Case builds for the quick resignation – or removal – of QLDC’s CEO Mike Theelen
It is almost a month since Crux published a definitive analysis of QLDC's $630,000 expenditure on ZQN7. We believe CEO Mike Theelen has spent this time preparing an orchestrated announcement that will seek to deflect attention from the facts we have uncovered - in spite of the attention of the Auditor General. Here is our view of what is at stake - and what should happen next.
Three strikes and you’re out. That’s a popular principle for both sport – and life.
We all make mistakes – but three big mistakes on the public dollar invariably reaches the threshold for serious consequences and accountability.
The Chief Executive of Queenstown Lakes District Council, Mike Theelen, is a smart, charming man who knows the local government system back to front. His time in Queenstown might have turned out to be a pleasant conclusion to a long career, except for three big mistakes – two proven and a third looking imminent.
Sixty year old Theelen arrived in Queenstown in February 2016 as QLDC’s new CEO with one big black mark against his name and reputation. That black mark came from former High Court judge Sir John Hansen who headed a Government appointed review into the rebuild of Christchurch following the earthquakes.
Sir John singled out Mike Theelen, who was in charge of the council’s planning department, for particular criticism saying that he seemed surprisingly ill-informed about the process that he was supposed to be controlling. There were multiple calls for Theelen’s resignation or sacking then, in particular from local developers who wanted to speed up the Christchurch rebuild and recovery process.
This was at a time when Theelen’s then boss, Christchurch City Council CEO Tony Marryatt, was the focus of public outrage over large pay rises. Marryatt was eventually forced out of office after the council was stripped of its building consent accreditation – but he still took a $500,000 “resignation package” on leaving. His tenure was covered in controversy with 4,000 people at one stage attending a public protest rally against him.
Both Marryatt and Theelen originated from Hamilton City Council.
Perhaps learning from the Marryatt playbook Mike Theelen has also been able to engineer some big pay QLDC’s rises and extensions to his contract, with the support of Mayor Jim Boult.
Crux queried the most recent extension to Mike Theelen’s contract employment this year and received this official information response just yesterday. One fascinating feature of the process is a clear effort by the council to comply with all procurement requirements in selecting a recruitment agency – even though the budget was under the $50,000 that Theelen says makes it “exempt”. Here’s the full disclosure from QLDC including a link to all of the recruitment procurement documents.
An official information request by Councillor Nikki Gladding in September 2019 revealed perhaps the most serious shortcomings of Theelen’s tenure as QLDC’s CEO.
Public servants, of which Mr Theelen is the most senior in the Southern Lakes District, are expected to be 100% politically neutral. It’s obvious. Management must not get involved in the politics of the Mayor or the elected Councillors. The Mayor and elected Councillors are Governance – and the senior staff are Management. Never the twain shall meet. It’s a Holy separation on which local democracy is founded.
Ms Gladding’s LGOIMA (local government official information) revealed not only that Mike Theelen had played a role in writing the most political speech of Mayor Boult’s time in office – but that he was taking sides against community opinion. The emails reveal his concern over Mayor Boult “burning political capital”, drafting the famous Wanaka speech in which Boult, just before the local elections in 2019, promised to freeze Wanaka and Queenstown airport expansion while the community was consulted through a social and economic impact survey which was run by consultants Martin Jenkins.
The emails also reveal that Theelen accused key parts of the community of living in a “fake news continuum” in opposing airport expansion, and allowing the council’s own PR team to assist the beleaguered Queenstown Airport Corporation management in trying unsuccessfully to garner more community sympathy and support for expansion – against the repeated wishes of the majority of the population. The community views were made clear in multiple surveys and reports – including those run by the council and the airport corporation.
Wanaka residents have gone as far as a judicial review where they claim that the Mayor and QLDC managers have been “evasive and misleading” over public information relating to airport expansion. QLDC and the QAC are spending around $1 million of largely public money defending themselves in this action.
The emails discovered by Councillor Gladding painted a fascinating picture of Mr Theelen leading council staff in supporting not only airport expansion but the Mayor’s political leaning towards both airport and tourism growth. The Queenstown Airport Corporation, 75% owned by the QLDC ratepayers, is supposed to be governed by an annual Statement of Intent as agreed by QLDC’s elected councillors. For council management, led by Theelen, to take sides against the community is perhaps the greatest betrayal imaginable of local democracy.
As stated at the start of this piece, people make mistakes. That’s OK as long as we own up to our mistakes and don’t try to hide them – especially when the person at the centre of the mistake is our district’s most senior public servant being paid more than the Deputy Prime Minister and not that much less than Jacinda Ardern. Theelen earns $356,619 (2019/2020) vs the PM’s $471,049 annual pay cheque. The Deputy PM and Finance Minister Grant Robertson gets $334,734.
For over a year now Crux has been investigating QLDC’s extensive use of contractors and consultants. A big chunk of the council’s $100 million annual budget is spent on these external third parties. For reasons of transparency and fairness, all of these suppliers need to be appointed and paid according to Government’s and QLDC’s strict procurement principles.
In order to dig deep into the entire question of fairness and transparency we selected one consulting firm at random – ZQN7 Ltd. We now know that Ruth Stokes and Jendi Paterson of ZQN7 were paid $630,000 between 2018 and 2020 to review three council bylaws while working extensively for other councils and clients all over NZ – including two large contracts with the Hamilton City Council that were worth a total of $400,000.
Ms Paterson is the former nanny to Mayor Jim Boult’s daughter Victoria and was an employee of ZQN7 Ltd – not a shareholder. Ruth Stokes, the new CEO of the Queenstown Chamber of Commerce, and her husband Antony, own ZQN7 Ltd. Crux is not alleging that ZQN7 did anything illegal – the key question is: did they deliver fair value and were their services appointed and paid for according to Government and Council policies and rules?
As our investigation progressed, we encountered more and more resistance from the council’s senior management team – specifically Mike Theelen as CEO, down through the powerful, 20 year veteran Corporate Services Manager Meaghan Miller, to the comms/PR/marketing team that we, as media, need to go through.
Every piece of information was hard won. It was a battle to obtain public information. Twice QLDC made complaints to the Media Council (one centred on airport expansion and one on ZQN7 – with QAC mounting their own synchronised complaint with the QLDC ZQN7 complaint).
Throughout the entire investigation Mt Theelen was resolute in saying to Crux that QLDC had complied with its procurement rules re: ZQN7 apart from one batch of $2,000 that was over the much-vaunted “$50,000 exemption limit.” Even if the $50,000 exemption did exist, and we can find no evidence of such a mechanism, the ZQN7 work would have to be composed of 13 different, unrelated projects that it was always impossible to calculate the total value of.
The truth always comes out and we published the final outcome of our ZQN7 work on January 15 this year – with links to all of the supporting documents that we had managed to extract from QLDC. Mayor Jim Boult asked Mike Theelen to launch a “review” (not an investigation) into himself and the council’s senior management team’s handling of ZQN7 on January 21st.
We learned last Friday (not via QLDC) that the Office of the Auditor General was involved (not an investigation) but our repeated requests to the council’s comms and marketing team have drawn a blank on what is happening – apart from “The Mayor is looking at it.”
Given that the council’s combined procurement policy and guidelines amount to less than 10 minutes reading and ten pages, any review, or even investigation, should take less than 24 hours. The council either complied with the rules or they did not.
Crux has even managed to get access to virtually all of the emails and paperwork showing that they did not.
The council withheld some information from Crux, but of course they and the Auditor General will have unlimited access to those documents.
Our suspicion, and concern, is that all of this time is being used by Mr Theelen and senior council managers, being paid by us the ratepayer, to stage manage or choreograph the near inevitable news that the rules were not followed.
We’ll hear all of the usual excuses re: “we can do better”, “we have learned from this experience” and “our procurement policy and guidelines need updating and we’re doing that” and that “some staff who are no longer with the council made some mistakes.” There will also be “we are fully cooperating with the Office of the Auditor General and while that work is underway we can’t discuss this matter or saying anything further.”
Given that Mr Theelen is a very senior, experienced local government public servant and, according to the emails we have seen, was kept up to speed on ZQN7 from the outset – he either knew, or should have known, there was a problem.
Not just a problem – but an extraordinary $630,000 series of payments to two former, high profile council staff – one with a close connection to the Mayor and the other who was on first name, friendly terms with all of the former QLDC colleagues who were hiring her.
What Happens Next.
If we hear that the procurement rules were broken Mr Theelen will need to resign or be sacked – if that is the will of the community. It will mean that his assurances around compliance were untrue.
The structure for Mr Theelen’s future is simply and is clearly stated by Local Government NZ.
Local accountability – local authorities are primarily accountable to their communities (for decisions taken and outcomes achieved) rather than to central government or the Minister of Local Government.
If that accountability is not exercised in this case, then we may as well declare local democracy terminally broken in this part of New Zealand.