McCully stepped over the mark

By Jan Corbett and Andrew Stone

Tourism Minister Murray McCully personally directed Tourism Board staff over the controversial $30 million Saatchi & Saatchi contract, even though the law strictly limits ministerial interference.

The extent of Mr McCully's meddling is revealed in documents obtained by the Weekend Herald.

But Mr McCully - who pledged this week to resign if an Audit Office probe finds he has fallen short of his ministerial obligations - insisted last night: "I did not overstep the line into unwarranted interference."

A legal opinion sought by the board has already found the minister was involving himself in "specific implementation or management decisions more properly the province of the board." And now confidential board documents show that last December 2 Mr McCully and his advisers met board management at their offices. No board members were present.

Mr McCully told the management he would not handle the contract to boost New Zealand's tourism image in the way the board was contemplating. He considered it was for management, not the directors, to give the Saatchi campaign the green light.

Board staff - concerned about "having two masters" - said they had "no direction from [the] board to go totally into global marketing."

The notes show Mr McCully replied that "the executive were not to be concerned about the board slowing them down."

Staff of crown entities are answerable to a chief executive who reports to the board, not their ministers. Ministers are meant to communicate through the board. Under the Tourism Board Act, the minister can issue policy directions, but they have to be in writing and be presented to Parliament.

According to the legal opinion the board sought from law firm Russell McVeagh, this "provides a check to ensure the minister acts within the proper sphere of his powers." The act did not mean to allow a minister to become involved in policy implementation or substitute his views for those of the board.

Opposition parties have questioned the degree of political edge Mr McCully is bringing to board activities in election year. The new revelations - on top of criticism this week of the Prime Minister's cosiness with Saatchi supremo Kevin Roberts - put more heat on National.

Mr McCully's approach to the board appears to centre on the pace of progress on Saatchi's global marketing project, aimed to take advantage of "mega events" such as Apec, the America's Cup and the millennium. He told the meeting - which occurred before three members of the board and its chief executive quit - that he was "expecting to see something more radical" and the board diverting a bigger budget chunk to the campaign.

He told the meeting he would issue a ministerial directive if necessary to get the ball rolling.

Mr McCully has never issued written directions to the board - even when on October 26 then chairman Bryan Mogridge pleaded for "a clear written statement."

The minister preferred operating outside the act and the gaze of Parliament by including performance demands in the annual purchase agreement, which tooks months to negotiate before it was signed on October 30.

According to the Russell McVeagh opinion, "the procedures for the amendment of the purchase agreement do not appear to be consistent with the act."

Last night Mr McCully said the December 2 meeting was at the chief executive's invitation with the chairman's knowledge. He said he might have considered written directives if the purchase agreement had not been signed.

Otherwise he was not prepared to comment on matters relating to the inquiry. The Audit Office will also not comment during the probe.