25 Nov 2008

New manager raised alarm over alleged DHB fraud

6:10 pm on 25 November 2008

A new manager raised the alarm over an alleged $17 million fraud at the Otago District Health Board, the High Court has been told.

The board's former IT manager Michael Swann and friend Queenstown surveyor Kerry Harford deny filing almost 200 fraudulent invoices to the board between 2000 and 2006.

However, Mr Swann and Mr Harford admit that they received the money.

Otago DHB chief financial officer Robert Mackway-Jones gave evidence at the High Court in Dunedin on Tuesday.

Mr Mackway-Jones told the court he looked at ways to reduce the IT budget when he began working for the DHB in 2006.

He said there were many invoices from Mr Harford's company, Sonnford Solutions, but they did not make much sense and amounted to millions of dollars.

Mr Mackway-Jones said he had never heard of the company and asked around the IT industry, but could not find anyone who had.

Contracts 'strange and irregular'

On Monday, DHB chief executive Brian Rousseau described contracts at the centre of the alleged fraud as "strange and irregular".

Questions were first raised about the payments being made by the Otago DHB to Mr Harford's company in 2006.

Mr Rousseau said it was the first time he had heard of Sonnford Solutions and asked Mr Swan for the relevant contract.

Mr Rousseau said when he eventually saw photocopies of 16 purported contracts, they contained discrepancies, contradictions and exculsions.

He told the court the contracts would not pass muster if inspected by a lawyer and Mr Swan had no authority to enter into them on behalf of the board.

Mr Rousseau then asked the accounts department to inform him if Mr Swan filed any invoices that were beyond his authority to approve.

When two such invoices were filed, Mr Rousseau said he emailed Mr Swan and asked to see the contract that corresponded to the invoices.

However, he said at first Mr Swan provided only contract templates unsigned and devoid of any detail.