Hotel defends 'squeaky clean' process

Earl Hagaman, pictured with wife Lani, made a $101,000 donation to the National Party. Photo / Brett Phibbs

The managing director of Scenic Hotel Group says he doubted the company's founder knew the company was negotiating a management contract in Niue, which it won, at the time he made a $101,000 donation to the National Party.

Labour wants the Auditor-General to look into Scenic Hotels Group's contract to manage the Matavai resort on Niue after it was discovered the group's founder, Earl Hagaman, gave the $101,000 to National during the election campaign before the contract was awarded in 2014. Foreign Minister Murray McCully said any suggestion the donation was a factor in granting Scenic Hotels the contract was "utterly baseless".

Mr McCully said he had no involvement in the tender process or decision, which was run by Auckland-based consultancy company Horwath HTL in 2014. Scenic Hotels was one of two proposals and was the preferred one.

Scenic Hotel Group managing director Brendan Taylor said Mr Hagaman knew the company was looking into Niue but that had been a six-year process and Mr Hagaman had not even known where Niue was. Any mention the company was tendering for it would have been "a cursory conversation".

He was aware Mr Hagaman had made a donation because it was mentioned at a board meeting of Scenic Hotels.

Mr Hagaman's wife, Lani, had signed the contract because Mr Taylor was away at the time.

"I was involved in the whole [process] and I can put my hand on my heart and say I know it was a squeaky clean transaction. There was no favouritism in any way towards it," Mr Taylor said.

Since 2011, the Government has put $18 million into the Matavai resort as part of its efforts to boost tourism to Niue. That included $7.5 million to build a conference centre soon after Scenic Hotels took over.

Labour leader Andrew Little asked the Auditor-General to investigate whether Mr Hagaman's donation to National at the same time his company was tendering for the Niue contract was above board.

"It was Murray McCully's personal appointees on the Niue Tourism Property Trust which awarded this contract ... The perception of propriety is key."

The Matavai is owned by the Niue Tourism Property Trust on behalf of the Government of Niue. That arrangement was put in place in 2011 to ensure oversight of NZ aid.

Mr McCully appoints the trustees who are Ross Ardern (NZ's High Commissioner to Niue and father of Labour MP Jacinda Ardern), Ministry of Foreign Affairs deputy secretary Jonathan Kings and former High Commissioner Mark Blumsky, a former National MP who lives on Niue.