The Auckland Council boss who took a private helicopter trip to the Bay of Islands for a day of sailing on a luxury superyacht is refusing to talk about the trip described as "ill-advised" by the Serious Fraud Office.
Panuku chief executive Roger MacDonald joined Tawera Group chairman Mike Mahoney for a day's sailing in January 2017 at the Millennium Cup billed as the country's number one event for the superyacht industry with "exceptional hospitality".
The trip was picked up by the Serious Fraud Office (SFO) investigating fraud claims by mayoral candidate John Tamihere over the sale of council's Civic Administration Building to Tawera Group's chief financial officer John Love.
The SFO cleared Panuku of any wrongdoing over the sale but raised concerns about a potential conflict of interest involving MacDonald, saying "its acceptance was ill-advised".
The trip did not warrant a formal investigation or impact on any decisions made by Panuku, the SFO said, but "it did risk creating a perception of impropriety" and recommended the CCO review its hospitality and gifts policy.
Mayor Phil Goff said MacDonald should not have accepted the gift, which included a night's accommodation in a Russell motel and a meal. The trip was not dishonest, but it was very unwise, he said.
Mahoney said MacDonald had just arrived in New Zealand, he was recently widowed and did not have many friends at that point.
"I met him through the negotiations and thought it was a nice thing to do," said Mahoney, who said he was not involved in the contract and it was his son-in-law, John Love, who bought the project.
MacDonald, who has a salary of about $570,000, has refused to answer questions or be interviewed about the trip.
Panuku's media manager Joanna Glasswell said as the council-controlled organisation (CCO) is about to review its hospitality and gifts policy "it's not appropriate for our CE to comment at this stage".
Panuku cleared by SFO but concerns over CEO hospitality
Watch: Plans for dramatic Wynard Crossing bridge revealed
'City of Sales' claim as Auckland Council hocks off marina land
The Herald is also seeking comment from Panuku chairman Richard Aitken who approved the trip.
Council's manager of CCOs Alastair Cameron said CCO boards are expected to manage all perceived and actual conflicts of interest according to council's governance manual for CCOs and be guided by information provided by the Auditor-General and Institute of Directors.
A spokesman for the Auditor-General, John Ryan, said its guidance on conflicts of interest applies to all public entities "and we expect them to be familiar with it".
The Panuku gift and hospitality policy at the time of the trip said "staff must refuse all gifts or hospitality that could reasonably be seen or perceived as undermining the integrity of individual staff of Panuku generally".
Panuku chairwoman Adrienne Young-Cooper, who was not chair at the time of the trip, said MacDonald followed the correct procedure regarding the invitation by completing a gift declaration and seeking permission from the chair before accepting.
MacDonald had informed the board the trip had a value of $300 to $500, she said, but this was before he was aware of the helicopter ride, which he only became aware of on the morning of the trip.
"It's not appropriate for me to speculate on the decision of the previous chair of the board," Young-Cooper said.
The Herald asked MacDonald what led him to believe it was okay to accept the trip. He refused to answer.
The trip is embarrassing to Goff in the lead-up to October's local body election where the behaviour of CCOs is in the spotlight.
Goff, who as Leader of the Opposition called CCOs a "clique of cronies" who won't be accountable to Aucklanders and struggled to rein in the unelected public bodies in his first term as mayor, has promised an independent review of CCOs if he is re-elected.
"I share the frustration of Aucklanders with some aspects of CCO performance and delivery, and concerns about whether they can be held accountable," he said at the launch of his CCO policy.
"Public entities must act in the public good and must be accountable to the public - it's as simple as that."
At the time Aitken was appointed in 2010 to the board of Auckland Council Property Ltd (which later became part of Panuku), Act leader and Local Government Minister Rodney Hide said "transparency and accountability is a key feature of CCOs".
Councillor John Watson, who has been critical of Panuku's sale of public land to developers, said the trip was naive in the extreme, saying MacDonald and Aitken should front up and explain themselves.
Their silence flies in the face of repeated assurances from CCOs to councillors about the need for greater transparency and accountability, he said.
"The Auditor-General is very clear and precise on advice about perception of conflicts of interest and that would be magnified when you are talking about the head of a CCO," he said.
Who says what about managing conflicts of interest:
Panuku Gifts and Hospitality Policy
"Panuku staff must refuse gifts or hospitality that could reasonably be seen as creating a real or perceived obligation or influence, or undermining the integrity of the organisation."
Auckland Council - Our Charter
"We will not accept any gift where there is a conflict of interest - perceived or actual. Is there a justifiable business purpose for accepting this gift or hospitality? Would others, especially members of the public, see it this way?"
"When making decisions about conflicts of interest, public entities need to be guided by the concepts of integrity, honesty, transparency, openness, independence, good faith, and service to the public. They also need to consider the risk of how an outside observer may reasonably perceive the situation."
Institute of Directors
"Whether that bias is real or perceived is sometimes a matter of debate, but the tests remain the same: What would a reasonable person think? What would this look like as headline news?"