Committee puts Public Trust under fire

By RICHARD BRADDELL

The Public Trust Office has been severely criticised by MPs for losing money and following unacceptable accounting practices and the Public Trustee has also been accused of being poorly briefed or untruthful.

This withering attack has been levelled at the trust in a report from Parliament's powerful finance and expenditure committee.

The Public Trust's annual result released last September showed a $8.5 million loss.

That disclosure followed lengthy discussions with the auditors during which the Public Trustee, David Hutton, endeavoured to retain $4.2 million in tax losses as an asset, because he was concerned about the impact the result would have on customer confidence. It appears that only the threat of a qualified audit report changed his mind.

The committee also attacked the accounting treatment of unrealised investment losses that are held in the Public Trust's books at cost rather than market value.

And it was also less than impressed by lax controls when a manager decided to open an office in the Christchurch suburb of Shirley that was closed only 18 months later.

Mr Hutton told the committee that the manager, who is no longer with the Public Trust, did not have his permission to open the branch but had the necessary authority.

"When we questioned the Public Trustee on the business case for the office ... he was very unhelpful," the committee said.

"A member had to ask five supplementary questions to get a satisfactory response from the Public Trustee," it said. "This is unacceptable."

The committee's stinging rebuke follows three hearings in February and March in which members of all political parties seemed uniformly disenchanted with Mr Hutton and the quality of information he offered.

"At worst, he chose not to disclose fully information available to him when answering members' questions," the committee said.

And on two occasions it became clear his answers were wrong, which led the chairman to remind him to be truthful.

Given its harsh findings, the committee took the unusual step of presenting the draft report to Mr Hutton last week for his comment before presenting it to Parliament.

Mr Hutton, through a spokesman, declined last night to comment on the review, relying instead on his written response to the committee.

In that he said he accepted the committee's desire "to see improved performance on both my own part and that of the organisation I am proud to lead."

A more detailed critique of the committee's draft report prepared for Mr Hutton by Mike Camp, QC, said there was no basis for such serious allegations.

"They seem to be an attempt to destroy a career civil servant's reputation on issues of trivia," he said.

The review of the Public Trustee's performance comes after two years of far-reaching restructuring and a high-profile rebranding programme.

The minister responsible for the Public Trust, Deputy Prime Minister Jim Anderton, said the concerns over Mr Hutton's performance were a matter for the chief executive and the board.

Measures were being put in place this week to improve accountability and governance.