The appointed members of Waikato District Health Board failed their core duty to protect the public interest when they agreed to let Dr Nigel Murray resign, and should be sacked for it, a critic claims.
Former Labour MP Sue Moroney, who warned former board chairman Bob Simcock not to hire the chief executive - found to have spent $120,000 of taxpayer money on unjustified travel - has called on Health Minister David Clark to sack the three members.
She also believes Clark should consider sacking the elected members involved in Murray's recruitment, and crucially, the October 5 decision last year to accept his resignation, an outcome highly criticised by the State Services Commissioner.
"The appointed members absolutely have to go because their job is to completely safeguard the public interest and that's one thing that they lost sight of in dealing with that employment situation," Moroney said.
"That's a major oversight in their role."
She said the appointed members in particular should have considered what the public wanted and how to restore public confidence in the DHB when they agreed to Murray's resignation, because it effectively shut the door on disciplinary action and made it legally fraught for the DHB to release the findings of its investigation.
"In allowing his resignation they used that process to withhold that investigation that they undertook with public money.
"They were making an agreement that was not in the public interest."
Both Simcock and current acting chairwoman Sally Webb, one of the three appointed members, said the decision to accept Murray's resignation was based on legal advice at the time and done in the interests of the organisation.
"Board members are not required to follow that legal advice," Moroney said. "They have to think about the bigger picture. The legal adviser is not required to think about the public interest, but the board is."
Moroney also believed the status of the elected board members involved in Murray's 2014 recruitment, criticised in the State Services Commission investigation, and those involved in the resignation decision should be questioned.
Only two current elected board members, Dave Macpherson and Mary Anne Gill, were not involved in either of the processes because they were not on the board in 2014 and both were ousted from the October 5 decision meeting over "perceived prejudices" by Murray's lawyers.
Webb said she did not believe board members needed to resign.
"This is one part of governing a $1.4 billion organisation. The report found some governance was wanting, as far as oversight of chief executive."
Webb said the board considered all aspects of the situation very carefully before it made the decision to allow Murray to resign.
"At the time there was threat of litigation [from Murray's lawyers]. There were potentially four PGs [personal grievances] that had been threatened by Dr Murray and that was one of the reasons why the board made the decision it made.
"We did not want to enter into long term litigious efforts to dismiss the CE. It would have cost a lot for the organisation in more taxpayer money. It would have cost a lot of time and it would have put a lot stress on staff who were already stressed."
A spokesperson for Clark's office said while the Serious Fraud Office was investigating the minister had nothing further to add.
When the SSC findings were released on Thursday Clark said he expected Waikato DHB to "concentrate on its real job – delivering quality health care for the people of Waikato", and implied Webb's position as acting chair was safe.
"I have every confidence that the acting chair Sally Webb will ensure they do just that."