The leadership of New Zealand's biggest non-government mental health agency, the Auckland-based Challenge Trust, has imploded in a dispute which may threaten some services.

The trust's chief executive Clive Plucknett, chief operations officer Karna Luke, trustees Stephen Grey and Barrie Green and a senior charge nurse in charge of Auckland's only eating disorder services, Dianne Bartlett, have all resigned.

Previously, about 170 of the trust's 350 staff signed a petition to trust chairman Allan Duffy seeking an explanation of the dispute, and more than 20 have joined a personal grievance claiming the board has disregarded the safety of staff and clients.

Disaffected staff and clients have also written to Health Minister Tony Ryall, Governor-General Sir Jerry Mateparae and the Ombudsman making further allegations.

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The trust received $15 million in Government contracts last year to provide services to more than 1500 clients in Auckland, Northland, Waikato, the Bay of Plenty and Gisborne. It has grown four-fold in the six years under Mr Plucknett through organic growth and takeovers of other providers.

But Mr Duffy and the two remaining trustees, Pamela Rankin and Jane Latimer, are understood to feel that the organisation grew too quickly, and have stalled two current takeovers which Mr Plucknett initiated - Central Health in Hawkes Bay and the PORCH Trust in Wellington.

Mr Duffy said yesterday that the Challenge Trust would move to a "new phase of consolidation combined with growth".

The board initially engaged former Manukau City Council chief executive Leigh Auton when Mr Plucknett was suspended last month pending mediation, and has now appointed former Housing NZ chief operating officer Stephen McArthur as interim chief executive until a permanent appointment is made.

Mr Duffy denied rumours that the changes could threaten the Parnell-based eating disorder services Thrive and Flourish, another contract in Auckland's eastern bays, a West Auckland child and adolescent respite centre called the Bach and a mental health peer support pilot in Counties-Manukau.

Mr Plucknett, 59, served in the Police for 29 years, retiring as acting assistant commissioner for human resources in 1998. He established an organic agri-tourism business and was then general manager of social services for Presbyterian Support Central, before joining Challenge Trust in August 2005.