Counties Manukau District Health Board uncovers evidence of fraud by former staff

Counties Manukau District Health Board considers it has evidence of potential fraud or serious wrongdoing by former staff. Photo / File

Counties Manukau District Health Board has uncovered evidence of fraud by former staff members following a independent review conducted last year.

CMDHB Chair Vui Mark Gosche announced today that the board considers it has evidence of potential fraud or serious wrongdoing.

"The potential fraud or serious wrongdoing is historic but of concern, and the DHB's Board has decided to seek full investigation of these matters by referral to the Serious Fraud Office," he said.

The evidence comes after as the result of further investigation and legal advice following the recent release of the Beattie Varley report.

In July 2017, the Ministry of Health commissioned an urgent independent review to investigate financial management practices and management culture at CMDHB prior to December 2016.

The ministry appointed forensic accounting firm Beattie Varley, Deloitte and Mike Heron QC to investigate expenditure, financial management and management culture at CMDHB for the financial years 2014/15, 2015/16 and 2016/17.

The Beattie Varley report was released in September of this year and did not draw any conclusions of wrongdoing, or find there were matters that warranted further investigation by other authorities.

However, the ministry's chief legal advisor said it did raise questions about the way staff conduct themselves in the health sector.

The report points to a lack of openness and transparency in some capital expenditure decisions related to the lecture theatre expansion of Ko Awatea and in the financial reporting associated with the APAC conference.

"It's these actions, and what could be perceived to be the deliberate construction of financial arrangements to avoid external scrutiny, that trouble me most. This behaviour does not meet the ethical standard that the public would expect of us and I do not consider it acceptable," director-general of health Dr Ashley Bloomfield said.

The report concluded that the expansion of Ko Awatea was presented to the Audit Risk and Finance Committee at a projected cost well below the actual expected value.

Pricing options showed the project was expected to cost upwards of $15 million, but the report said anyone reading the material presented to the audit committee could see the project would cost far more than that.

Beattie Varley also examined how an Australasian health conference, run between 2014 and 2016, went from running surpluses to a near million-dollar deficit.

The report didn't propose the Ministry undertake any further investigation, however, the DHB called in lawyers to determine whether it should take more legal action.

In a statement today the CMDHB said it will not be making further comment on these matters to avoid prejudice to any investigation.