Part 2: Sequence of events

Inquiry into events surrounding the chartering of aircraft by the Department of Work and Income.

While we have been unable to ascertain with complete certainty the details of all the events that led up to, and followed, the service centre managers’ course, the main features seem relatively clear. Although there have been significant differences in some recollections, we do not consider this unusual in itself. We were not surprised that staff did have not have detailed recollections of matters which took place two months or more before our inquiry began and which may have seemed relatively routine at the time.

In what follows, we have set out what be believe to be the main sequence of events. Information that is “common ground” is shown in italics. Where recollections differ, we have cited the differences without further comment, except to draw attention to documentary or other ancillary evidence where it seems pertinent.

11 May 1999

The Department’s Leadership Team (the Chief Executive and Level 2 managers) identifies a potentially significant lack of clarity among at least some service centre managers about the nature of the workbroker role. A decision is taken to provide training promptly for all service centre managers to correct the problem.

The Chief Executive stated in evidence that discussions on the need for a course for service centre managers had begun after the second course for workbrokers had been held. A meeting of the Leadership Team took place on 11 May and the decision is recorded in the minutes of that meeting. The minutes confirm that discussions were held on that issue on that date.

11-12 May 1999

The Chief Executive informs the Course Organiser of the decision to mount a course for service centre managers, and discusses with her the issues of venue and timing.

Recollections differ about the timing and content of the initial discussion and whether or not there was a subsequent discussion the following day to confirm arrangements. The timing of the first discussion is important, because the Chief Executive stated in evidence that she was absent from the National Office on 13 May. If the initial discussion took place on 11 May, it was possible for a follow-up discussion to have been held on 12 May. However, if the first discussion took place on 12 May, then apparently there could not have been a subsequent discussion on the following day.

The Chief Executive gave evidence, both orally and in a written statement, that the initial discussion was held on 12 May. The tenor of the discussion was that she suggested the dates of 3 and 4 June 1999 and a location somewhere in the central North Island – including that Wairakei Resort seemed to be a good idea – simply as possibilities to be explored.

The Course Organiser gave evidence of two early morning conversations with the Chief Executive, which she believed were on consecutive days. She believed – but was not certain – that the initial conversation took place on either 10 or 11 May. She took the Chief Executive’s statements about timing and venue as directions. After making initial inquiries and recognising the difficulties, she sought out the Chief Executive again the next day to seek confirmation as to the dates and venue – confirmation which she said she received. She then proceeded with the arrangements on the basis that she had been instructed to do so.

Ann Dostine, Events Manager, stated in evidence that she was present at a conversation between the Chief Executive and the Course Organiser, and her recollection of its content largely accords with that of the Chief Executive. However, Shelly Whyte, Adviser, Human Resources, stated in evidence that she inferred from the Course Organiser that the dates were firmly fixed from the outset. Daryl James of DestinatioNZ stated in evidence that, at his first meeting with the Course Organiser, he discussed the possibility of changing the dates and venue and was told it was not possible.

Other evidence bearing on the date of the initial conversation is less clear.

  • Daryl James stated that he and a colleague, Karen Juno, first met with the Course Organiser at 2.00pm on 11 May to discuss arrangements.
  • The Course Organiser stated that she contacted Wairakei Resort by telephone and discussed bookings. She also stated that she contacted and met with Daryl James following discussions with Wairakei Resort.
  • A facsimile letter from Wairakei Resort confirming provisional bookings was received by the Course Organiser on the afternoon of 12 May. This letter suggested the air charter company Origin Pacific as a possibility for handling travel arrangements and invited the Course Organiser to contact Origin Pacific’s agent, Daryl James.
  • Shelly Whyte stated in evidence that she believed she recalled initial discussions on 11 May, but subsequently inferred from a copy of an email message sent by the Course Organiser that the date had in fact been 12 May.
  • Ray Smith, the National Commissioner, stated in evidence that he recalled a discussion among managers in either late-April or early- May, following which the Chief Executive was to have discussed the matter with the Course Organiser. He believed that the discussion between the Chief Executive and the Course Organiser would have taken place “around 10 May”.
  • After we had completed taking evidence on oath and the Department was made aware of the significance of the dates, it was able to inform us of evidence that the Course Organiser had been in Palmerston North on 10 and 11 May and had not returned to Wellington until the afternoon of 11 May.

12 May 1999

Wairakei Resort sent a facsimile letter to the Course Organiser, confirming the tentative booking of 75 rooms and providing an estimate of the costs. The letter suggested Origin Pacific as a possibility for handling travel arrangements and gave the name and contact number of Daryl James.

The Course Organiser advised the Chief Executive that Wairakei Resort was available and that she had booked that venue.

14 May 1999

Following an initial meeting with the Course Organiser at which he was given a brief and instructions to proceed, Daryl James had been making arrangements for travel to the course. On 14 May he sent a facsimile letter to the Course Organiser providing a quotation for the travel arrangements of $165,055.91, and indicating that a 25% deposit of $41,263.97 was required by 4.00pm that day. The letter made it clear that the deposit was not refundable.

The Course Organiser sent a facsimile letter to Daryl James (actually dated 12 May) which confirmed instructions about the arrangements and acknowledged the quoted deposit requirements.

The Course Organiser arranged the payment to DestinatioNZ of a 25% deposit for the travel costs –- the deposit amounting to $41,263.97. Mark Fell, General Manager, Human Resources, approved the payment of the travel deposit of $41,263.97.

The Course Organiser stated in evidence that she had attempted to have the letter of instruction to DestinatioNZ signed by Christine Rankin and that she had asked Ann Dostine to review the draft letter to DestinatioNZ. Ann Dostine stated in evidence that she did not see the draft letter.

Mark Fell stated in evidence that the Course Organiser did not inform him of the total amount she had formally accepted in writing. Mr Fell stated that he was reluctant to sign the payment and initially refused to do so. He only countersigned it on the basis that the Course Organiser had signed it as budget holder, and on the basis of representations made to him by the Course Organiser that:

  • the payment was urgent and the Chief Executive was unavailable (which he confirmed);
  • the Chief Executive approved of the payment; and
  • the payment was for the pre-purchase of air travel and that any subsequent payments would be a “wash-up” based on the actual number who travelled.

In fact, Mr Fell’s signature constituted an approval of the payment.

The Course Organiser gave a different account of these events. She stated in evidence that she did not have a detailed conversation with Mr Fell; she simply approached him because she believed the amount to be approved was greater than her level of delegation. (This was in fact incorrect – the amount in question did not exceed her level of delegation.)

18 May 1999

The Private Secretary to the Minister of Social Services, Work and Income asked the Chief Executive and National Commissioner about the chartering of aircraft for the course.

18-21 May 1999

Following the enquiry by the Minister’s Private Secretary, the Chief Executive asked the Course Organiser about the chartering of aircraft.

The Chief Executive stated in evidence that the Course Organiser had confirmed flights had been chartered and that “the costs were no more than full and equivalent priced airfares”. The Chief Executive also stated that she sought assurance about the costs on two separate occasions during this period. Her evidence on this point is supported by the evidence of the National Commissioner.

The Course Organiser stated in evidence that she did not give the Chief Executive any such assurances on the costs. She told us that “It would have been impossible for me to give her assurances that it was cost effective and heaps cheaper and any of those things because it wasn’t so.” She also denied being asked on a second occasion about the chartering.

24 May 1999

The Course Organiser dictated a memorandum to the Chief Executive (typed by Blair McKenzie, Senior Advisor, Human Resources) seeking her approval for payment of the balance of the travel costs ($123,791.04) to DestinatioNZ. Blair McKenzie compiled the memorandum together with other relevant documents and sought urgent approval by the Chief Executive. Later that day the Chief Executive approved the payment.

The Chief Executive stated in evidence that she recalled seeing only the payment form that she had signed. She stated that she had not seen the supporting documentation.

Blair McKenzie stated in evidence that he had given to Marise Anderson, the Executive Assistant to the Chief Executive, a complete document set (which included an invoice citing the full costs of $165,055.91), and that he had received the same complete document set back when the Chief Executive’s signature had been obtained.

Marise Anderson told us she had no recollection of the documents being passed to her, of passing them to the Chief Executive, or of returning them to Blair McKenzie.

We examined the original document set and noted that it had been stapled together. One document had the appearance of having been stapled and unstapled at various times. However, the invoice from DestinatioNZ – which showed the full cost of air travel - appeared to have been stapled only once.

When we were first provided with a copy of the document set by the Department’s staff, it contained a photocopy of a part of the invoice from DestinatioNZ (the remittance advice). This photocopy showed only the balance payable, not the full cost. We were unable to ascertain who had made this misleading photocopy, or why and when it had been used. However, it is possible that the remittance advice had been copied instead of the full invoice simply to enable accounts staff to reconcile the amount owing with the amount actually paid.

2 June 1999

As a result of enquiries made by a manager at Taupo Airport about the identity of the travellers (see also paragraphs 2.032-2.034 below), Blair McKenzie alerted Robert Brewer, Acting Media Manager, of a potential media issue relating to the chartering of the aircraft.

Mr Brewer prepared a file note dated 14 July in which he recorded that he had questioned the Course Organiser about the cost of chartering aircraft. He also recorded that the Course Organiser had stated that the chartering was cost effective and that a cost analysis had been done.

The Course Organiser stated in evidence that she had no recollection of this conversation.

3 and 4 June 1999

The course was held at Wairakei Resort. The arrival of the chartered flights into Taupo Airport created interest in Taupo.

Daryl James stated in evidence that he had been instructed not to disclose the name of his client. This included not using the expression “charter” on any documents. He stated that he believed that the “secrecy” surrounding the flights contributed to the interest at Taupo Airport.

The Course Organiser stated in evidence that she had judged that chartering aircraft created some risk to the Department of adverse publicity, and had sought to avoid publicity by avoiding the use of the word “charter”.

8 June 1999

Minutes of the Leadership Team meeting record that the Wairakei Course could be a focus of future media attention.

Meetings of the Department’s Leadership Team begin with an issues management report by the Communications Manager. Helene Quilter, General Manager, Business Development, stated in evidence that she recalled that the matter had arisen on this occasion as a result of interest expressed by a manager at Taupo Airport. Other staff interviewed on oath did not have a particularly clear recollection of what had caused the matter to be raised at the Leadership Team meeting.

In a subsequent letter, Helene Quilter provided additional information that Blair McKenzie had reported to Robert Brewer that the Taupo Airport manager potentially might go to the media. This was conveyed to Jane Green, Communications Manager, who reported the matter to the Leadership Team.

6 July 1999

Steve Maharey MP lodges a Parliamentary Question for Written Answer in the following terms:

Is it correct that on the 3 June 1999 the Work and Income Agency chartered a aeroplane; if so why, what was the total estimated cost, from where did they fly and what was the destination, how many staff were on board, and were they in uniform or clearly identifiable as WINZ staff; if not, why not?

12 July 1999

The Course Organiser provided a draft written response to the Parliamentary Question to Karen Stewart, Government Relations Manager. In this draft response, the Course Organiser stated that aircraft chartering had occurred and that the cost had been $120,000.

The Course Organiser stated in evidence she knew that the figure of $120,000 was not accurate but expected the draft to be returned to her for checking.

13 July 1999

The Department’s Issues Management Group met to discuss the issues raised in the Parliamentary Question. The Course Organiser was asked to attend the meeting.

Helene Quilter stated in evidence that, at this meeting, the Course Organiser again advised management that the “all up cost” was $120,000.

The Issues Management Group asked Kate Joblin, National Media Manager, to prepare a comparative cost with normal airline fares. This exercise was completed by another officer in some haste and was not reviewed by a financial professional. It indicated that the comparative cost of full equivalent airfares was $36,000. (This figure was later revised upwards to $39,000, and then $50,000.)

Kate Joblin stated in evidence that the comparison had not taken into account the possibility that most staff would have been unable to travel using normal scheduled flights.

Helene Quilter and Kate Joblin advised the Chief Executive of the assessed cost differential. The Chief Executive then summoned the Course Organiser and, in an emotionally charged meeting, questioned her in the presence of Helene Quilter and Kate Joblin about the costs.

All accounts of this meeting, other than that of the Course Organiser, concur that the Chief Executive put it to the Course Organiser that she (the Chief Executive) had asked for and received assurances on at least three occasions about the costs of chartering the aircraft. The Course Organiser stated in evidence that this account was inaccurate.

14 July 1999

Management of the Department retrieved documentation that showed the true costs of the chartered flights was $165,055.99 (GST-inclusive). The Chief Executive commenced an internal investigation into the cost of the Wairakei Course.

On the evening of 14 July 1999, after a meeting with the Course Organiser, the Chief Executive suspended the Course Organiser pending a full investigation.

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