Report on the Disposal of 17 Kelly Street by The Institute of Environmental Science and Research Limited

10 June 2003

Hon Pete Hodgson
Minister Responsible for Crown Research Institutes
Parliament Buildings
WELLINGTON

Dear Minister

REPORT ON THE DISPOSAL OF 17 KELLY STREET BY THE INSTITUTE OF ENVIRONMENTAL SCIENCE AND RESEARCH LIMITED

What we were asked to do

1 In July 2001 the Institute of Environmental Science and Research Limited (“ESR”) – a Crown Research Institute (“CRI”) – signed an agreement with Glenstone Limited (“Glenstone”) for the sale of its property at 17 Kelly Street, Mount Eden in Auckland (“the property”).

2 Over a period of time, local residents and the media expressed concerns about ESR’s disposal of the property. You asked us to undertake an independent audit of the process. Two issues emerged which became the main focus of our consideration:

• The property was known to be contaminated with mercury – a legacy of its earlier use as a dental school. We considered how ESR managed the evolving issue of the contamination, and its impact on the method of disposing of the property in a way that met the Minister’s requirements; and
• Glenstone was owned by a former Chief Financial Officer of ESR (“the former CFO”). We sought to establish why ESR chose to enter a private treaty sale arrangement with the former CFO, and what steps it took to ensure that it was proper and ethical to do so.

3 This report sets out our expectations and our findings...