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The Serious Fraud Office has been asked by Otago's health board to investigate suspected fraud involving possibly millions of dollars.

A board employee was suspended on full pay yesterday morning, Otago District Health Board chairman Richard Thomson confirmed.

The investigation centred on information technology spending, he said.

"Over the last six years, the board has spent approximately $16 million with an IT vendor and it is the legitimacy of those transactions which is in question," Mr Thomson said.

A considerable number of information technology contracts were involved and the investigation would determine if all or any were an issue.

He would not disclose the sum thought to be involved, but he said "It clearly has the potential to be significant, otherwise the Serious Fraud Office wouldn't be involved.

"Hypothetically, it could be zero to millions. I just don't know. As soon as I'm in a position to be clearer about the sum, I will be.

"This is not simple," he said.

"Our concern is it [the alleged fraud] may have occurred over a number of years, but we're not in a position to state that with any certainty."

Asked whether the board could claim recompense if charges were laid and proven, Mr Thomson said the board's insurance covered a range of eventualities, including "malfeasance".

"But those are difficult issues and we just don't know ... and we don't wish to say or do anything that might put those potential claims at risk."

The issue became public yesterday when board chief executive Brian Rousseau said in a written statement that the need for a "comprehensive investigation" became apparent following analysis of transactions involving a single information technology vendor over an extended period.

Mr Thomson said the board's management became aware three weeks ago "of some issues that gave rise to concern" and launched an internal investigation into transactions with the company.

He would not elaborate, saying that would mean "giving away information which it would not be appropriate to give away at this time".

Following the internal investigation the board approached Dunedin police, who advised approaching the SFO.

That was done on Friday.

The board would co-operate with the SFO in any way required.

Mr Thomson stressed that the matter did not involve compromising patient safety or confidentiality of records.

Asked for comment, the SFO said the director had a policy of not commenting on investigations.