The Hawke's Bay Regional Council has been cleared by the Office of the Auditor General from claims Transparent Hawke's Bay made against it.
The Auditor General responded to claims the council had not met its statutory obligations to consult on the proposed Ruataniwha Water Storage Scheme, and perceived conflicts of interest - membership overlaps between the council and its investment company.
Council chief executive Andrew Newman is now working with the investment company heading the dam project. Senior council officer Liz Lambert had taken over his council role while the water scheme progressed.
The Auditor General reviewed the council's long-term plan and was satisfied the disclosures regarding the Ruataniwha scheme were adequate and appropriate, given the project's early stages.
Conflict-of-interest situations were not uncommon in the local government sector, the Auditor General said, noting the regional council's intent to operate the current investment company as a transition board of directors until January 2014.
Regional council chairman Fenton Wilson said it confirmed there were steps in place to deal with issues as the project progressed: "However, we take our role in the community seriously and we will be having formal consultation at the end of this process. This is when all parties will have the opportunity to ask questions and explore any remaining issues."
Transparent Hawke's Bay spokesperson Pauline Elliot said the group was disappointed but believed it had brought the water storage project "out into the public arena".
"I think this has really put the council on notice that it does require robust consultation. In that respect, it is quite positive and ensures the public will be involved in the progress of the dam scheme."
Mrs Elliot said the group would continue to keep a watchful eye on the council, its investment company and the dam.
It would also make a submission to the board of inquiry which was likely to review the scheme's request for a resource consent.