Council takes action against auditor and former CEO by Colin Patterson Kaipara Lifestyler In what is believed to be a legal first, Kaipara District Council is taking Audit New Zealand to court for negligence which it claims has cost it and ratepayers millions of dollars. Meeting in Dargaville today (Tuesday August 26) council commissioners also decided to take action in the Employment Relations Authority against former chief executive Jack McKerchar to recover losses relating to cost overruns on Mangawhai’s Eco-Care sewerage scheme. The scheme’s cost rose from $35 million to $63 million but ratepayers were not told. Instead, the council several times raised rates without consultation, breaching the Local Government Act. The unlawful decisions were not picked up by Audit New Zealand which was the council’s auditor throughout the period. Last December Auditor-General Lyn Provost admitted that Audit New Zealand’s work undertaken for Kaipara prior to 2010 did not meet professional standards. Although she apologised for that, Kaipara District Council chief commissioner John Robertson says that is not enough. “As a result of Audit New Zealand’s negligence, huge costs have been imposed on Kaipara District Council and its ratepayers. The simple fact is that Audit New Zealand did not identify the Mangawhai Community Wastewater Scheme as a key audit risk or even an area of focus. It should have done so and that was made very clear in the report released by the current Auditor-General last year.” Mr Robertson says that because of the statute of limitations the legal action would only cover work done by Audit New Zealand dating from March 2008. Proceedings are expected to be lodged by the end of October. Mr Robertson says Mr McKerchar failed the people of Kaipara and should be held to account. “Elected members and the Kaipara community should have been able to rely on the chief executive’s advice. But in a number of areas it was very poor.” Mr Robertson says in the latter part of Mr McKerchar’s time in charge the council failed to assess and set rates legally; it failed to ensure a number of statutory requirements were met and it failed to manage its finances prudently. “Mr McKerchar should be held to account for his role in those failings.” He says the council’s legal advisers had been instructed to begin action against Mr McKerchar. Mr McKerchar did not return calls seeking comment. However, commissioners decided not to take action against former mayor Neil Tiller or other former councillors. Mr Robertson says the council had received strong legal advice that there was no legal basis on which to base a case. However, the commissioners will ask Ms Provost to reconsider her earlier decision not to use her statutory powers to hold the councillors to account. “There is now a formal declaration from the High Court confirming a number of previous council failings, which didn’t exist when the Auditor-General made her previous decision,” says Mr Robertson. “The Auditor-General has the best chance to initiate recovery action for former Kaipara elected members and we will be asking her to review her decision. Whether she does so, is entirely up to her.” Commissioners will decide next month whether to take action against consultants involved in the EcoCare scheme.
Posted on: Tue, 26 Aug 2014 06:27:13 +0000
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