Buller District Council refuses to release forensic audit

The Buller District Council (BDC) has refused to release a forensic audit into serious allegations of financial mismanagement relating to the council's Project Management Office (PMO) where consultants' fees have sucked up more than $8 million in taxpayer and ratepayer funds.

The report has cost Buller ratepayers about $100,000.

Council's former chief executive Steve Gibling commissioned the audit from KPMG late last year. He had promised council would make it public.

"The intent is to release the report to the community as a way to resolve the issues that have been raised last year - we just need to address the process once we see what the recommendations are," Gibling told The News in March.

However, council's new chief executive Simon Pickford yesterday refused a request from the newspaper, under the Local Government Official Information and Meetings Act (LGOIMA), for the report.

"Council will also be considering on an ongoing basis whether some portions of the KPMG report may be able to be released in the future," Pickford's response said.

Pickford also refused to release any related reports/recommendations from himself or council staff.

He cited the LGOIMA's individual privacy provisions and section 19 of the Protected Disclosures Act for both refusals. Section 19 says councils should refuse to release information which could identify someone who has made a protected disclosure.

Pickford offered to meet The News next week to discuss the "high level findings" of the KPMG forensic audit.

He did not answer emailed questions today including what had changed since Gibling promised to release the report, how many pages the report comprised and how many recommendations he (Pickford) had made.

Nor did he answer when asked how ratepayers could be assured council was not covering up, if it released only portions of the report.

The council set up the PMO in January 2021, to handle external funding from the government. Staffing gaps were filled by consultants. By December last year the consultancy costs totalled $8.2 million.

The News sought comment today from the whistleblower whose allegations a year ago prompted the forensic audit.

The person said the council had no grounds for withholding a report that might embarrass it or reveal incompetence.

"My problem is, they've done nothing," the ex-council staffer said. "This thing has been dragging on too long… At what point is BDC management's mishandling of this whole sorry saga going to be looked into?"

The whistleblower said Gibling had told them the report had vindicated most of their allegations. Ratepayers had paid for the report and deserved to see it.

The person said the New Zealand Transport Agency (NZTA) was now looking into allegations of potential financial mismanagement on roading projects.

"The issues were raised with NZTA by concerned parties who more recently became aware that it appeared BDC had failed to advise the agency of the long-standing issues - including the forensic audit into roading projects.

"To put it plainly, BDC failed to advise an interested agency of a potential fraud."

Buller Mayor Jamie Cleine declined to say whether the forensic audit had found wrongdoing. He said today that he and councillors had agreed the report should not be released "at this stage".

"There's a number of HR (human resources) matters and things we need to work through as a result of the findings of the report…

"We have an obligation to speak to the whistleblowers first, an obligation to speak to the key funders. The auditors and all those sort of people need to be briefed on it, before it goes public."

Council's auditors have refused to sign off last year's annual report until they have seen the KPMG report.

Cleine said council would hold a workshop with KPMG, to discuss what changes council should make.

"The action point list is going to address all the recommendations and findings of KPMG."

The mayor said council had not discussed taking any legal action. He would not comment on whether any disciplinary action had been taken or was planned.

He said the Serious Fraud Office (SFO) had not been involved.

The whistleblower said multiple complainants had contacted the SFO.

"Council have failed to work with any agency except the Office of the Auditor General, when they were forced to over EY's (council's auditors) refusal to sign off the annual plan from last year," the person said.

The KPMG report is the fourth sought by the council on the PMO since setting up the office over three years ago. All-up the reports have cost ratepayers more than $170,000.

Timeline of claims

June 2023:

A former council staff member alleges the council has failed to properly manage the PMO consultants and costs.

Mayor Cleine reveals the council has commissioned a review from Morrison Low and Associates, after NEMA questioned $93,000 worth of PMO invoices.

July 2023

The News reveals the PMO has racked up almost $6.1 million for 31 consultants since it opened.

October 2023

The council refuses to release a 2021 report on the PMO by consultants Team Projects Advisory. A leaked copy obtained by The News reveals dozens of flaws and "significant risks in many areas", including financial controls, health and safety, procurement, project management and monitoring, and quality assurance.

Team Projects made 52 recommendations. The report cost ratepayers $18,468.

Gibling releases two reports by Morrison Low, costing ratepayers $55,000. The reports essentially give the PMO a clean bill of health.

But Gibling, who arrived at council after the Morrison Low reports were commissioned, says it was not the right consultant to undertake a forensic audit. He announces he's commissioning a forensic audit to address internal and external allegations of irregular use of public funds, mismanagement and conflicts of interest relating to roading projects, and why a $3 million "urgent" spend on council's water supply was left out of council's annual plan.

March 2024

The News reveals that by 31 December 2023, PMO costs for consultants had jumped to $8.2m. Twenty-five consultancy firms are still working there. NEMA is still refusing to pay almost $90,000 worth of bills from Christchurch-based consultant Team Projects Advisory.

The council fails to answer questions about the amount paid to each consultant and how much the office has cost ratepayers.

Pickford confirms the council has the final KPMG report.

May 2024

The council refuses to release the KPMG report.