Rail, road corruption probes

Transport Minister Gerry Brownlee's office referred <i>Herald</i> questions to State-Owned Enterprises Minister Tony Ryall. Photo / Greg Bowker

SFO awaits results of Auckland Transport, KiwiRail inquiries into fraud allegations.

Two large public transport organisations - Auckland Transport and KiwiRail - are holding inquiries into separate allegations of corruption over contracts.

Serious fraud investigators are waiting on findings from the inquiries before deciding whether to swoop.

Auckland Transport has put a senior manager in its road maintenance division on indefinite leave until it completes an internal investigation into what it says are "serious allegations relating to the potential misuse of public monies".

KiwiRail has called in outside forensic accountants to make an independent review of infrastructure contracts after receiving what it says were anonymous allegations about them.

"There is no evidence of wrong-doing at this time and, as a result, we have not stood anyone down," the state-owned rail operator's chief executive, Jim Quinn said late yesterday in a statement to the Herald.

The Serious Fraud Office says it is aware of the two sets of investigations, and has spoken to both transport organisations.

Both had undertaken to contact the SFO if their investigations found evidence of possible fraud, a spokeswoman for the office said yesterday.

A spokesman for Auckland Mayor Len Brown said he knew of the council-controlled transport organisation's investigation but had no comment to make about the allegations which prompted it.

Transport Minister Gerry Brownlee's office referred Herald questions to State-Owned Enterprises Minister Tony Ryall, whose office referred the newspaper to KiwiRail.

Auckland Transport chief executive David Warburton said a senior manager had been placed on indefinite leave after a review of procurement procedures in its road corridor maintenance operations.

He said the organisation would not make any further comment on the matter "as it may involve employment issues and or legal proceedings".

Mr Quinn said that as soon his company received anonymous allegations "asserting issues with some infrastructure contracts", it commissioned an independent external review of them by PricewaterhouseCoopers.

"The SFO is also aware of the allegations and we will contact it should there be any evidence from the PWC review of any potential fraud," he said.

"For some of the allegations it was clear immediately that they were factually inaccurate, while others needed deeper investigation to prove their accuracy or otherwise.

"The review is not yet complete, but is well-progressed."

He would not disclose any details of the allegations until the investigation was completed, because of the potential for damaging reputations.

"We will not allow that to happen unless there is strong evidence of wrong-doing, which would, of course, have serious consequences."

The SFO website says its focus in determining whether to begin an investigation is whether serious or complex fraud has occurred.