24 May 2017

MPs to meet over Auditor-General controversy

12:40 pm on 24 May 2017

MPs who appointed Auditor-General Martin Matthews have been called to a meeting by the Speaker this afternoon, to discuss whether they need to review that move.

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Auditor-General Martin Matthews was previously the head of the Transport Ministry. Photo: RNZ

Mr Matthews led the Transport Ministry while a large scale fraud was carried out by one of his top managers, Joanne Harrison.

There are questions about why he did not act when red flags were raised directly with him in 2014, and whether whistleblowers were forced out of the ministry.

Meanwhile, Mr Matthews has individually contacted party leaders, asking to meet with them so he can answer questions about how he dealt with the Joanne Harrison fraud controversy.

Harrison was sentenced in February to three years and seven months in prison for stealing $723,000 from the ministry.

She also tricked another government agency into hiring her husband and got a job for a friend who was on the Ministry of Transport's payroll for 10 months but never turned up or did any work.

Fresh information about the audacity of the fraud and the red flags staff raised with him have led to Labour seeking a review of his appointment as Auditor-General, while New Zealand First leader Winston Peters wants him to step down.

Peter Dunne's United Future also thought Mr Matthews had questions to answer.

Mr Matthews contacted party leaders individually after questions about whether he could, or should, have acted earlier when red flags were raised with him, and requested to meet.

However, the parliamentary committee that appointed Mr Matthews as Auditor-General, chaired by the Speaker David Carter, will now convene this afternoon.

The Serious Fraud Office director Julie Read confirmed she told the committee during the appointment process that his conduct was exemplary.

But now she has confirmed that only related to Mr Matthews' conduct after he was tipped off to the fraud in April 2016.

As far back as 2013, staff at the Transport Ministry were alerting Mr Matthews to what they regarded as Harrison's astounding behaviour.

She created fake companies and paid them for work that was never done and refused to cooperate with an internal investigation.

It was not until Mr Matthews received an external tip in 2016 - that Harrison was a convicted fraudster - that he clicked.

State Services Commissioner Peter Hughes is now considering launching an inquiry into claims by whistleblowers that Harrison forced them out in a restructure.

Mr Matthews would not be interviewed yesterday but issued a statement saying he regretted the fraud that took place under his watch and that he wished he could have detected her criminal activity earlier.

But he said he stood by his decisions and that he acted swiftly once he was alerted to Harrison's true identity.

Minister of Transport Simon Bridges said once Mr Matthews realised he was dealing with fraud, he acted professionally.

"The SFO has described that [Matthews' conduct] as exemplary. I think there are whistleblowing issues that now do need to be looked at and we are seeing an inquiry or inquiries happening there.

"And the matter of Martin Matthews and his role as Auditor-General, that's a matter for Parliament," Mr Bridges said.

In Parliament yesterday, Mr Peters demanded answers from Prime Minister Bill English.

"Why for so long did the system miss every malpractice, fraud and warning sign after warning sign in the Joanne Harrison case?" Mr Peters asked.

Mr English responded.

"I understand these matters were canvassed in a process that's nothing to do with the government, and that is the process of appointing the Auditor General, where the MPs committee ... were briefed in full about all these matters."

*An earlier version of this story said Mr Matthews was due to be questioned by MPs. RNZ was subsequently told this was not the case.

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