Key Points:

Labour has accused Health Minister Tony Ryall of political interference in seeking to sack the chairman of the Otago District Health Board.

Mr Ryall today said he was considering sacking Otago DHB chairman Richard Thomson over the DHB's handling of a $17 million fraud by its former chief information officer Michael Swann and his friend and business associate Kerry Harford.

Discussions between a defiant Mr Thomson and Mr Ryall over the huge fraud scandal came to a head last night with the minister asking for Mr Thomson's resignation.

Mr Thomson told the Otago Daily Times the request came as Mr Ryall sought an explanation as to how the pair were able to get away with the ongoing fraudulent behaviour.

But Mr Thomson refused and told Mr Ryall he should have the courage of his convictions to sack him and provide the public with reasons for doing so.

A spokeswoman from Mr Ryall's office said today the minister was writing to the board "as he is considering removing the chairperson".

Mr Thomson is an elected member of the board, and if he was removed as chairman, he would still remain a board member.

Labour's Dunedin North MP, Pete Hodgson today accused Mr Ryall of political interference.

"Sacking the guy who helped catch the crook is nonsensical; therefore the conclusion must be that Mr Ryall wishes to install his own person to the job.

"Most people will immediately see that Mr Ryall is using the fraud case as a pretext."

Mr Hodgson said Mr Thomson had been re-elected in October 2007, after the basic facts of the fraud case were in the public domain.

Mr Hodgson, who was health minister at the time, appointed Mr Thomson as chair after his re-election.

Swann and Harford were found guilty last month and are awaiting sentencing.