Auditor General: QLDC probe "is ongoing" - QLDC "No investigation."

The Office of the Auditor General and the Queenstown Lakes District Council have a dramatically differing view of a probe into the council breaking its own rules over the payment of tens of millions of dollars to consultants and contractors. Many of the consultants and contractors are former QLDC staff.

The council says "there is no investigation." The Auditor General says that their work at QLDC is "ongoing" and "not informal."

It was confirmed on February 12th that the Auditor General was looking at QLDC's finances and why the council's procurement rules that govern hundreds of millions of dollars of ratepayers money were either ignored or misunderstood for over four years.

ZQN7's Ruth Stokes - now CEO of the Chamber of Commerce. Her company was paid $630,000 by QLDC between 2018 and 2020 - she's a former QLDC manager.

A Crux investigation has showed that in the case of just one consultant, ZQN7 Ltd, two former council staff were paid $630,000 in 48 months without the council's financial rules being followed. The rules are designed to stop "jobs for mates" and ensure that ratepayers receive good value for their council dollars.

Our investigation exposed a problem so serious that senior council staff discovered that if they followed their own rules, in place since 2016, the council's day to day operations would not be possible. An Extraordinary council meeting in Februray was called to change the rules.

Crux requests for more information from QLDC about other consultant contracts are being blocked by either a move to charge council fees for access to the information, complaints that the our requests will take too much time, that releasing the information amounts to harassment of council staff as well as preventing their freedom to have internal discussions away from public scrutiny.

ZQN7 employee Jendi Paterson is the former nanny to Mayor Jim Boult's daughter - and is a close friend of the Boult family. She is also a former QLDC Team Leader.

Crux has asked the Office of the Ombudsman to intervene and assist with our access to further information.

Here are the questions we have asked QLDC, followed by their response.

• Is the Office of the Auditor General still investigating QLDC’s financial management and failure to follow the council’s own Procurement Rules and Guidelines? What is the status of their investigation and how broad is their work?
• Has QLDC received any communication or preliminary findings from the Office of the Auditor General? How many QLDC staff are involved in the enquiries from the OAG?
• QLDC’s CEO Mike Theelen was wrong on a number of occasions in saying to Crux during 2020 that QLDC had fully complied with Procurement Rules and Guidelines in hiring and paying ZQN7 Ltd. What action is, or will be taken, as a consequence of this failure by Mr Theelen to speak factually on such a key financial matter?

 QLDC's full reply:

“As previously advised, there is currently no investigation of QLDC by the Office of the Auditor General. For further details you are best to contact them directly.

“All actions from the internal review of QLDC’s procurement practices, including those relating to ZQN7, were detailed in the QLDC report on the matter. This report has previously been sent to Crux.”

From the Office of the Auditor General in answer to our question: "In the public interest, can you please clarify if your “informal” or “preliminary” look at the QLDC’s procurement processes and financial management is complete, ongoing or will become a formal investigation?"

"Our work isn’t informal; when we consider an issue we need to carry out enough work to make an informed decision about whether to carry out an inquiry or do some other work. That usually involves a review of documents and/or correspondence and discussion with the entity. It would be more accurate to say that our work (at QLDC) is ongoing.

"There’s more information about our process on our website: Our inquiry process — Office of the Auditor-General New Zealand (oag.parliament.nz)."

"We will let you know when we have a further update for you."

Source: Office of the Auditor General.