Labour questions $101,000 National donation and Niue resort management contract links

Murray McCully said he would not have been aware Earl Hagaman was a donor to the National Party. Photo / Supplied

The Labour Party has called for an Auditor-General probe into whether a donation to the National Party had anything to do with a decision to grant the Scenic Hotel Group a contract to manage the Matavai Resort on Niue.

Earl Hagaman, the founder of Scenic Hotel Group, gave $101,000 to the National Party in September 2014. In October, Scenic Hotel Group announced it had the contract for the Matavai Resort on Niue - a contract awarded by a trust which was appointed by Foreign Minister Murray McCully to oversee the resort.

Mr McCully told RNZ National that there was no link between the donation and the contract and he had not been involved in awarding the contract. That was decided by the Niue Tourism Property Trust after running an international and competitive process. Mr McCully appoints the trustees for that but said he was not involved in the decision. "I can tell you that I had no involvement in the appointment process, conducted purely by the trustees and commercial management they appointed. These are reputable professional people who conducted a full international process."

Since 2009, the Government has put in $18 million to upgrade the hotel as part of its aid effort to build Niue's tourism industry. That includes $7.5 million toward developing a conference centre at the Scenic Matavai Resort Niue in 2015 after Scenic Hotels took over the contract. Mr McCully said that aid funding was at the request of the Niuean Government.

Labour leader Andrew Little said the close timing of the donation to the awarding of the contract "stinks to high heaven" and he had asked the Auditor-General to investigate whether it was above board.

"New Zealand money, which was earmarked as aid for the island nation, has instead been given to upgrade a resort run by a National party donor."

He said it was Mr McCully's personal appointees on the trust which awarded the contract. "We must have questions answered on how the tender process worked, who knew about links between donations and the tenderer and whether Niuean people will ultimately benefit from the resort's funding. The perception of propriety is key."

Mr McCully said he would not have been aware Mr Hagaman was a donor to the National Party. "Even if I had, I had no capacity to influence the decision." Mr Hagaman's donations were publicly disclosed on September 23 and received media coverage at the time.

Brendan Taylor, the managing director of Scenic Hotel Group, says the group's successful tender to manage the Matavai resort in Niue was "squeaky clean"and had nothing to do with a donation to the National Party from Scenic Hotel's founder Earl Hagaman.

Mr Taylor said he led the Scenic Hotels' tender for the contract to manage the hotel on Niue which was awarded to Scenic Hotels in 2014 - the end of what Mr Taylor said was a six year process.

He said speculation about whether the donation from Mr Hagaman was a factor was "a lot of misinformation".

"I was involved in the whole [process] and I can put my hand on my heart and say I know it was a squeaky clean transaction. There was no favouritism in any way towards it."

The tender process was run by consultancy group Horwath and Scenic Hotels had dealt only with the consultancy group during the process. There was no contact with Government ministers or the Ministry of Foreign Affairs.

He had known about Mr Hagaman's donation to National but said it was not related to the company's bid.

The donation was mentioned in passing at a board meeting, but he could not recall whether it coincided with the tender process.

"A donation came up in conversation during one of our board meetings but I actually didn't think much more of it because Earl's made donations over the years between National and Act. What he does from a personal perspective is totally up to him. What we do at the Scenic Hotel Group, in a lot of cases, we've got nothing to do with each other."

Mr Taylor said he was told there were three parties involved in the tender process but he did not know who the others were.

"You're talking quite a small resort, so when you get into the small resorts it gets quite specialist as to who will pitch for them and who won't."

He said that was particularly the case when it was for a management contract which did not include any ownership.

"So a lot of the big international players, the resort would have been too small from a management fee perspective for them to even consider it."

He said it worked for Scenic Hotel because it was close to another hotel Scenic runs in Tonga.

Scenic Hotel is a New Zealand owned company - "and we pay tax in New Zealand. We're probably one of the few hotel chains which does pay tax in New Zealand."

It was set up by Mr Hagaman, a former Californian, and has 17 hotels across New Zealand, in Niue and Tonga.