Metrowater has begun disciplinary action against an employee who used a contractor to carry out private work but did not tell the company of the conflict of interest.

Metrowater chief executive Tim Hammond said yesterday that an audit and forensic investigation by Ernst & Young found no direct evidence to support a claim that the private work influenced the awarding of contracts by the Auckland City Council-owned water company.

He said the auditors were satisfied that the private work was paid for on a commercial basis.

Nevertheless, Mr Hammond said the fact that the employee did not inform the company of the private work was a serious matter.

"Under Metrowater's conflict of interest policy, the company would have been expected to be informed," he said.

"This in itself is a matter Metrowater takes very seriously and is something that Metrowater will now take up with the individual."

The company had begun a disciplinary process with the employee.

While the disciplinary process was taking place, Mr Hammond said the employee would not be at work.

Mr Hammond said Metrowater had controls to protect the awarding of contract work from manipulation and undue individual influence.

These included controls for works of a certain value to be tendered to multiple parties, and segregating responsibilities so no one individual was solely responsible in the tendering, contracting and payments processes.

The company also had performance and quality expectations for contractors, Mr Hammond said.

The contractor involved in the allegation had consistently performed well against these expectations.

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