NZ on Air 'golden handshake' criticised

Katherine Rich

The Auditor-General has slammed state broadcast-funding agency New Zealand on Air for consultancy work given to its former television manager after his contract was terminated.

The agency's TV manager, Neil Cairns, entered into a $40,000 consulting contract with NZ on Air after he "resigned" in February 2005 following a dispute with his employer.

The Auditor-General said the deal had the clear appearance of a golden handshake.

The details of the case, and his criticism, was revealed in documents from Parliament's commerce select committee.

These documents showed there was a dispute with an employee in February 2005 during the course of restructuring. The unnamed staff member was paid out $18,460 as well as outstanding entitlements.

Separate information given to the committee by NZ on Air show Mr Cairns was the only staff member to leave in that month.

After his departure, NZ on Air immediately contracted him to do a $40,000 report on the funding processes of equivalent European bodies, with about 80 per cent of the contract paid in advance of the report.

He also received $12,500 expenses.

The Auditor-General's report to the committee highlights several concerns about the deal.

It says that although NZ on Air claimed the contract was a legitimate and necessary piece of research, the agency's decision-making process was clouded by "its close proximity to and association with the termination agreement".

"There is the appearance that the contract was additional compensation for severance of employment," it says.

The scope of the contract and expectations of the contractor were not specific enough and the 80 per cent payment of the contractor's fee before completion of the report was bad practice, it says.

The report recommends that when staff contracts are terminated public agencies should avoid entering into "follow-on contracts".

Commerce committee chair Katherine Rich said the report contract appeared to be a golden handshake in all but name.

"Labour came to power saying they were going to get rid of golden handshakes," she said.

"But in an era when they are supposedly banned, what we see is creative restructuring of arrangements."

She agreed with the office of the Auditor-General that there needed to be more distance between staff members being re-employed after their contract was terminated.

The committee's report says NZ on Air chairman Don Hunn accepted the follow-on contract contravened the State Sector Act and should not be repeated. However, he said the resulting report was of high quality.

Mrs Rich said she accepted Mr Hunn's assurances.

- NZPA