crux that the money complied completely with QLDC's procurement rules. The council's own internal report now contradicts those statements.

The two staff members working through ZQN7 were Ruth Stokes, currently CEO of the Queenstown Chamber of Commerce and Jendi Paterson, a close family friend of Mayor Jim Boult and former nanny to the Mayor's daughter Victoria.

Crux emailed all ten councillors on Friday last week asking for comment on the report and whether they were comfortable with Mr Theelen's handling of the issue.

Only two councillors, Niki Gladding and Niamh Shaw, commented. Crux understands that our emailed request for comment was passed on to Mayor Jim Boult who then worked with QLDC lawyer Alice Balme to notify councillors of potential legal consequences of talking to Crux about ZQN7 or Mr Theelen.

Here's the statement from Niki Gladding:

Niki Gladding - wants a new elected group to control the council's media and comms activity and improve transparency.

"The report raises at least a couple of high-level issues or concerns for me:

Firstly, it indicates that aspects of QLDC’s Procurement Guidelines have not been understood or followed by some staff for some time – years by the looks of it.  Elected members haven’t required transparency around contracts and procurement, and so there was nothing in place to alert us that the Guidelines were not being followed. 

Secondly, Crux raised specific concerns about the procurement of ZQN7 back in Feb 2020.  It’s taken elected members (as a group) a whole year to take those concerns seriously and acknowledge that they are valid.   

QLDC breached its Procurement Guidelines, but I don’t think we should focus on blame because we need to develop an organisational culture that’s quick to reflect on its mistakes and learn from them. I’d rather focus on ensuring we have systems in place across the organisation to ensure policies and bylaws and legal requirements are followed and that compliance can be easily overseen by the elected members, media and the community.

I’d like us to form a Committee to oversee the corporate services department that controls media responses, communication and consultations; I think we need to ensure LGOIMA requests and responses and all contracts are published on the website; and I’d like us to consider other ways to improve transparency and ensure elected members can govern better.  

For peace of mind, I’d also like to see an external investigation of ZQN7’s procurement and of QLDC’s procurement practices more generally."

Councillor Niamh Shaw supplied Crux with the following statement:

Councillor Niamh Shaw - is ZQN7 an isolated case?

“Many thanks for giving me the opportunity to comment; as always, this is my own personal opinion. I believe we require an external independent review of not only the ZQN.7 contract, but our processes generally. It should be noted that the decision not to proactively do so was made by a majority of Council - not staff. 

Although I endorse the recommendations of the report, it doesn’t sufficiently cover some critical areas such as value for money, budget overspend, and whether the ZQN.7 process was an isolated incident. Before any recommendations can be implemented, we must identify and address any fundamental issues that gave rise to such a situation in the first place - and I believe the only way to ensure this is an external independent review.”

The office of the Auditor General is currently making preliminary enquiries into the procurement of ZQN7 and Crux has lodged complaints with the Office of the Ombudsman around QLDC's reluctance to release details around ZQN7 as well as other former council staff employed as external consultants.