Bryce Edwards: Time for the Auditor General to investigate Mahuta contracts

Bryce Edwards: Time for the Auditor General to investigate Mahuta contracts

Pressure is increasing on the Auditor General to undertake an inquiry into numerous contracts, appointments and grants awarded to members of Cabinet Minister Nanaia Mahuta’s family by various government departments she has had official responsibility for.

Allegations and revelations are mounting up, meaning this issue can no longer be ignored. As economist and political commentator Eric Crampton wrote yesterday, if the allegations – especially those documented by Herald journalist Kate McNamara – bear up, then “New Zealand is a fundamentally corrupt country. If it doesn’t, the air needs clearing”.

Latest revelations about the Mahuta family contracts

Three government agencies have been undertaking reviews this year into how they came to give contracts to Mahuta’s husband, Gannin Ormsby, and other close family members. Ormsby owns a consultancy, Ka Awatea Services, which has been contracted to supply services in the last couple of years to Kāinga Ora, the Ministry for the Environment, and the Department of Conservation. Another consultancy, Kawai Catalyst, is owned by Ormsby’s nephew and wife, Tomoko and Waimirirangi Ormsby, and has also gained government contracts.

The latest revelation, which MacNamara reported on yesterday, is that Kāinga Ora has admitted it did not follow correct procedures in awarding a contract to Ormsby, and is now undertaking a review of how this occurred. MacNamara reports: “Housing Minister Megan Woods has confirmed that Crown housing agency Kāinga Ora was deficient in its conflict of interest processes in awarding Ka Awatea Services a $66,846 (excluding GST) contract.”

According to Kāinga Ora, Ormsby’s firm was hired to “engage Māori and to understand Māori perspectives on Kāinga Ora urban development work”. The firm then used another relative, Rama Ormsby, to do the work.

It seems no conflict of interest declarations were sought or received from any of the participants, despite Mahuta then being the Associate Minister for Housing with specific responsibility for Māori housing.

MacNamara reports: “Woods previously said that ‘a verbal conflict of interest was declared’ when the contract was initiated, however that statement was corrected late last week with the clarification that no “formal” conflicts, written or verbal, were declared.”

The “Extraordinary pattern” of government contracts

All three contracts that Ka Awatea Services has won with the government agencies were awarded while Ormsby’s wife, Nanaia Mahuta, had ministerial responsibilities for those agencies. Furthermore, as MacNamara reports, “All of the contracts were awarded on a sole source basis, without competitive bids.”

In terms of the contracts provided by the Ministry for the Environment to the family firms Ka Awatea Services and Kawai Catalyst, a review has just been released that shows “a litany of deficiencies in the process of awarding the contracts”. For example, due to the family connections the contracts should have been signed off by the Ministry’s chief executive. Further conflicts of interest were not sufficiently discussed or managed.

The Department of Conservation is also reviewing the process that led to Ka Awatea Services being awarded a $52,000 contract, which has not yet been fully delivered.

In her latest Herald report, MacNamara also reveals that the Government’s Criminal Cases Review Commission has employed Ormsby as a “connector” since January 2021. She reports: “It has been asked whether Ormsby’s criminal record was considered relevant in his hiring but has not yet responded. In 2003, Ormsby pleaded guilty and was convicted on one charge of assaulting a woman.”

In addition, the Waikato Regional Council has recently employed Ormsby for $33,000 to provide consulting services to identify issues Māori were facing in the area, and last year the Ministry of Māori Development gave his firm a $28,000 grant to assist on suicide prevention.

Has Nanaia Mahuta dealt with the conflicts of interest appropriately?

Both the Prime Minister and Nanaia Mahuta have suggested that there is nothing to see here, saying the Minister has followed the correct procedures in dealing with the conflicts of interest arising from these family contracts.

The first device for dealing with a conflict of interest has been for the Minister to essentially recluse herself from the situation by temporarily transferring responsibility in the portfolio to another minister. For example, when her sister Tipa Mahuta was appointed chair of the new Three Waters regulatory advisory group, the Minister passed her Local Government responsibilities to Kelvin Davis while the decision was made.

But this hasn’t always occurred. Kate McNamara points out, for example, when she “appointed Waimirirangi Ormsby to the group that produced the He Puapua report”, this was deemed unnecessary because Ormsby was not a “close relative”.

Mahuta also says that she has covered herself by declaring “conflicts of interest” to the Cabinet Office and colleagues whenever they have arisen. However, just because such a conflict is declared doesn’t mean that it is no longer a problem.

Commenting on this recently to the Herald, Prof Karin Lasthuizen, the Chair in Ethical Leadership at Victoria University of Wellington, has argued that this can be like a passenger declaring the possession of forbidden goods on arrival into the country but not then doing anything about it: “Saying you can manage this conflict is like saying to Customs, ‘Yup I’ve got a big hornets’ nest to declare’, and then Customs says, ‘Okay, here’s a form for you to fill out and you will be fine’. Of course it doesn’t work that way for a reason, and that’s the problem itself and the consequences it might have. You can’t actually bring in a hornets’ nest into the country even if you declare it.”

Is an independent investigation required?

So far, no other journalists or media outlets seem to be covering the ongoing questionable contracts apart from the Herald’s Kate MacNamara and the Platform’s Graham Adams. In fact, MacNamara has written six reports on the topic so far this year. TVNZ’s Q+A programme did raise some of the allegations with Mahuta in an interview by Jack Tame recently, but she was able to easily swot away the questions, painting a picture of herself as a victim of malicious and anonymous online smears and wasn’t challenged on this.

To be fair, there might well be ulterior motives in the scrutiny that is currently being applied to Mahuta from some quarters. The Opposition are continuing to ask questions in Parliament, obviously hoping to inflict damage on the Government. But that’s their legitimate role, and many of the facts about the Mahuta contracts have only come to light through questions being asked in Parliament.

Some have even attempted to paint questions being asked about potential corruption or nepotism as being racist. For example, on Newshub, Labour-aligned commentator Shane Te Pou denounced criticism of Mahuta as “racism and double standards”.

The Herald’s Audrey Young says it’s time to clear the issue up once and for all, saying Mahuta should just front foot the issue because questions are mounting, and they are distracting the Minister from important work: “They have reached such a pitch that she herself should refer the matter to the Public Service Commission or Auditor-General to get an independent opinion and draw a line under it.”

This seems the correct approach. Even if Mahuta and her family have done nothing wrong, it would be very useful for government agencies to review how they deal with conflicts of interests. The issues are too big to be ignored, and the need to prevent corruption is too important to be brushed aside.


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