ZQN7 - Media Council rejects Boult nanny complaint against Crux

The latest in a series of complaints to the Media Council relating to Crux coverage of ZQN7 Ltd and QLDC expenditure on external consultants has been rejected. The Council noted in its ruling that Crux reporting on the issue has been both "consistent and vital."

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

The complaint was from former nanny to Mayor Jim Boult's daughter, Ms Jendi Paterson. Ms Paterson is a close friend of the Boult family as well as being a former QLDC team leader. Ms Paterson and her colleague Ruth Stokes earned $630,000 over a two year period from the QLDC in reviewing some local bylaws, while also carrying out lucrative contracts for other local councils in Hamilton and Auckland.

Both Paterson and Stokes have now taken on new roles. The full Media Council ruling is available here.

The Office of the Auditor General continues to examine the QLDC's finances after the Crux investigation into ZQN7 Ltd revealed QLDC failed to comply with its own procurement rules and guidelines over a four year period from 2016. The problem was so serious that a special meeting of the full council had to be called in February this year to make urgent procurement changes. Otherwise the council would have, according to senior staff, had difficulty paying for its day-to-day operations.

The Auditor General's "informal" examination of QLDC's financial management started on February 12.

ZQN7 Ltd was formed in 2018 just days before taking on the QLDC bylaw review work. Now Paterson has carried out work for QLDC under a new consulting company while Stokes has been appointed CEO of the Queenstown Chamber of Commerce. ZQN7 Ltd is now being used by Antony and Ruth Stokes to build a luxury boutique hotel at 3 Turner Street in the Queenstown CBD. Construction started last month.

Council CEO Mike Theelen - assured Crux during 2020 that the council's procurement rules had been followed. He was wrong.

QLDC CEO Mike Theelen told Crux on a number of occasions during 2020 that the ZQN7 payments were fully compliant with QLDC procurement rules and guidelines. It is now evident that those statements from Mr Theelen were wrong.

Paterson's complaint to the Media Council claimed that a Crux article on January 15 2021 was both inaccurate and derogatory and that Crux’s reporting is damaging her professionally and personally. She argues the news value of the articles is to question QLDC’s procurement processes and her continued inclusion is unnecessary. In her complaint she says "while the article acknowledges she has done nothing wrong, “the general tone of the articles suggest that I received work for QLDC without merit and on the basis that I knew the mayor”.

The Media Council ruling has made the following observations. 

"While it’s understandable that Ms Paterson feels distressed after a year-long series of stories, the articles have been a consistent and vital journalistic attempt to understand the QLDC’s use of consultants. If the QLDC had been more open, there would likely have been fewer articles.

"But the undisputed facts remain that ZQN7 has received significant amounts of public money for its work, Ms Paterson has a close relationship with the mayor, she chose to work for a company receiving money from that council and, according to the QLDC’s own report written in response to Crux’s persistent stories, “in a number of instances the engagement of ZQN7 did not meet the requirements of the Procurement Guidelines”. These all make Ms Paterson and ZQN7 legitimate objects of reportage."

Crux was found to have made an initial error in failing to detail the fact that Paterson was an employee of ZQN7, not a director or shareholder, meaning that it could not be reasonably assumed that she shared equally in the $1 million earned from various councils, incuding QLDC, in the period 2018 - 2020. ZQN7 Ltd is owned by Ruth Stokes and her husband Antony. Crux also reported that Paterson was nanny to both of mayor Jim Boult's children, whereas she was nanny only to Victoria Boult.  The Council also found that Crux image captions showing Paterson dining and celebrating with the Boult family should have been more detailed.

Crux has made corrections as indicated by the Media Council. The final decision from the Council was:

[29] The Media Council urges Crux to improve its captions, correct the nannying detail and ensure any corrections around Ms Paterson’s employment and earnings are corrected in all the stories in this series.

[30] But Ms Paterson’s complaints under Principles 1, 2, 3, 11 and 12 are not upheld.

Crux asked QLDC today for an update on the work of the Auditor General, as well as background on Mr Theelen's 2020 comments to Crux - the following reply, that we publish in full, was received. The Office of the Auditor General, as well as the Ministers of Finance and Local Government have all declined to comment. The latest details from the Auditor General was that an informal type process was underway and was not yet complete.

“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.”

Source QLDC.

Main Image: Consultant Jendi Paterson during a recent QLDC Zoom call.