By MATHEW DEARNALEY
The Inland Revenue Department is battling an Employment Relations Authority order to reinstate a senior Auckland manager who embarrassed it with controversial evidence in the Winebox tax inquiry.
Though the department says it is not questioning Denese Latimer's professionalism or integrity after 35 years' service, it is concerned she may have inadvertently let slip information to her husband, a former IRD manager now working for private-sector tax consultants.
Her lawyer says this amounts to a suggestion she may compromise information through "pillow talk", an idea she strongly rejects after so long with the department.
The department is appealing to the Employment Court against an authority directive to put Mrs Latimer in charge of its technical and legal services group in Manukau, a position to which she was appointed in 1995 but was unable to take up then because of special duties.
In 1995 she also gave evidence to the commission of inquiry into Cook Islands-linked tax avoidance schemes for New Zealand corporates.
Mrs Latimer produced a diary in which she wrote that Russell McVeagh law partner Geoff Clews had blackmailed the department into settling a dispute over film investment tax deductions by threatening litigation over another case, an allegation Mr Clews denied.
But the employment authority, while also awarding Mrs Latimer $4500 for distress caused by unreasonable actions of the employer, rejected her claim that her promotion may have been blocked because of her evidence to the commission.
"I am not persuaded that the department acted with any improper motives or in bad faith towards Mrs Latimer," authority member Alastair Dumbleton said in a reserved decision.
He accepted that a potential conflict of interest arose from her marriage to former IRD official Norm Latimer, who also gave controversial evidence to the commission and now works for a firm of private-sector tax consultants.
Mr Dumbleton also accepted that before Mrs Latimer could be allowed to assume her new role, the department was obliged to take steps to ensure the integrity of the tax system.
But he noted there had been discussions with the department in which she proposed ways of ensuring that other managers handled any dealings with her husband's firm.
In November last year, a month before she was blocked from promotion, her managers and supervisors were still acting "as if the conflict of interest situation was sufficiently manageable to allow Mrs Latimer to commence in the new role", he said.
Then came a letter denying her the job on the basis of "an objective assessment of the business risk" rather than any adverse view of the professionalism and integrity of either herself or her husband.
Mr Dumbleton found no reasonable basis for the change of mind, and no evidence that the department gave any real consideration to whether Mrs Latimer could perform her role effectively if cases involving her husband's firm were "ring-fenced".
He ordered the department to reinstate her immediately - subject to reserving it the right to keep assessing potential conflict of interest risks against any changing circumstances.
Mrs Latimer's lawyer, John Haigh, QC, said the department had applied to the Employment Court to suspend the reinstatement order pending an appeal, an action which Mrs Latimer would resist.
She rejected what amounted to a claim by the department that, after so many years as its employee, she might compromise confidential information inadvertently through "pillow talk".
IRD fights reinstatement order
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