KEY POINTS:
The public needs better answers than we have heard so far from Auckland health boards who allowed a member to bid for, and win, a contract he had heavily influenced. The High Court judge who has stopped the laboratory test contract awarded to a consortium led by Dr Tony Bierre has found serious failings in the performance of those we have elected.
The issue is serious because, as Dr Bierre was told when he was approached to stand for election, many board members are medical professionals who may be reliant on board funding and conflicts of interest could be "managed". That turned out to mean, in his case, that he could register an interest and proceed with the advantage of knowing the savings the board was seeking.
He knew what the boards were seeking because he, as the only pathologist on the Auckland board, was instrumental in forming their expectations of savings and poisoned their view of the incumbent's "information asymmetry" and "superprofit". The judge found the profits of Diagnostic Medlab were in fact modest. But he also found Auckland had an unusually large number of collection sites for its population and did not dispute that the costs of the laboratory service could be reduced. Diagnostic Medlab, however, had no inside knowledge of the changes the boards had in mind and faced difficulty finding out.
Auckland board chairman Wayne Brown told the court all board members earned income from public funds under the board's control. They were expected to register their interests and exclude themselves from a say in transactions involving their declared interests. Dr Bierre applied for contracts for his company Labtests and sat on the board's audit committee where he moved that "open book" accounting be required of service suppliers, a requirement that was to count against Diagnostic Medlab. He also gave the board memoranda of his vision for community laboratory services. He appears to have acknowledged his business interest only in general terms.
The boards shared a Government-appointed deputy chairman, Ross Keenan, who told them Dr Bierre had fully declared his interests and urged them to hear his views on Diagnostic Medlab. Mr Keenan did not know Dr Bierre was seeking funding for his own laboratory and now defends the boards in the wake of the High Court judgment against them. Yet it was he who from early on was setting the level of savings to be expected at $20 million, and allowing Dr Bierre among others to know this and his, influential and highly negative, view on the attitude and performance of DML. The judge accepted that the board leaders did not know Dr Bierre was seeking a contract for his company until Mr Brown was alerted by National MP Paul Hutchison.
Mr Brown wrote "a stern letter" to Dr Bierre noting the board may have been compromised by his involvement in decisions on laboratory testing. Mr Brown stated that Dr Bierre should be excluded from further board considerations of lab testing, but the court found he was not excluded and nothing was done about it for another five months. It was not until Dr Bierre mentioned to a woman at the Auckland Hospital Laboratory that he was putting together a consortium to bid for the regional contract that the extent of interest was brought to the board's attention. Shortly after, Dr Bierre agreed to stand down from the board.
But by then he had secured the advantages that were to bring his company the contract. It is possible that he and other board members genuinely did not know the seriousness of his position but they ought to have known. And then they still went ahead and awarded him the contract six months later. The public has been poorly served by this business and has a right to expect better. For acting Health Minister Annette King to blame everything on Dr Bierre yesterday in Parliament is to deny that once board members realised they had been misled by him they still found him suitable for a $560 million contract. She, Mr Brown and Mr Keenan cannot excuse Dr Bierre's conduct until the release of Justice Asher's judgment and then suddenly condemn it.
The Government's man, Mr Keenan, drove this flawed agenda and remains unrepentant. Mr Brown failed the boards and the public. Both should go.
