Boult: “No witch hunt” as councillors oppose independent finance audit

At an extraordinary meeting of the QLDC this morning councillors gave near unanimous support for an in-house committee review of a procurement fiasco that threatens to bring day to day council business to a standstill. Suggestions of an external audit failed to gain majority support.

The problems centre on QLDC’s 2016 procurement policy and guidelines along with the wholesale failure of council staff to observe these rules.

It was only after extensive Crux coverage that QLDC realised that the rules were being broken on a daily basis – in fact at least 300 times each month – as consultants, suppliers and contractors were not put through a procurement process designed to deliver good value to ratepayers and prevent “jobs for mates.”

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.

Our year-long investigation into ZQN7 Ltd produced evidence of council managers hiring former staff without procurement rules being followed. In the case of ZQN7 $630,000 was paid out with council CEO Mike Theelen telling Crux on a number of occasions that the procurement rules were being followed. It is now confirmed that was not the case.

At today’s meeting councillors voted to give their own Audit, Risk and Finance Committee six months to sort out necessary changes to the procurement rules designed to deliver more accountability and transparency.

A staff report prepared for the meeting revealed that massive problems would result if QLDC tried to comply with the “literal” wording of the existing procurement policy and guidelines including the delay of payments to the IRD and other government departments.

A new $10,000 limit on the need for procurement rules to be applied was adopted by the council today as an interim measure that should allow the most key payments to go ahead without a time-consuming procurement process.

Councillor Niki Gladding pointed out that in the case of ZQN7 the $10,000 “no procurement” limit was used five times but in three of those cases the actual expenditure was $66,000, $32,000 and $56,000. A suggestion from councillor Gladding for two council staff to sign off such deals in the future was not supported by other councillors.

Apart from councillors Niamh Shaw and Niki Gladding most councillors expressed sympathy for the Mayor and CEO Mike Theelen’s preference to “move forwards and not look back” with mayor Boult saying that there had been no “behind the bike sheds stuff going on.”

Councillor Quentin Smith - forward focussed.

Councillor Quentin Smith (Wanaka) told the meeting he wanted to concentrate on the future, not the past.

"My focus is forward looking in ensuring we have sound  accountability, processes and value for money for the external assistance we receive from the hundreds of consultants and contractors that we use. With a proposed $1.4 billion capital expenditure program, much of it in  the infrastructure portfolio, we have a massive task on our hands and  need to be focused on delivery."

 The potential cost of an independent audit was discussed as being in excess of $100,000, although councillor Heath Copland (Arrowtown Ward) said he would canvas support for an independent audit with the council’s Audit, Finance and Risk Committee (AFRC) when it meets next month. Committee chair John MacDonald was not at today’s extraordinary council meeting as he was on medical leave, but he plans to chair next month's AFRC meeting.