Part 5: Our conclusions

Inquiry into aspects of ACC's Board-level governance.

5.1
In this Part, we set out our overall conclusions and comments about:

Board policies and practices

5.2
The Board's Manual covered conflicts of interest generally. However, it did not prescribe the practices that should apply when a claimant contacts a Board member directly. We accept that Mr Seymour covered the matter orally in his induction session for each new Board member.

5.3
We recommended to ACC that the Manual contain such a policy. The policy should require a Board member in those circumstances to notify the chairperson, who will decide whether the Board member should meet the claimant or whether the matter should be referred directly to the chief executive or the board secretary.

5.4
Although there was no written policy, both the Board members involved were clear that matters about individual claimants were strictly the concern of management. They clearly understood the risks that would arise if a Board member were to intervene in an individual claim.

Did Ms Pullar obtain any advantage from her approach to Mr McCliskie?

5.5
We have considered whether Ms Pullar obtained any special treatment from ACC by approaching Mr McCliskie. In our view, the offer of a meeting with the (acting) National Manager, Claims Management was special treatment. Although meetings with such senior ACC officials are not without precedent, few claimants have that opportunity. The meeting did not, in fact, give Ms Pullar any special benefit or concession.

5.6
We accept that the decision to have the (acting) National Manager, Claims Management offer to meet Ms Pullar was intended to try to progress a longstanding and complex claim. Mr Verberne and Mr Murch told us that they understood that the purpose of the 1 December meeting was to give Ms Pullar a hearing. Even though the meeting resulted from Ms Pullar's approach to ACC's Deputy Chairman, they did not believe that they were expected to resolve her claim.

5.7
In our view, Mr Verberne and Mr Murch were not influenced by the 1 December meeting taking place because Ms Pullar had approached a Board member, nor were they influenced by the former Minister's support for her, of which Mr Murch was aware. We consider that they understood that Ms Pullar was to be treated as any other claimant. In our view, they saw the meeting as an opportunity to try to repair the relationship between ACC and Ms Pullar and, if possible, to progress ACC's plan for Ms Pullar's continuing rehabilitation.

Why did ACC not identify the risks posed by Ms Pullar's wider allegations?

5.8
When Ms Pullar met Mr McCliskie in September 2011, the issues that she raised with him were arguably general issues about ACC, rather than (or not only) specific to her claim. However, the matters that ACC investigated because of Ms Pullar's approach to Mr McCliskie focused on its handling of her claim.

5.9
In our view, the matters that Mr McCliskie recorded in his email of 14 September (illegal access to files, incompetent ACC specialists, fraudulent activities by ACC staff) are areas of risk with which a Board should be concerned. That was Mr McCliskie's original reaction.

5.10
Mr Judge asked management for "appropriate investigations". Mr McCliskie, in his email to Ms Pullar of 12 October, referred to an agreement that ACC management would review Ms Pullar's file, because both he and Mr Judge were "very reluctant to go any further into the specifics of your case". Mr Seymour understood that management were to look at the claim and confirm whether they believed that it had been handled appropriately.

5.11
Mr Seymour told us that, when he and other ACC personnel looked at the issues raised by Ms Pullar (as set out in Mr McCliskie's email of 14 September), it became clear to them that Ms Pullar had raised them with ACC about her claim before. They interpreted her comments to Mr McCliskie as pertaining simply to her claim. Management advice to the Chairman on 6 October was that the issues were "operational in nature and should not be handled by the Chair".

5.12
We note that ACC's review in September and early October 2011 was based on Mr McCliskie's email of 14 September. Ms Pullar's fuller explanation of the issues was not sent until 14 and 15 October, and she gave the list of 45 alleged breaches to ACC only at the meeting on 1 December.

5.13
Mr Verberne and Mr Murch thus attended the meeting on 1 December expecting to discuss Ms Pullar's own claim. Their intention was to find a way to progress a complex and longstanding matter. Ms Pullar told us that, when she knew that Mr Murch would be attending the meeting, she too decided to take the opportunity to try to deal with her claim, as well as with the broader issues she had first raised with Mr McCliskie.

5.14
After the 1 December meeting, any management attention given to the matter was about:

  • ongoing attempts to resolve differences with Ms Pullar over the way in which her claim would be handled; and
  • retrieving the client information disclosed to Ms Pullar.

5.15
None of the managers concerned appeared to recall that the more general issues set out in Mr McCliskie's email of 14 September might remain to be considered.

5.16
From the Board's point of view, it was important that the issues were investigated. However, once Mr Judge referred the matter to ACC management and management confirmed that it was operational in nature, management assumed responsibility for Ms Pullar's claim. Consistent with their understanding that the complaint to Mr McCliskie was a purely operational matter about Ms Pullar's claim, neither Mr Judge nor Mr McCliskie inquired about the outcome of the 1 December meeting, although Mr Seymour informed Mr Judge that it had taken place.

5.17
We looked for some reporting back to the Board, or to Mr Judge and Mr McCliskie, on the issues raised by Ms Pullar. This included issues raised at her meeting with Mr McCliskie, in her emails to Mr McCliskie of 14 and 15 October, and in the list of 45 issues presented at the 1 December meeting. We did not find any evidence of this. The reporting back after the meeting, including about the privacy breach, seems to have stopped at Ms Cosgrove as General Manager, Claims Management. Even so, neither Ms Cosgrove nor Mr Tully saw the list of 45 issues until the time of this inquiry.

5.18
The absence of reporting back to the Board seems to be because management believed that the issues raised by Ms Pullar were operational and solely about Ms Pullar's claim. Management did not recognise these issues as possible symptoms of systemic failure. For that reason, management saw no reason to report back to the Board.

5.19
We note that privacy breaches have not routinely been reported to the Board. Indeed, it is not clear to us whether information regarding privacy breaches is systematically collected and collated for senior management to assess.

Comment

5.20
We have some observations about why ACC might have failed to appreciate the risks arising from the privacy breach and the allegations of systemic wrongdoing.

5.21
ACC is a Crown entity. This model supposes that the pivotal relationship is between the responsible Minister and the Chairperson. ACC is one of the largest public organisations in New Zealand and touches the lives of most of New Zealanders at some point. Because of its significance, a Minister responsible for ACC tends to treat it almost as if it were a government department – for example, meeting weekly with the chief executive and senior management. Ministers will also have regular but less frequent meetings with the Chairperson. The Crown entity governance model requires the Minister, Chairperson, and chief executive to be aware of the complexity of the model.

5.22
Secondly, ACC is a large and complex organisation. We consider that a new Board member, even if that person is an experienced director, will take two to three years to understand key actuarial and financial aspects of ACC, as well as its culture. Board members need to understand these matters to be able to balance ensuring the fair and equitable treatment of its claimants and keeping ACC financially viable.

5.23
The ACC Board at the time was reaching this point of maturity. Most of its members had served about three years. Its primary focus for that period, at the direction of the previous Minister, had been to address ACC's long-term liabilities, to ensure ACC's viability into the future. It had carried out that task, and was at the point of broadening its focus to ensure equal attention to all aspects of the business.

5.24
ACC also experienced significant management changes during 2011/12. Mr Stewart took up his position as chief executive only on 19 September 2011, at the time Ms Pullar met Mr McCliskie. Six of the eight direct reports to the chief executive changed in 2011/12.

5.25
Clear lines of communication between the Board and the chief executive and between the chief executive and senior managers are unlikely to have been in place in September 2011. Cohesion between Board and management in an organisation depends largely on communication through the chief executive. As we have noted, the McCliskie/Pullar meeting, the privacy breach, and Ms Pullar's other allegations did not come to Mr Stewart's attention until March 2012.

5.26
In this environment of change and transition, Ms Pullar's allegations, and the privacy breach in particular, were not recognised for the risks they presented. We have no view as to whether Ms Pullar's wider allegations are in any way justified. We have not inquired into those matters. However, we consider that accusations of systemic illegality and fraud are issues that any public sector organisation should take seriously.

New direction

5.27
Under Mr Stewart's leadership, ACC has prepared a business plan for 2012-15, which the Board adopted in February 2012. The plan is built on five core principles:

  • improved customer centricity by focusing on better service for injured people;
  • better service for levy payers;
  • better engagement with the health sector to improve care and rehabilitation for injured people;
  • better co-ordination across ACC to ensure that the organisation operates as "One ACC"; and
  • ensuring delivery of world-class results to clients, levy payers, and government.

5.28
This plan is consistent with the Service and Purchase Agreement between the Minister and ACC released in late June 2012. The Agreement sets out the Government's key priorities for ACC:

  • improved trust and confidence;
  • improved management and security of private information;
  • maintaining a focus on levy stability and financial sustainability;
  • providing high quality services for clients;
  • ensuring early resolution of disputes; and
  • reporting on the performance of the Accredited Employer Programme.

5.29
We consider that this approach will lead to a more balanced and comprehensive approach to the governance and operation of ACC.

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