KEY POINTS:
Tony Bierre CEO, Labtests Auckland
Background
A pathologist, Bierre was an Auckland District Health Board (ADHB) member before he resigned last August to set up Labtests. Until 2002, he was also employed by Diagnostic Medlab (DML), which until Tuesday's High Court decision, was to have been
supplanted by his company on July 1. His departure from DML was the subject of a 2003 Employment Relations Authority ruling, which rejected his claim of constructive dismissal. After leaving DML, he had difficulty finding another position.
What Justice Asher said
On any conflict of interest:
"Dr Bierre was in a conflict of interest from the time he started sitting on the ADHB in December 2004. Throughout his time as an ADHB member he was interested in securing ADHB funding for his own laboratory, which amounted to an attempt to further his own private financial interests."
On Dr Bierre continuing to tender even when his conflict of interest became apparent:
"Rather than cease to have anything to do with the ongoing process, he was at the heart of it. Dr Bierre should have stepped out of the process altogether. Standing down in December was not enough."
On the three health boards' desire for DML to open its accounts for inspection:
"Dr Bierre's knowledge that [the boards] sought open-book accounting in itself did not necessarily amount to a great information advantage. However, DML did not appear to realise just how uncomfortable the [boards] were with its refusal to co-operate on transparency. Dr Bierre was aware of the discomfort. He had helped to create it."
On Dr Bierre's response to Auckland DHB chairman Wayne Brown's letter reprimanding him on his failure to expressly declare a conflict of interest:
"Dr Bierre responded to Mr Brown's reprimand by refusing to accept that there had been any failure on his part to address his potential conflict of interest. His response was consistent with a continued indifference to the conflict inherent in his role as both an ADHB member and a potential provider."
On his use of information gained as a board member:
"Dr Bierre was making use of information that he had acquired in his capacity as an ADHB member that would not have otherwise been available to him. He knew, but DML did not, that [the boards] considered that DML was making super profits, and that it wanted a radical new structure plan from which it could extract savings of up to $20 million per annum."
Ross Keenan Deputy Chairman of all three health boards
Background
A professional director, Keenan was appointed in 2004 by the Health Minister of the day, Annette King, to become deputy chairman of the region's three health boards (Waitemata, Auckland and Counties-Manukau), a collective known as the Auckland Regional District Health Boards (ARDHB). The move was designed to promote greater collaboration. As the only member involved in running all three boards, he chaired a monthly meeting with their chairmen and chief executives.
What Justice Asher said
On the ARDHB's inaction when Dr Bierre's conflict of interest became clear:
"The ARDHB's failure to act on Dr Bierre's conflict of interest had unfortunate consequences. [He] was able to endeavour to influence and mould the board's thinking to be consistent with his commercial goals."
On the boards not refusing a bid by Dr Bierre, given his involvement in the boards' strategy surrounding the tender process:
"Any such proposal would be tainted by Dr Bierre's knowledge as an insider. The ARDHBs should have made this position clear to Dr Bierre in December 2005, when it became a possibility that he would enter a proposal. Further, as it became clearer through February and March of 2005 that he was leading the consortium proposal, the ARDHBs should have made it clear that such a proposal involving him would not be accepted. The ARDHB's failure to take any of these steps was a serious error. A process which permits a particular party to use confidential information about the particular wishes of a decisionmaker to its advantage is much less likely to achieve the best result for the public than a proposal process that is procedurally fair."
On the boards' consultation document on the tender process:
"I record also that I do not regard the [tender] document as a consultation document. It was not designed with consultation in mind and it was not circulated to the [Primary Health Organisations]. It had contractual force from the moment it was issued and so could not be altered. It was not treated as a consultation document by either the DHBs or the PHOs. It was a document directed to those who were interested in making a proposal."
On the processes the boards followed:
"These errors were not minor. They were major faults in a procedure that was of importance to the people whom the ARDHBs served. Although they did not involve dishonesty, they were serious."
Wayne Brown Chairman, Auckland District Health Board
Background
Brown's polarising, blunt style and hard-nosed approach to cost-cutting has seen him favoured by two governments.
Brown, an engineer, was appointed by National to the board of the ailing Northland crown health enterprise in 1992.
Labour liked his efforts, and made him a health board commissioner in Gisborne in 2000 and Auckland chairman in 2001.
What Justice Asher said
On what the ADHB did:
"From the time Mr Brown became aware of Dr Bierre's serious conflict of interest, the ADHB was obliged to address it. The action taken by the ARDHBs was entirely inadequate. Indeed, apart from Dr Bierre's abstention from voting in the 4 August resolution, there was no action.
"In allowing Dr Bierre to continue to be involved in discussions about laboratory services, while he wished to bid for them himself, the ARDHBs permitted this process to be damaged."
On the board not formally considering Dr Bierre's role under the Health and Disability Act 2000:
"If it had been, Dr Bierre, given his strong desire for ADHB laboratory funding, would have been stood down as Mr Brown on 8 July 2005 indicated he should be, from considerations involving laboratory testing and the regional process that was underway."
On what Mr Brown did once Dr Bierre's conflict of interest became clear:
"It is possible that Mr Brown took no further action because Dr Bierre's letter of 11 July 2005 had stated that he was mothballing his laboratory.
"This may have been interpreted by Mr Brown as a promise that Dr Bierre would no longer have any involvement in seeking funding for his own laboratory interests. However, given the significance of the issue, that should have been clarified.
"If Mr Brown had checked he would have found that Dr Bierre had not abandoned his attempts to secure funding for his own laboratory but had rather put them temporarily on hold. His conflict of interest continued, and the ARDHB's failure to prohibit further involvement amounted to a serious procedural error."
On how the whole procedure was handled:
"The immediate reaction of quite a number of persons when first presented with Dr Bierre's situation was correct: he was in a conflict of interest position that needed to be addressed. Unfortunately nothing of substance was done when those views were expressed."
