Auditor General confirms early stage enquiries into QLDC's ZQN7 spend

by Peter Newport - Feb 12, 2021

Following coverage by Crux and a complaint from the NZ Taxpayers Union, the Office of the Auditor General (OAG) has started the early stages of enquiries into QLDC's expenditure of $630,000 on two former staff members - appearing to bypass the council's own financial rules. 

Confirming the move this afternoon, the OAG told Crux that no further information could be released, in line with their own investigation process. 

Crux has revealed that QLDC paid $630,000 to ZQN7 Ltd between 2018 and 2020 to review three council bylaws.  The company is connected with new Queenstown Chamber of Commerce CEO Ruth Stokes and Jendi Paterson, former nanny to Mayor Jim Boult's daughter Victoria. Both women are former senior QLDC staff.

During this time both women carried out extensive work for other clients throughout New Zealand including other local councils. QLDC has not been able to provide any evidence to Crux of the council's own procurement rules being followed - there was no tender process and no formal business case as to why the council's own staff could not do the review work. 

QLDC's CEO Mike Theelen has claimed the work was all split into stages of less than $50,000 being therefore exempt from procurement rules. The rules actually forbid that approach and we can find no support for the $50,000 "exemption."

Audit, Finance and Risk Committee Chair John MacDonald - changed his position on looking at ZQN7

In the meantime the Executive Director of the NZ Taxpayers Union, Jordan Williams says it is incredulous that QLDC's Audit, Finance and Risk Committee has not yet met to address the issue and called on committee chair John MacDonald to "consider his suitability for that role."

Councillor MacDonald initially told Crux that the committee would want answers as a matter of some urgency - but then changed his position to saying the Mayor Jim Boult was in charge of the matter and that the Audit, Finance and Risk Committee would not be meeting for another seven weeks.

Mayor Jim Boult asked QLDC CEO Mike Theelen on January 21 to investigate his own management team's role in the ZQN7 procurement situation - an investigation that Crux believes would only have taken one or two days given the simplicity of QLDC procurement policy and guidelines - amounting to less than ten pages. Our own coverage linked to numerous official information documents - all indicating that QLDC did not follow its own financial rules in hiring ZQN7 Ltd.

ZQN7 Director Ruth Stokes - now the CEO of the Queenstown Chamber of Commerce.

We therefore take the view that QLDC is using the time before a public announcement to manage or choreograph the situation so as to cause minimum negative impact to council management.

On December 2 2020 Crux requested details of other "direct appointments" of external consultants - in particular consultants who are formal staff. QLDC is currently refusing to release such details - a decision that Crux has challenged with the Office of the Ombudsman.

QLDC Chief Executive Mike Theelen has repeated to Crux on a number of occasions that QLDC did not break its own procurement rules in respect of ZQN7. We asked QLDC's comms team on January 26th if Mr Theelen had read the Procurement Policy and Guidelines. The comms team provided the following response:

“As Chief Executive, Mr. Theelen is familiar with a wide range of QLDC policies. This includes the Procurement Policy. However, when issues arise it is best practice for him to consult with staff members who oversee individual policies.”

Crux has approached QLDC for comment regarding the Office of the Auditor General's investigation. QLDC's comms team has said that they will not be able to respond until Monday, February 15th.

Main Image: QLDC CEO Mike Theelen.


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