Conflict of interest awareness important as CERA probe continues

A future emergency response agency would need to focus on raising awareness about declaring conflicts of interest, with an investigation into the Canterbury Earthquake Recovery Authority ongoing, says the Office of the Auditor-General.

The finance and expenditure select committee heard from the OAG over its report on the effectiveness and efficiency of the CERA, which was released in January.

The report was critical of CERA, saying the agency took a long time to set up effective systems and controls and its management controls and performance information "needed improvement right up to the time of its disestablishment." CERA was effective in leading the government response in the early phases of the earthquake recover, but struggled to maintain momentum when that shifted to the reconstruction phase, the report said.

Megan Woods, Labour's spokeswoman for Canterbury issues and local MP for the Wigram electorate in Christchurch, asked about management controls over conflicts of interest within CERA, after last month's announcement that the State Services Commission is investigating allegations that three former CERA staff members used their positions to advance their private business interests.

The auditor-general's report said there were "loose management controls for the procurement of services for clearing and managing some of the Red Zones, which created the potential for fraudulent activities" and that "although financial controls improved by the time of CERA's disestablishment, management controls and performance information systems still needed improvement after five years."

Henry Broughton, who was sector manager at OAG for CERA before it was disestablished and is now sector manager for Regenerate Christchurch and Ōtākaro, told the select committee that CERA had had a conflict of interest policy. There was an "interesting point" around the interaction between employees with experience in the public sector and those coming from a private sector background, and a need to "raise awareness around the importance of declaring conflicts of interest", he said.

Woods asked Broughton whether it was a cause for concern that the CERA conflicts of interest register had not been transferred to the new entities. Broughton said the OAG was "in a wait-and-see holding pattern" pending the outcome of the SSC investigation.

Michael Heron QC, who is leading the investigation, provided an interim report at the end of February, and is now working to complete the investigation and prepare his final report and conclusions, the SSC has said.

(BusinessDesk)