Wintec chief executive off the hook, urgent action being taken over how it spends public money

Wintec chief executive Mark Flowers says he is pleased but not surprised two investigations have cleared him of any major wrongdoing. Photo / Alan Gibson

Wintec is taking urgent action to address serious concerns that money spent by the organisation - particularly on overseas trips - cannot be accounted for.

The Waikato-based tertiary institute has today released the findings into an Audit NZ investigation into travel expenses made by past and present management, redundancy and severance payments.

Audit NZ, in its report, was unable to provide assurance that all overseas expenditure was appropriate and or had not been spent on personal use.

"This is unacceptable for a public entity charged with the stewardship of public resources," the report said.

"We are particularly concerned about the processes, patterns of behaviour, and level of documentation we saw in our work on international travel expenditure. Some of these practices simply do not meet accepted standards of public sector behaviour and provide an increased opportunity for the misuse of public money."

The lack of documentation also meant Audit NZ could not come up with a complete account of how much the chief executive and his management team spent in Hong Kong and China.

Th records also included receipts in Mandarin which when translated did still not include detail about what it had been for and Audit NZ questioned how the person who authorised it would have also known what they were approving.

Some of the expenditure was for 5-star hotels which broke the organisation's policy and there were also cases where a more senior line manager had not approved the spending.

There were also examples of a "flexible approach" to alcohol purchased in restaurant and bars with receipts showing that drinks in three different places on one night exceeded reasonable dinner costs.

There were several cash withdrawals - valued at several hundred dollars each - made from the chief executive's business cards with no evidence of what it was spent on or how it was repaid to Wintec.

But Wintec chief executive Barry Harris said Audit NZ could not produce any evidence of any wrong doing or misappropriation.

"There's no evidence there's money missing. If there was I would pursue that.

Harris said the council focus was now on fixing any shortfalls in the processes and moving on.

"Yes there was looseness around some of the policies and procedures which I take seriously, but will focus that we move forward as an institution and making those as robust as we can make them."

Audit New Zealand was commissioned last year to look into travel expenses made by past and present management, redundancy and severance payments following public pressure.

Meanwhile, the independent investigation by Auckland-based QC Simon Mount into historic allegations into former chief executive Mark Flowers' actions was unable to substantiate the majority of complaints "on the balance of probability".

Flowers was also criticised for how he handed a conflict of interest in relation to an employee.

"A consistent theme from many I interviewed was that Wintec did not always strike
the right the balance between flexibility and due process... It also contributed to a perception among many of the staff I interviewed that the chief executive could direct employment outcomes without following proper process," Mount said.

Wintec also failed to adequately respond to a serious complaint, the report found.

Harris said Wintec would now review its processes and policies to make sure they were robust especially in regards to employment, conflicts of interests and serious complaints.
It had no plans at this stage to apologise to the complainant over its handling of the matter.

In a statement released by Flowers, he said he was pleased but not surprised he had been cleared of any wrongdoing.

"While I am disappointed to end my 27-year New Zealand public service career in
these circumstances, and cannot quantify the impact of this ordeal on my
personal health and that of my family, Lynnette and I have both been uplifted by
those who sent messages of support."

Flowers said Wintec was audited for each of the 16 years he was chief executive and
there had never been any issue raised about inappropriate or unauthorised spending by him.

"At all times, my expenses were submitted to the council chair, clarified where
necessary, and approved. Similarly, all overseas trips and expenses were
authorised as appropriate costs associated with Wintec's change programme."

Flowers said he had been unable to engage meaningfully during the Audit NZ process due to his ill-health, but understood some procedural issues that had not been previously identified in the annual audits needed improvement.

He also admitted it was difficult at times to strike the balance between processes and controls, and agility, progress and results when managing under-performing individuals and said it was an area "fraught with danger".

The reports cost Wintec a total of $282,000. A further $30,000 was spent on an investigation by Wellington-based lawyer Victoria Casey, QC, who looked at whether the original report clearing Flowers of any wrongdoing was robust.

Legal fees were last known to be sitting around $205,000 and include the organisation seeking external legal advice to prevent media from running stories about it.

Flowers has been on sick leave since August last year and officially retires from the organisation in March. A farewell is being organised.