National wants Auditor-General to look at $7.8m MSD contracts where conflicts of interest not declared

National has asked the Auditor-General to investigate the Ministry of Social Development’s (MSD) handling of contracts worth nearly $8 million in which a staff member and two contractors failed to declare conflicts of interest.

Social Development Minister Carmel Sepuloni said she’d been assured by MSD the matter had been investigated and resolved.

But National Party social development and employment spokeswoman Louise Upston said she believed the violation of procurement rules and failure to disclose “multiple conflicts of interest” was concerning and warranted further scrutiny.

“This does not pass the sniff test with failures to disclose multiple conflicts of interests and a violation of Government procurement rules.

“Minister Sepuloni has failed to hold MSD accountable and provide sufficient answers despite being briefed in April 2021 on this procurement.”

The query relates to a situation in July 2020, when a staff member raised concerns about information and communication technologies (ICT) procurement after another staff member engaged contractors from a vendor, where one of the vendors was already engaged as a contractor with MSD.

Further concern was raised about the hiring of another contractor who, two months after they were engaged, became a shareholder of a company in which a staff member’s spouse was a director and shareholder.

Procurement rules require in contracts worth more than $100,000 they be on the All of Government Recruitment Service Panel or have an existing Master Service Agreement with MSD – neither of which occurred here.

The procurements involved contracts worth $7.89m between mid-2019 and mid-2020.

In official information released to Upston, MSD explained the conflicts of interest should have been declared, but it found there had been “no personal gain as a result from any of these matters”.

MSD was satisfied with the work done by the contractors and had since made changes to its processes to ensure such instances would not occur again.

While MSD has acknowledged procurement rules were breached, Upston said limited explanations had been given about what had happened and why.

Upston said answers to Written Parliamentary Questions (WPQs) showed while Sepuloni was responsible to Parliament for the public expenditure she had not asked the total value of the procurement nor sought further information from MSD when specifically asked WPQs about critical aspects of the procurement.

“New Zealand rightfully celebrates its status as one of the least corrupt countries in the world which makes it all the more important when concerns are raised they are thoroughly investigated.

“That is why I have asked the Auditor-General to inquire further into what exactly has happened here.”

Upston has requested the Auditor-General investigate specifically:

• Why the conflicts of interest were not declared.

• Why the spousal conflict was considered “perceived” rather than actual.

• The leadership level the contracts were signed off.

• The specific consequences that resulted.

Sepuloni said MSD had assured her the matter had been investigated with support provided from consultancy firm KPMG and the matter was resolved.

“My office have previously said to Ms Upston’s that if they have any further evidence they wish to provide we would be happy to ask MSD to look into it further.”

The information Upston was referring to had also been publicly released, she said.

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