'Serious allegations of mismanagement' of public funds at Buller District Council

Friday, 20 October 2023

“Serious” allegations of mismanagement involving multi-millions of public money has been made against the Buller District Council.

The allegations have come from both within and outside the council and relate to the council’s project management office (PMO), which was set up in January 2021 to manage shovel ready and provincial growth fund projects.

Its job expanded when the council was given Government funding after severe flooding in the district in July 2021 and February 2022. Projects included repairs to roads and Three Waters infrastructure.

Government funding through the office included $18 million from the National Emergency Management Agency, $13m from Waka Kotahi NZ Transport Agency and $17m from the Ministry of Business, Innovation and Employment for a temporary accommodation village.

Council chief executive Steve Gibling said three reviews had been done since the office’s inception.

They showed the office had been effective in delivering a large volume of infrastructure work and had adequate checks and balances in place to provide transparency and accountability, he said.

However, they noted areas for improvement and did not review the financial statements in detail.

“The reports therefore do not conclusively determine whether there has been any mismanagement or misappropriation of funds,” he 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.”

The audit would look at whether funds had been mismanaged, misappropriated and if there were any conflicts of interests in how the money was spent.

He said several external and internal complaints were received by council alleging irregular use of public funds, mismanagement and conflicts of interest relating to roading projects and unplanned expenditure of $3m on water projects.

He could not say how much money was alleged to have been involved but confirmed it included money spent on consultants.

It would look into whether there were any conflicts of interest between the office and the consultants and check that proper procurement processes had been followed. It would also determine whether documentation was in place and the work performed was consistent with the money spent.

He said the office had spent money on about 14 different consultancy organisations and companies.

He did not know how much the audit would cost and he hoped it would be completed by the end of the year.

“Given the multi-millions of taxpayers’ and ratepayers’ funding being managed by the PMO, it is a good investment in identifying any issues and ensuring best practice,” he said.

One of the reports noted the council was limited in its ability to attract, recruit and retain an in-house team so had to engage external contractors to deliver the required projects.

The Westport News reported the office had employed more than 30 consultants at a cost of about $6m, of which about $900,000 has sheeted back to ratepayers, since January 2021.