Key Points:

The Auditor-General's office will look into how conflicts of interest are managed at the Hawkes Bay District Health Board, despite Health Minister Pete Hodgson's preference for an inquiry to be conducted by other people.

A spokeswoman for the Auditor-General's office yesterday confirmed that the annual audit of the district health board now under way will include a probe of the management of conflicts of interest.

She said the office had already been aware of the health board's situation before weekend media coverage highlighted a wrangle over a contract worth up to $50 million.

Separately, the National Party has written to the Auditor-General's office requesting that it investigate matters relating to health board member Peter Hausmann, whose involvement with a company seeking a contract is now under the microscope.

A whistleblower became concerned that although Mr Hausmann said he would not be involved in the tender process, an intercepted email suggested he knew something of terms of reference being drawn up between the health board and his company, Healthcare of New Zealand.

The process was eventually terminated, and Mr Hausmann has strenuously denied any wrongdoing.

Confirmation that the Auditor-General's office will look into the conflict of interest came on the same day that the Ministry of Health announced the names of three men who will conduct a separate inquiry into the issue.

That inquiry was ordered by Mr Hodgson, but it has been strongly criticised by the National Party for not being independent enough.

National deputy leader Bill English has been pressuring the Government to call in the Auditor-General to investigate, and it is understood that some of the Hawkes Bay health board members support that approach.

But over the weekend Mr Hodgson argued that it was unlikely an investigation would find anything wrong, and said he did not want to bother the Auditor-General with something which was "almost nothing".

Now the Auditor-General's office is looking anyway.

The men who will run the inquiry ordered by Mr Hodgson are Canterbury District Health Board chairman Syd Bradley, Wellington lawyer Michael Wigley and former public sector health boss David Clarke.

The trio will report to the Director-General of Health, and their report will subsequently go to the minister.

The terms of reference of the inquiry include looking into any past and current conflicts of interest held by Mr Hausmann in his role as a member of the health board, and the management of those conflicts by him and the board.

The inquiry can also probe "any other matter arising through the course of this investigation that ought to be considered" - meaning the treatment of the whistleblower who later lost her job could also be investigated.