Meltdown – hundreds of QLDC payments affected by procurement fiasco

QLDC has called an extraordinary meeting for 9.00 am Thursday morning (February 25^th) to change crucial financial procurement rules, that apparently have not been followed for four years, to prevent day to day council operations from grinding to a halt.

CEO Mike Theelen (left) and Mayor Jim Boult (right) have stood firmly together in denying any serious wrongdoing with QLDC procurement rules

Crux has highlighted for the past 12 months the case of $630,000 of consultant payments to two former QLDC staff members via ZQN7 Ltd that broke the council’s 2016 procurement rules. Now the council has discovered that the same rules affect hundreds of transactions including virtually every aspect of council operations.

Staff have now told council leaders that day to day operations will grind to a halt if the procurement guidelines are interpreted “literally.”

Staff say around 300 transactions a month do not comply with the current procurement rules.

The current guidelines, that CEO Mike Theelen has repeatedly told Crux have been 100% complied with in the case of ZQN7, actually require a competitive tender process and a formal Procurement Plan from zero dollars.

The staff document, to be tabled at tomorrow’s 9.00 am meeting, makes the following revelation:

“On further investigation staff believe that it is not practicable to operate the organisation under the current Guidelines and that interim changes are needed in advance of the Audit Finance and Risk Committee March meeting.

“Arguably caught by the literal interpretation of the Guidelines are payments for noncontrollable spend, such statutory payments (eg IRD, ACC, MBIE, ORC, etc) and grants (eg Destination Queenstown, Lake Wanaka Tourism, Wilding Conifer Control, etc). “

The document logically concludes that the council will not be able to function if the procurement guidelines were left in force for even a few more days.

Former QLDC staff member Ruth Stokes was paid $630,000 via ZQN7 in just 24 months - with QLDC's Theelen  telling Crux the deal complied with procurement guidelines now found to be unworkable.

Quite apart from the chaos that would result from the guidelines not being changed on Thursday this week, is the possibility that the Queenstown Lakes District Council has either ignored or misunderstood its own procurement guidelines since they were formally adopted in 2016. QLDC even hired its own Procurement Manager, Geoff Mayman, in mid 2018 to monitor and enforce the council's procurement rules. He told Crux in late 2020 that the rules we "ambiguous" and needed to be updated, blaming Covid 19 for delays in the process. 

This could mean that hundreds, maybe thousands, of QLDC consultant and contract agreements since 2016 are non-compliant denying ratepayers of the financial controls supplied under the procurement rules mandated by both central Government and local government authorities.

CEO Mike Theelen has criticised Crux for the past year over our reporting of the procurement issue, supported by Mayor Jim Boult who has a personal link to one of the two ZQN7 consultants, Jendi Paterson, who worked for him as a former nanny to his daughter. The other consultant, Ruth Stokes, is currently CEO of the Queenstown Chamber of Commerce. Both are former QLDC staff members.

Boult denies any involvement in the hiring of the two women and Crux is not claiming that they did anything illegal.

QLDC Procurement Manager Geoff Mayman - told Crux late last year that critical procurement rules were "ambiguous"

Theelen and his council comms/PR team even resorted to two Media Council complaints in what seemed to Crux as an attempt to prevent Crux reporting on the procurement issue and other “problematic” stories that the council wished to keep from the public eye.

Crux understands that both the Office of the Auditor General and the Office of the Ombudsman are following the current QLDC regulatory meltdown with considerable interest.

Crux called on Wednesday last week for the resignation or removal of CEO Mike Theelen, words that were 100% ignored by most councillors, The Mayor and senior council managers.

Now the situation is far more serious and could, in the view of Crux, lead to wholesale changes in senior management on both the financial and communications sides of council operations. Mayor Jim Boult will not be left unscathed by the episode – especially as further information requests by Crux may reveal key emails (so far withheld) between Mike Theelen, the Mayor and the council’s executive leadership team.