By Lee Scanlon of The Westport News
Buller District Council has launched an investigation into the misuse of public funds. Photo: Tracy Neal / RNZ Photo: RNZ / Tracy Neal
The Buller District Council is commissioning a forensic audit following "serious allegations of mismanagement of funds" relating to its Project Management Office (PMO).
Chief executive Steve Gibling said the audit would address external and internal allegations of irregular use of public funds, mismanagement and conflicts of interest relating to roading projects, and $3 million for Westport's water supply.
The council set up the PMO to handle big projects after its capital spending more than doubled to $20 million a year. Most of the projects are government-funded.
The Westport News has been reporting concerns about the PMO since a former council staffer spoke out in June about the number of consultants, their cost, and lack of proper processes.
The office has employed more than 30 consultants at a cost of around $6 million, of which about $900,000 has sheeted back to ratepayers, since January 2021.
Buller Mayor Jamie Cleine told The News four months ago that council had commissioned a review from consultants Morrison Low and Associates (ML) after the National Emergency Management Agency refused to pay some PMO consultants' bills.
It has emerged the council had commissioned two reports from ML - an "infrastructure health check" and a review. Former acting chief executive Rachel Townrow commissioned the additional review after concerns were raised about the management of third-party funds.
Councillors were not advised of the reviews before they were commissioned. They are expected to cost ratepayers about $40,000.
Council released both ML reports today. Totalling 79 pages, they basically give the PMO a clean bill of health.
But Gibling, who took up the chief executive's role two months ago, said ML did not look closely at allegations about PMO finances.
"The reports therefore do not conclusively determine whether there has been any mismanagement or misappropriation of funds," Gibling said.
"Serious allegations of mismanagement of funds have been made and must be addressed carefully and in a timely manner. For this reason, council has decided to commission an independent financial forensic audit."
Gibling would not provide details of the allegations. He confirmed "two or three" council staff, and numerous members of the community, had raised concerns about the PMO.
The $3m "urgent" spend on Westport's water supply was left out of council's annual plan.
Council staff made a late submission to the plan, asking councillors to include it. Staff said they had left it out because they had expected the Government to fund it, but the Government had refused.
Councillors were torn over whether to risk omitting the urgent work or to approve unbudgeted spending without consulting the public. They eventually agreed to a $650,000 spend but left out the urgent water main extension.
At the time, the Westport News was unable to obtain copies of relevant documents. The council refused to provide a copy of its business case seeking government funding.
Councillors decided on the forensic audit at a closed-door extraordinary meeting last night.
Gibling said the audit would cover the period from January 1 2021 - when council set up the PMO - to August 31 this year.
The terms of reference had been developed by a subcommittee comprising Cleine, the independent chair of the council's risk and audit committee Sharon Roche, councillor Colin Reidy and himself.
The terms of reference aimed to establish whether there was any truth to the allegations about the PMO, Gibling said.
"Council is seeking to address these serious allegations in a way that balances transparency with respect for the privacy of all the individuals involved. For that reason, the full terms of reference will not be released."
He expected the forensic audit to be completed by the end of this year. He revealed the cost could run close to six figures and said staff would attempt to fund it within existing budgets.
"This is a question of value for the community. There have been some serious allegations raised.
"For the organisation, and for our staff, we want to absolutely rule out, or identify, whether any of those allegations can be substantiated. To not do that would leave a cloud hanging over the organisation and the staff members...
"I realise this is a hot topic for everyone. It's important for my staff that we can give them a clear run at next year and I want to conclude this.
"But it's equally important for everyone in the community to understand that we're taking this absolutely seriously. We'll share the results once we've got them."
He would be seeking independent companies to provide proposals for the review. The council's auditor, Ernst and Young, had helped formulate the terms of reference but would not undertake the review, Gibling said.