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PoliticsMay 24, 2017

Pressure builds in Auditor General case


Auditor General Martin Matthews has come under extra pressure to resign today as the State Services Commission launches a full, independent investigation into the treatment of whistle-blowers who tried to warn Matthews about fraudster Joanne Harrison. Peter Newport reports.

5pm update: It has just been announced that Matthews is to step down while “his suitability to continue in the role is reviewed”.

The whistle-blowers who lost their jobs after alerting the Ministry of Transport to blatant fraudulent activity by Harrison met with the State Services Commissioner Peter Hughes this morning. Martin Matthews was boss of the MOT at the time and refused to take action against Harrison in spite of eight separate tip offs from staff. Some of those staff then lost their jobs in a move initiated by Harrison.

Commissioner Peter Hughes announced the investigation today within an hour of meeting the sacked staff. The State Services Commission told The Spinoff a short time ago that the investigation will be headed by Sandi Beatie who was Deputy State Services Commissioner between 2013 – 2015 and before that Deputy Chief Executive at the Ministry of Justice and the Department of Corrections.

“Public servants must be able to raise concerns without fear of punishment or reprisal,” said Hughes. “If public servants raised genuine concerns through proper channels and were then disadvantaged in any way because of it, that would be completely unacceptable and something I view very seriously.”

Further questions have been raised today about Martin Matthews’ handling of the Joanne Harrison fraud case. She paid herself over $700,000 via fake invoices as well as securing a $100,000 job for her husband at another branch of the MOT. In addition she added a friend to the MOT payroll for 10 months, in spite of that person never turning up for work. Harrison also billed the MOT for travel to the UK to attend a non-existent conference.

Joanne Harrison at her sentencing at Manukau District Court last week. Screengrab:

As MOT chief executive, Matthews was told on eight separate occasions between 2013 and 2016 about Harrison’s activities by MOT staff. It appears that on each occasion he simply asked Harrison if the complaints had substance and she told him there was nothing to be worried about. She then went on to sack or restructure some of the people who had made complaints against her. It is those sacked staff who met with the State Services Commissioner this morning.

The Commission says that the Beatie investigation will have all the staff and resources it needs. There is no deadline for the investigation to be complete, but Deputy Prime Minister Paula Bennett met with Commissioner Peter Hughes on Monday this week and clearly wants the issue sorted out. The Commission would not speculate on what remedies are available to the sacked staff. Will they get their jobs back or compensation if the investigation discovers they were unfairly dismissed?

A Commission spokesperson said he did not want to pre-empt any investigation outcomes but that there were in effect no limitations on what the Commission could recommend. The same spokesperson said the investigation would be 100% free of any political or external interference.

Today The Spinoff received a statement from the Office of the Auditor General, as well as from the Director of the Serious Fraud Office, Julie Read, who told MPs last year that Matthews’ conduct was “exemplary”:

“Mr Matthews is aware of the recent claims and allegations about the decisions he made in relation to Joanne Harrison while Secretary for Transport.

“As he has stated earlier, he regrets that these events took place under his watch and wishes he could have detected her criminal activity earlier. He stands by the decisions he made, because they were based on information available at the time.

“In April 2016, Mr Matthews was tipped off about Ms Harrison’s true identity and history. He acted swiftly and decisively to investigate and make sure Ms Harrison was brought to justice.”

The key thing about this statement is that it makes no reference to the whistle-blowers and the eight times Martin Matthews was told about Harrison between 2013 and 2016. He decided to believe her over his other staff each time with no apparent attempt to investigate the claims.

MPs who confirmed Matthews’ appointment as Auditor General in November last year relied on the Serious Fraud Office view that his behaviour was “exemplary”. But SFO boss Julie Read was quoted today by RNZ News as saying that her “exemplary” reference only applied to Matthews conduct after an external tip off in April 2016, not in the context of the earlier whistle-blowers and their sacking.

Julie Read issued this statement to The Spinoff a short time ago:

“I am unaware of what was said on Radio NZ this morning, however, I have advised all journalists (including Radio NZ) that proceedings before the Officers of Parliament Committee are confidential and therefore I will be making no comment about my attendance upon the Committee.”

The Speaker, who chairs the committee, told RNZ News that the SFO had informed the committee that “Matthews had acted in an exemplary fashion from the moment he became suspicious of fraud and that his actions would assist the Serious Fraud Office obtain a conviction” adding that his had “played out correctly”.

The glaring problem with this SFO statement is that Matthews took no action based on his own senior staff telling him there was a problem, although he must have been suspicious as he is understood to have questioned Harrison on each occasion. The SFO statement suggests that these eight whistle-blower events did not take place – which is clearly wrong based on their meeting this morning with the State Services Commission, and Matthews’ own statement to MPs last November.

There was no response from the Speaker’s office this morning but it seems clear that MPs who gave Martin Matthews the Auditor General job in November are now wondering if they had all of the facts in front of them.

Labour’s Trevor Mallard, who was part of the hearing, and Labour leader Andrew Little both want the Auditor General appointment re-visited, while Winston Peters is calling for Martin Matthews to stand down immediately.

Read more: Is fraudster Joanne Harrison’s old boss really fit to lead NZ’s top public watchdog?


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