Health board conflict of interest claim

By MARTIN JOHNSTON health reporter

Two senior Auckland health executives who resigned in the past two months were accused of a conflict of interest involving a medical supplies company.

Graeme Edmond resigned as chief executive of the Auckland District Health Board in July, citing an unspecified difference of opinion with the board.

Chief financial officer Ian Ward quit last month.

Mr Edmond was a director of Health Support Ltd, a warehouse company for hospital medical and surgical supplies; Mr Ward stood in for him when he was unable to attend meetings.

The company was set up by Auckland's public hospitals in 1992, but has been progressively privatised. The Ebos Group bought the last of the shares last year and Mr Edmond continued as a director.

In June, the Auckland board's audit committee, which meets behind closed doors, excluded Mr Edmond and Mr Ward from talks about the board's main $17 million contract with Health Support, alleging a conflict of interest.

The contract has since been renewed, but will be put out to tender next year.

Committee chairwoman Vicki Salmon said yesterday that the board had commissioned an independent inquiry into relationships with Health Support.

"This is a very serious matter."

Neither man could be contacted yesterday, but Mr Ward's wife said he rejected any suggestion of a conflict of interest and he received no payment for his role at Health Support.

Health sources believe the health board used the issue as a pretext to force the pair to quit.

Ebos managing director Mark Waller said Health Support did not pay Mr Edmond. It gave his director's fees of about $10,000 a year to the district health board.

"Our understanding is that he was there to protect Auckland Healthcare's [the district health board's] interests," Mr Waller said. "We saw absolutely no evidence of any conflict of interest.

"His presence kept it extremely favourable to Auckland Healthcare."

At Health Support, Mr Edmond was distanced from contract negotiations, which were done at an "operational level, not at board level, so there was no conflict at all".

Health Support handled repacking and delivery of supplies, for which it took a fee, but product prices were negotiated directly between the district health board and the manufacturer.

The company's turnover was about $107 million last year and around 60 per cent of its business comes from Auckland public hospitals.

Mr Waller said he understood the district health board or its chairman, Wayne Brown, were fully aware of Mr Edmond's Health Support role.

Mr Brown is overseas and could not be contacted, but Ms Salmon said that if he had known Mr Edmond was continuing as a director after the final share sale he would have objected.

The role ought to have been disclosed in the board's register of members' and management interests and was not, she said.

"It's a very straightforward, basic business issue that people shouldn't put themselves in."

Senior doctors' union executive director Ian Powell said Mr Edmond's actions were "unwise but not unscrupulous".

Had Mr Edmond's relationship with Mr Brown been better, it would not have been a quitting issue, Mr Powell said.