A relationship between the former Kaipara District Council chief executive officer and a staff member has been questioned in parliament.
"How was it that (former CEO) Jack McKerchar was in a live-in romantic relationship with one of his council staff who was involved with planning the Mangawhai sewerage scheme?" NZ First MP Andrew Williams asked during debate on the Kaipara District Council (Validation of Rates and Other Matters) Bill.
Mr Williams told parliament that the Auditor-General Lyn Provost was queried about her concerns about the relationship, and any possible conflict of interest.
The auditor general had said she was aware of the rumours but they were not relevant and had not been investigated, Mr Williams said.
Mr McKerchar's partner, Vanessa Anich, worked for the KDC on the Mangawhai project before going to work for engineering consultancy firm Beca.
The bill - passed last week with seven NZ First MPs and Mana Party leader Hone Harawira voting against it - legalised council bungles which contributed to an $86 million debt blowout and led the Government to last year appoint commissioners to replace the council.
The bill became law the day after Ms Provost reported on council mismanagement of the sewerage scheme and apologised for mistakes by council auditors.
Mr Williams told the House that around 2000 Beca had evaluated tenders for the Mangawhai project and awarded the tender to themselves, providing $675,000 of ratepayers' money to manage the bid process.
Beca, in conjunction with Mr McKerchar, settled on Simon Engineering as the preferred bidder.
But in 2002, the Government banned infrastructure projects set up on Mangawhai scheme lines.
"Neither Beca nor Mr McKerchar wanted to revisit anything, because the deal had already been secretly committed to," Mr Williams said, describing how Bruce Rogan - then a councillor and now chairman of the Mangawhai Ratepayers and Residents Association - attempted to prevent cost over-runs.
Councillor requests for financial details of the Mangawhai scheme were declined.
Mr Williams said that when Mr McKerchar and Ms Anich's relationship became public, she went to work for Beca, which contracted her to provide services to the council. She is now back on the council planning staff.
Hearing date set
The judicial review of Kaipara District Council rates sought by the Mangawhai Ratepayers and Residents Association has been set down for a four-day hearing in the Whangarei High Court, beginning on February 3 next year.
Association chairman Bruce Rogan said the Kaipara District Council (Validation of Rates and Other Matters) Bill passed by Parliament last week had legitimised illegal rates but had not touched on liability for illegal debt resulting from proceedings without proper consultation with the community.