Request for inquiry into dam investment

Hawkes Bay Regional Council chief executive Andrew Newman at the site of the proposed Ruataniwha Dam near Tikokino. Photo / New Zealand Herald

The Office of the Auditor-General is looking into a request made to investigate the $500,000 approved by the regional council for its investment arm.

At the January council meeting, Hawke's Bay Regional Investment Company requested the half-million dollars for it to effectively "start the construction phase" of the Ruataniwha Water Storage Scheme.

It was noted in the company's report to the regional body that last November the council resolved to approve an increase in the Ruataniwha Water Storage Scheme's budget by $1.3 million, of which $922,000 was sought from the Ministry for Primary Industries' Irrigation Acceleration Fund. However, according to its latest report, the company was unable to secure the full $922,000 applied for from the fund and have been left with a shortfall of $347,000.

As such, they asked for the council to approve a further borrowing of $500,000, which it did. This approval seemingly raised the ire of someone who made the request to the Office of the Auditor-General.

In the interest of confidentiality, that person's name is withheld. However, in a tweet to Auditor-General Lynette Diana Provost, Hawke's Bay resident Andrew Frame raised his concerns.

"Millions already wasted $80mill [sic] more at stake @auditor-general STOP. THIS. NOW! HBRIC wants $500k to start dam work," Mr Frame tweeted.

In answering his tweet, the Auditor-General apologised for the delay in her reply. "We received a request to look into this; we'll let you know if we have any public updates," she said.

When asked about a potential investigation, a spokesman confirmed the office had received requests to inquire into matters relating to the Ruataniwha scheme. "We are in the process of deciding whether to investigate," he said.

"Generally, when we receive an inquiry we do some preliminary work, such as reviewing evidence provided to us and talking to the entity, before deciding whether a more significant inquiry needs to be carried out.

"To be clear, none of the entities you referred to [the council and its investment arm] are under investigation."

When asked about the possible investigation, the council's chief executive Liz Lambert said it was the first time she had heard about it and so she really could not comment on the matter.

Regional council chairman Fenton Wilson clarified the original matter that the investment company statement of intent, which was approved by the full council, allows the company to borrow against their balance sheet.

"The council were advised, as a matter of courtesy, by HBRIC at an open council meeting they needed to increase the borrowing provision which we voted in favour of," he said.

When speaking about the request for the money last month, company board chairman Andy Pearce said the reason for the shortfall from the ministry was because it said money for early geotectonical work was not required to reach financial close, one of the conditions precedent that had to be met before the project could go ahead.

Councillor Peter Beaven said at the time that the council should not be spending a single penny more than was required to meet the four conditions precedent.