The Ministry of Education did not fully investigate how nearly $1 million of funding resulted in only three substandard classrooms being built at a Northland school.
Ministry officials believed $986,926 had been used by Te Kura Kaupapa Maori o Kaikohe to build six new classrooms in 2005.
But in 2009 a consultant found only three classrooms had been built, documents released to the Herald under the Official Information Act show.
Certificates provided by the school were accepted as the only evidence classrooms were complete.
The classrooms that were built did not meet council building standards, and required months of remedial work.
A subsequent review by the ministry's internal auditor, Bruce Ferguson, found:
* A question over whether a $232,150 payment was legitimate.
* An invoice value altered by hand.
* Other invoices unclear and without supporting documentation
* A lack of a tender process for work carried out.
But an independent review or legal action was ruled out, partly because of apparent gaps in documentation kept by the local Whangarei office and "its role in monitoring property activity".
Education Minister Hekia Parata said lessons from this "historic experience" would benefit the ministry's property management processes.
A spokesman said changes in 2007 meant school build projects were now led by a professional project manager.
The project manager for the 2005 work was Hone Mutu, then a senior staff member at the school and husband of then-principal Deborah Mutu.
Of $986,926 of classroom funding, $232,150 was spent to commission designs for a new gymnasium and pool complex with a value of around $4 million which was never built.
In 2009, Mr Ferguson was asked to consider legal action over the payment. But further investigation showed its Whangarei office had approved two contradicting plans for the work, one including a gymnasium.
Some work invoices had no GST number, inconsistencies on tax rates, lacked information on contractors and one was altered by hand.
"We saw little sign of dialogue between the [local office] and the [board of trustees] around expectations of processes to be followed which would ensure good management of what was a significant project," Mr Ferguson wrote.
He criticised Mr Mutu being left in charge of nearly $1 million two years after he led a wharekura building project at the school which had to be rescued after a budget blowout.
In 2007 Mrs Mutu was put on leave and eventually resigned after covering up complaints against her husband, who was suspended by a new board of trustees after an incident in 2004.
Mr Mutu had been found lying on a mattress under a blanket with a 15-year-old student at her house, and he and Mrs Mutu were deregistered for serious misconduct following a Teachers Council hearing last year.
Despite the investigation into Mrs Mutu's conduct, she worked for the Ministry of Education as an "expert" paid to advise principals.
The ministry later said Mrs Mutu had failed to disclose the seriousness of the allegations against her and its secondment process would be made more rigorous.
Mrs Mutu was seconded from Te Runanga Nui, the national body of Kura Kaupapa Maori schools then headed by her husband.