Claim of conflict of interest on gambling fund panel

The Salvation Army is expected to pick up most of PGF's loss. Photo / APN

The Problem Gambling Foundation says a member of the panel assessing proposals for problem gambling services had a family connection to one of the contenders.

The foundation is applying for a judicial review after losing most of its funding to the Salvation Army in March.

The foundation was left only with a specialist contract for Asian problem gamblers as a result of the Ministry of Health tender process in which 32 bids were made.

Following the assessment, the foundation was told it would lose more than 70 per cent of their funding, resulting in the closure of their 10 offices and 11 outreach clinics by July 1.

However, its contract was extended until February 2015 after the foundation filed for an urgent judicial review.

At the High Court at Auckland today, the foundation's lawyer Mai Chen described the foundation as "the best in the business" highlighting how they had pioneered a number of initiatives during their 25 year history.

Stripping the foundation of the majority of their contracts would result in a step back for the gambling recovery sector, she said.

Ms Chen today told the court a six-member evaluation panel appointed by the Ministry to assess the proposals included a direct family member of an individual involved with one of the contenders, resulting in a conflict of interest.

Ms Chen also said that the decision maker for the ministry, Rodney Bartling, admitted in an affidavit that he did not read any of the proposals submitted by potential providers or reviewed the minutes from panel meetings.

"Mr Bartling appears to have made his decision in the course of a single morning."

Among the unread proposals was the lead agency proposal from the foundation, which outlined how they would achieve cost savings of up to $500,000, she said.

Furthermore, the panel failed to realise it was undertaking a statistical evaluation process and did not obtain appropriate advice to ensure the process was robust, logical or reliable, Ms Chen said.

The panel's chairman, Natuitasina Levy, also made arithmetic errors when averaging the raw scores from each of the providers, Ms Chen said.

This included replacing the scores recorded by a panel member, whom the ministry accepted had a conflict of interest, with zeroes, thus artificially lowering the scores for that provider.

A retrospective audit by PwC following a "red alert meeting" did nothing to fix the issues, she said, as they were brought in late in the piece, had very narrow terms of reference and missed errors in the panel's processes.

The hearing is set down for three days and continues tomorrow.