23 Mar 2017

MOT fraud: Dodgy invoices, twink and $723,000 stolen

11:59 am on 23 March 2017

For five years the Ministry of Transport's general manager Joanne Harrison signed contracts with companies that didn't exist, twinked out the details of the work they supposedly did and refused to provide information about her deals to an investigation.

Invoice generic

By the time Joanne Harrison was caught she had stolen $723,000. Photo: 123RF

She exceeded her authorised-spending limits, ignored Ministry policy about having invoices countersigned and putting contracts out to tender.

While staff raised concerns about her behaviour, it took Ministry chief executive Martin Matthews five years to twig that it was not non-compliance he was dealing with, but Harrison committing fraud.

By the time she was caught she had stolen $723,000.

Documents released by the Ministry of Transport after her sentencing last month reveal how Harrison offended.

Between November 2012 and July 2014 Harrison authorised invoices totalling $227,126 to Sharp Design, they show.

Harrison was the Ministry's Organisational Development manager during most of her five years of offending.

In August 2014, after staff raised concerns, Mr Matthews emailed Harrison raising the following issues about Sharp Design:

  • "The existence of Sharp Design is in question. It does not have a web presence and is not listed in the Yellow Pages."
  • "There's a name in the organisation which could suggest a personal connection which, if true, would have implications for the related party disclosures required of general managers."
  • "Information in some of the invoices has been twinked out so that it is not possible to see what services have been provided."

In October 2014, the Ministry of Transport's chief legal adviser, Lisa Nickson, emailed Harrison to discuss the "ongoing problem" of her not providing the required details for her contracts with Sharp Design.

Ms Nickson was worried Mr Matthews would be unable to answer MP's questions around the spending at an upcoming Select Committee.

She asked for "a set of Sharp Design invoices (with no redactions) and examples of the work they did."

She asked Harrison provide basic information like Sharp Design's "history, services provided, principals and client base etc".

Fewer than two hours later, Harrison emailed Mr Matthews asking him to close down Ms Nickson's inquiry into Sharp Design.

"I am concerned that this is not being closed down; in particular the sensitive operation that Management Leadership Team were verbally briefed on. I do not intend going back to her by email as I believe she now has enough physical information.

"I do think she (Lisa Nickson) will keep coming back if she is allowed to do so and I would appreciate your help in closing this down."

That's where the email trail the Ministry of Transport released abruptly stops.

Mr Matthews subsequently told RNZ News he did not shut down the inquiry into Sharp Design.

"I instructed Joanne Harrison to continue to comply with my requirement to provide information to my chief legal adviser."

"My recollection is that information was subsequently provided."

Mr Matthews said he always thought the problems raised about Harrison were simply matters of non-compliance.

"It's realistic to understand that there are many occasions when people enter into arrangements with third parties where all the i's are not dotted or t's crossed.

"I'm not justifying that, but I'm just acknowledging it's not altogether unusal that that occurs in any organisation," Martin Matthews told Morning Report.

Audit NZ raised array of concerns

The Ministry of Transport released about 80 pages of emails, contracts and reports related to Harrison's fraud.

There was an 18-month gap between these final emails on Sharp Design and Mr Matthews taking action against Harrison in April 2016.

What is clear, is that with questions swirling around Sharp Design, Harrison changed tack.

From August 2014 to March 2016 she fraudulently paid $499,223 to two different entities - Mazarine Associates and EJW Consultants.

On 22 April, 2016, Audit New Zealand identified an array of major concerns about Harrison to the Transport Ministry.

Audit NZ reported she was exceeding her allowed spending limit, repeatedly failing to put contracts in place, was not having invoices countersigned and was not putting contracts out for tender.

It highlighted that Sharp Design did not exist.

"We were not able to find any company named 'Sharp Design', corresponding PO Box or physical address that would appear to relate to these transactions.

"We were not able to identify any other staff member that was able to inform us of the nature of the expenditure of and what it relates to."

That day, Mr Matthews placed Harrison on special leave.

On 27 April, Mr Matthews wrote to Harrison proposing to suspend her the following day, with pay, while Peter Churchman QC carried out an nvestigation.

In that email, Mr Matthews revealed staff had raised red flags with him since mid-2015 about Harrison's contracts with Mazarine Associates.

It was at about this time Harrison fled to Canada.

Harrison returned to New Zealand, and, last month, was sentenced to more than three and a half years in prison.

Transport Minister Simon Bridges described Harrison as an "incredibly manipulative" fraudster.

In a Victim Impact Statement, the Ministry's new chief executive, Peter Mersi, explained how Harrison carried out the fraud.

"In a highly calculated manner, Harrison created relationship capital she would later call onto to deflect attention from her fraud.

Harrison delibrately undermined senior leadership relationships, she played some leaders off against each other, seeking to sever the bonds of trust amongst her peers, that contributed to conditions of advantage for her fraud."

Both the Ministry and the Minister refuse to hold an inquiry into claims Harrison had potential whistleblowers restructured out of the organisation.

Mr Bridges and Mr Mersi were adamant Harrison could not have manipulated the process.

It was not the years of concerns being raised internally at the Ministry that finally led Mr Matthews to order inquiries and stand Harrison down.

Mr Matthews, who is now the Auditor General, said he recieved an "external tip" that Harrison had a previous fraud conviction, for which she received name suppression under an alternative alias.

"I'm confident that my actions were what were critical to her now being in prison.

"I was determined to ensure this person was brought to justice - I could not have done anything sooner."

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