Inquiry into Public Funding of Organisations Associated with Donna Awatere Huata MP

In January 2003, Hon Richard Prebble MP, leader of the ACT New Zealand parliamentary party, asked the Controller and Auditor-General to inquire into certain allegations of financial impropriety involving one of his party’s list members, Donna Awatere Huata MP.

The allegations involved money owned by the Pipi Foundation Trust (“Pipi”), a private trust established by Mrs Awatere Huata in 1999 to deliver a children’s reading programme known as the Four Minute Reading Programme, which Mrs Awatere Huata had developed in the 1970s.

The Auditor-General is not the auditor of private trusts. We therefore had no power to investigate the allegations of financial impropriety surrounding Pipi’s funds. Both the Police and the Serious Fraud Office have made inquiries into those matters.

But it was also apparent that some (if not all) of the money that was the subject of the allegations had originated from public sources – primarily through a series of funding contracts between Pipi and the Ministry of Education. As the auditor of public entities (including the Ministry of Education), the Auditor-General has an interest in ensuring the integrity of such funding arrangements.

Our preliminary inquiries also revealed that:

• Pipi may have received funding from a number of public entities besides the Ministry of Education;
• some of Pipi’s funds had (it was alleged) been paid to or from other private trusts and organisations with which Mrs Awatere Huata was associated; and
• those other organisations had themselves been the recipients of public funds.

In the normal course of events, we would have expected the funding agencies themselves to have taken steps – through the medium of the funding contracts – to check and verify that the funds they had made available had been spent properly and for the purposes for which they had been given.

We decided that an inquiry was justified because:

• Irrespective of whether the allegations of fraud involving Pipi funds were true, the suggestion that funds of public origin may have been available to be misspent at all brought into consideration the possibility either that the contracted services had not been fully delivered or that more public funds than necessary had been provided for the purpose. This raised a question about the integrity of the systems used by the individual funding agencies – both in the making of contracts with private organisations and in monitoring and overseeing their service delivery.
• At least five different funding agencies appeared to have been involved in providing funds either to Pipi or to other associated organisations. This raised cross-sectoral issues – such as the prevention of “double dipping” – that the Auditor-General (as the auditor of all the funding agencies involved) was well placed to consider.
• Mrs Awatere Huata herself had been personally involved in seeking, from Ministers and officials, funding for Pipi and other related organisations. Irrespective of whether she had done so in her personal capacity or as an MP, this raised a question about what is (or ought to be) expected of MPs when their private business interests bring them into contact with fellow politicians and the bureaucracy. Although the Auditor-General does not oversee the actions of MPs, the question is relevant to the integrity of public funding systems.
• The allegations had significant implications for Parliament itself, because of the move to suspend Mrs Awatere Huata’s membership of ACT New Zealand until the allegations against her had been fully investigated.