State Services Commissioner Peter Hughes. Photo / Mark Mitchell
The Public Service Commissioner has declined to launch a broad review into $600,000 of Government contracts awarded to marketing and communications company Tātou, with close family ties to Labour Minister Peeni Henare.
Last week, in a formal response to a National Party request for a review of the matter, Commissioner Peter Hughes emphasised: “There is no suggestion that any impropriety has occurred …”
However, on Hughes’ request, the Ministry of Health (MoH) is reviewing the processes it followed in contracting nearly $300,000 of services from Tātou between 2021 and June 2023 for marketing, communications and engagement work, including brand design. All of the figures exclude GST.
Hughes’ letter to the National Party’s spokesperson for the public service, Simeon Brown, said he has asked for an assurance from the Director-General of Health that proper procurement and conflict of interest processes were followed by the ministry “out of an abundance of caution … given the minister’s delegations in relation to the Health portfolio at the time”.
Henare has been Associate Minister of Health (Māori health) since 2019. The Cabinet Office has confirmed that he declared his relationship with partner Skye Kimura as a potential conflict of interest in 2018. Kimura was Tātou’s CEO from 2021 through to early 2023.
Tātou is part of Waitapu Group Ltd, owned and controlled by Greg Partington. Sarah Johnson, head of Waitapu Group Wellington, declined to comment and to confirm Tātou’s employees, except to say that Kimura is no longer with the firm.
The Herald contacted Kimura for comment through social media. She did not respond.
A spokesperson for Henare said: “He has declared his relationship with Skye Kimura and her business interests for some years and, as part of the management plan, has agreed that he will not be involved in any decisions regarding awarding a contract to his partner or her agency, and will not suggest Tātou as a possible service provider to agencies over which he has responsibility.”
Only management of the procurement and potential conflict of interest at the ministry level is under review. Responsibility for this process sits with the public agency, and is separate from, and in addition to, any disclosure and management obligations of the minister. Public agencies, in turn, rely on contractors to disclose any possible conflicts.
A spokesperson for the MoH said the agency standardly requires contracting parties to declare any conflicts of interest (including potential or perceived), but declined to indicate whether Tātou declared any conflict.
Through the OIA, Nicky Dirks, manager of ministerial and executive services at the Public Service Commission (PSC), told the Herald: “The MoH confirmed that from their records, no conflicts of interest had been declared in relation to contracts with Tātou NZ.”
An OIA response from the PSC shows that “around November 2022″, an assistant commissioner of the PSC and the Ministry of Health chief of staff (acting) discussed the ministry’s Tātou contracts following several related written Parliamentary questions being posed by Opposition parties.
Dirks said no further action was recommended or taken by the assistant commissioner at the time. The PSC can act as a kind of watchdog for public agencies.
The MoH spokesperson said government ministers are not party to the ministry’s operations and do not influence ministry procurement processes.
He said that, at the time the contracts were drawn up, the ministry undertook a process to confirm there were no conflicts of interest for staff involved in contracting decisions with Tātou, and that there was “no relationship between the ministry and Tātou staff which may have unduly influenced the procurement process”.
PSC standards for managing conflicts of interest which relate to ministers, however, appear to be more thoroughgoing.
A high-profile probe by the PSC last year found substandard conflict of interest processes and procurement practices across four public agencies related to contracts awarded to two companies linked to family members of Labour Minister Nanaia Mahuta (no evidence of favouritism or bias was found).
The review specifically noted that matters “involving ministers” should have “a clear timely escalation path to the chief executive to ensure the agency level perception risks are appropriately assessed and managed”.
Updated PSC procurement guidelines now state: “To assist in identification, agencies should discuss with prospective contractors and suppliers any interests that may be relevant. The agency can determine whether those interests give rise to any conflict, which can then be recorded in a formal declaration.”
“Conflicts can occur at an agency, not just individual, level. It is important to consider contractors’ and suppliers’ relationships with agency senior leaders and ministers. If a conflict of interest is identified that relates to a minister, the matter should be escalated to, and managed by, the agency chief executive in a timely way.”
National’s spokesperson for the public service Simeon Brown said he was “happy to some degree” with Hughes’ response: “I’m pleased to see the Public Service Commission has taken into account our concerns and that the Ministry of Health is looking further into the issues to see if conflict of interest was properly managed. I’m also pleased that the chief of MBIE [the Ministry of Business, Innovation and Employment] will also be making sure agencies are aware of the new, clarified rules around conflict management and subcontracting arrangements.”
Brown said he was “disappointed” the PSC declined to conduct its own tally of public spending on Tātou work. The extent of its contracting to date is largely derived from written Parliamentary questions put by Opposition parties National and Act.
Hughes has also asked MBIE chief executive Carolyn Tremain to “bring to agencies’ attention” guidance on procurement and subcontracting, including relating to the cumulative value of contracts and the application of government procurement rules.
In order for the rules to be applied to subcontracting arrangements, these need to be described in contracting paperwork; Hughes indicated this was not the case when the Ministry of Education contracted advertising and marketing firm Stanley St - also part of the Waitapu Group - to produce its “every school day is a big day” campaign aimed at boosting attendance, and Stanley St subcontracted work to Tātou. The Stanley St contracts reached $1m across fiscal 21/22 and 22/23, including the cost of media buying.
Public agencies may undertake sole source contracting (without seeking competitive bids) where contracts are worth less than $100,000. However, the standard rules require competitive bids above that threshold, including where separate contracts cumulatively amount to more than $100,000 (though there are exemptions).
In the case of the MoH contracts, four of the contracts were awarded on a sole source basis. Cumulatively, they were worth $180,000.
Other public agencies which have contracted or subcontracted Tātou over the period include: the Ministry for Primary Industries, Statistics NZ, Te Whatu Ora, the Department of Internal Affairs, Te Puna Aonui (a cross-agency group aimed at reducing domestic and sexual violence) and the Lotteries Commission.
Te Whatu Ora signed two contracts worth $185,690 with Tātou. National Public Health Service national director Nick Chamberlain, said Tātou’s CEO declared “her perceived conflict as the partner of Associate Health Minister Peeni Henare”.
Walls has been ZB political editor since January 2023.