Former Auditor-General Martin Matthews was given an ultimatum by MPs who appointed him to resign or face a parliamentary vote of no confidence, RNZ understands.
Martin Matthews resigned as Auditor-General yesterday, saying "issues and speculation" around the handling of a fraud case in a prior role had forced his hand. Photo: Twitter / @auditor_general
Mr Matthews has resigned after what RNZ understands was a highly critical report into his handling of a major fraud while he was the Transport Ministry chief executive.
In February, Joanne Harrison was jailed for three and a half years after stealing more than $700,000 under Mr Matthews' watch.
Senior public servant Maarten Wevers was commissioned to investigate how Mr Matthews responded when red flags were raised with him about Harrison, and whether he was fit to serve as Auditor-General.
Joanne Harrison Photo: Supplied
RNZ understands there was major pushback from Mr Matthews and his legal team in response to Sir Maarten's draft report.
But it is understood he was given a deadline earlier this week for tendering his resignation, otherwise a vote of no confidence in him would be made in Parliament.
Speaker of the House David Carter would not comment on the substance of the report.
The committee of MPs who ordered the report are now refusing to release it, a decision Mr Carter said was unanimous.
RNZ understands the report found Mr Matthews had failed to act when concerns about Harrison's conduct were raised with him and he had not been as forthcoming as he should have been during the interview process for the Auditor-General role. It concluded those actions had damaged his reputation as Auditor-General and once that was lost it was difficult to regain.
Mr Carter said there were many areas of "significant disagreement" between the conclusions drawn by Sir Maarten and a report submitted in response from Mr Matthews.
"But subsequent to receiving the resignation ... the committee determined there was no need for us to do further work on either of those reports."
New Zealand First leader Winston Peters said Sir Maarten's report should made public.
"You cannot have an inquiry that goes to that level and at some significant expense into such a high office and then keep these findings confidential and secret from the taxpayer.
"There should not be one law for one group of people, no matter how high that office is, and a different law for everybody else."
United Future leader Peter Dunne said the conclusions presented in the report left Mr Matthews no choice.
"It's a pretty full and devastating critique of what went on. It would have been very difficult for him to have survived that and it was essentially the right thing to tender his resignation now."
Mr Dunne said it was vital the reputation of the Office of the Auditor-General - the government watchdog - was maintained.
"The Auditor-General is the ultimate safeguard in out system and if there can't be confidence in the Auditor-General's integrity and probity then who's can there be?
"Once that was thrown into doubt it was inevitable that he couldn't continue."
Mr Dunne said it was his initial understanding the report was going to be released.
"Given the extraordinary nature of the circumstances and the fact that the Auditor-General's chosen to resign, I think it's pretty difficult for it not to be made public frankly."
When Mr Matthews resigned, Labour MP Sue Moroney, who has been pursuing this matter, said the report "had to be made public", as it was funded by public money.
"We need to know the details of what came out in that investigation because I think that will put the public's mind at ease."
However, her Labour colleague on the committee, Trevor Mallard, voted for it to be kept secret, saying once Mr Matthews had resigned, the process had come to an end. He said there was no payout to Mr Matthews in return for his resignation.
The $27,000 cost of the report came out of the budget of the Office of the Clerk.