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


On 16 July 1999 I was approached by Mrs Christine Rankin, Chief Executive of the Department of Work and Income, concerning the chartering of aircraft by the Department. These aircraft had been chartered to enable the Department’s service centre managers to attend a course at the Wairakei Resort Hotel on 3 and 4 June 1999. Mrs Rankin asked for an independent investigation to advise her what had happened.

Based on the information supplied, I determined that my officers would conduct an inquiry that would have as its objectives:

  • Identifying and documenting the events surrounding the chartering of aircraft for service centre managers to attend a training programme on 3 and 4 June 1999.
  • Determining whether or not the chartering of aircraft was an isolated instance.

To this end, my officers would:

  • source and investigate all documentation relating to the event;
  • interview key personnel associated with the event;
  • identify delegations/authorities held by persons associated with the chartering and their use; and
  • examine examples of other similar expenditure to establish its appropriateness and compliance with internal procedures and controls.

I also determined that, should any other matters be disclosed during the course of the inquiry, they too would be investigated.

Other Inquiries and Actions

My inquiry was carried out in my capacity as the auditor of public money, pursuant to section 25(1)(a) of the Public Finance Act 1977. Its purpose was:

  • to examine particular transactions in order to ascertain whether the procedures of the Department, including its internal controls, were sufficient to ensure that there was effective control over expenditure and that all expenditure was properly authorised – section 25(2)(b)(iii); and
  • to ascertain whether, in my opinion, resources of the Crown had been applied effectively and efficiently in a manner that was consistent with the applicable policy of the Government, while having due regard to the responsibilities of the State Services Commission – section 25(3).

I have the power under section 33 to report to the House of Representatives on such matters as I think fit relating to any transaction that is required to be audited by my Office. In making this report, however, I am conscious of two other matters:

  • The State Services Commissioner’s review of Mrs Rankin’s own performance in relation to this matter; and
  • Proceedings commenced in the Employment Court against the Department by the manager who organised the course. Those proceedings were commenced after Mrs Rankin invited me to conduct an inquiry. They are still before the court.

The Department also conducted its own internal inquiry into the actions of the manager who organised the course.

Some of the evidence which was taken in my inquiry will also be relevant to the Employment Court proceedings. Because of the circumstances I considered it necessary to use my powers under section 28 of the Public Finance Act 1977 to take evidence on oath. The evidence was obtained for the purpose of establishing the circumstances surrounding possible failures of administration, but not for determining whether there was any breach of a contact of employment. That is for the Employment Court to determine in accordance with such evidence as may be given to it.

In addition, the Employment Court has issued an interim order suppressing further publication of the name of the manager. The order does not directly affect this report, but we understand the Court’s reasons and have decided that it is not appropriate to use the manager’s name or her job title. For clarity and convenience we refer to her simply as “the Course Organiser”.

Notwithstanding that proceedings are still before the Employment Court, I am conscious of the level of Parliamentary and public interest in these events. My inquiries have disclosed that what happened and why it happened differ from what appears to be the general understanding to date. I have concluded therefore that it is in the overall public interest that I make this report now.

Considerations of Perspective

The events that are the subject of this report should be viewed from two important overarching perspectives.

First, within any organisation, the management information and control systems are put in place to achieve management objectives and minimise the risk of adverse outcomes. However, even very good systems will inevitably leave the organisation exposed to some residual risks. The fact that something goes wrong does not mean – of itself – that systems were deficient or that management efforts were misdirected. However, in this case we identified certain weaknesses in the Department’s systems that we believe contributed to the problem.

Secondly, when conducting this inquiry, we drew on documentary evidence and human recollection. Both sources carry some uncertainties, but human recollection is especially fallible. We took evidence from a number of people on oath, and there were some irreconcilable differences in their accounts of events. However, that does not necessarily mean that anyone giving evidence was not genuinely trying to offer their best recollection or was deliberately seeking to mislead us.

Our report has been prepared having regard to these considerations and to the fact that some matters are still sub judice. In cases of conflicting testimony, we have not sought to indicate which account of events we prefer – and indeed, in the absence of conclusive evidence, it would be inappropriate for us to do so. However, we have pointed to the differences and have drawn linkages to documentary evidence where we think that is useful.


Our conclusions are that:

  • The expenses incurred in holding a course at the Wairakei Resort Hotel were excessive in comparison to the cost of holding the same course at another, more accessible, location, where the same organisational objectives could have been achieved.
  • The chartering of aircraft appears to have been an isolated incident. We reviewed all the courses undertaken by the Department since its establishment on 1 October 1998 and found no other examples of such chartering.
  • The chartering did not take place simply as a result of self-serving extravagance by staff of the Department. Rather, it appears to have been the final consequence of a series of miscommunications and mistakes. These miscommunications and mistakes, although arguably not enough individually to have caused serious problems, compounded into a significant overall error that has proved costly to the Department (both financially and in terms of its credibility with its stakeholders).
  • The decision that initiated the overall error was not the selection of the mode of transport but the selection of the venue for the course. There were significant difficulties associated with arranging travel for that number of people to that venue. The difficulties were made worse by the short amount of time in which the course was organised and by the dates on which it was held (immediately prior to Queen’s Birthday weekend). However, given the particular location used for the course, in our view it would not have been possible to transport in excess of 100 people to it from all over New Zealand using scheduled air services. It was possible for all but 44 staff to travel by road to the venue. However, many would have had to travel for several hours starting very early in the morning, possibly in inclement weather, and facing the risk that the Desert Road might be closed. Both alternatives were far from ideal.
  • In the ensuing public debate, a comparison has been made between the cost of travel on scheduled flights and the costs actually incurred in chartering the aircraft. We believe that comparison is invalid. A valid comparison would need to take into account the costs of regular transport, additional accommodation and the cost of the additional time that the course attendees would have had to spend travelling.
  • The initiating action appears to have resulted from a meeting between the Chief Executive and the Course Organiser. We received different accounts of what transpired. The Chief Executive stated in evidence that she gave instructions to the effect that the Course Organiser should explore the possibility of holding the course at Wairakei or some similar North Island venue, and she had suggested the dates of 3 and 4 June 1999 only as possibilities. The Course Organiser stated in evidence that she took the Chief Executive’s words to be a direction to arrange a course at Wairakei on those dates. It is apparent that there was a miscommunication. We express no view on which version of events is correct, nor on the cause of the miscommunication.
  • Senior managers of the Department were subsequently involved on at least three occasions in the arrangements for the course. These were:
    • On 14 May 1999, when an initial deposit was paid to secure the chartered aircraft. This payment was authorised by the General Manager, Human Resources.
    • On 18 May 1999, when the Chief Executive was made aware of the fact that aircraft were being chartered through a question asked of her by the Minister’s Private Secretary;
    • On 24 May 1999, when the Chief Executive approved the payment of the balance of the travel costs.

These three occasions did not result in the overall error being averted. We explore them further in the main text.

  • Following the inquiry from the Minister’s Office, the Chief Executive spoke to the Course Organiser. The Chief Executive has stated in evidence that she sought assurances at various times that the action taken to charter the aircraft was defensible and that the costs were justified. Other evidence supported the Chief Executive’s evidence. However, the evidence we were able to obtain did not enable us to establish conclusively the nature of the assurances given, or to determine whether or not they were false assurances or merely miscommunications.
  • The Course Organiser stated in evidence that she anticipated that the chartering of aircraft created risks in relation to public perception and therefore took steps to minimise any publicity about the fact that aircraft had been chartered. This resulted in the travel arrangements for the course taking on a secretive flavour that we found quite inappropriate. Unless circumstances are exceptional, the activities of government departments should be able to sustain public scrutiny.
  • In a regime of robust financial controls, proposals that will commit an organisation to significant expenditure should, before final decisions are taken, be subjected to an independent assessment or review by staff who have specialist financial management skills. That did not happen in this case.
  • In a regime of robust staff control, there should be a clear transfer of responsibility for the management of individual members of staff who are detached from their normal line management for particular purposes. In this case, there was evidence of confusion about who was overseeing the work of the Course Organiser. We express no view about what caused this confusion.

D J D Macdonald
Controller and Auditor-General

15 October 1999

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