NZ Post spends $3m in Spain
New Zealand Post spent more than $3 million on an abortive five-month attempt to establish a European base in a house in Madrid, a parliamentary select committee was told yesterday.
The existence of the house, complete with swimming pool, was revealed by ACT NZ MP Rodney Hide.
He said NZ Post had advised the finance and expenditure committee that it spent $3.023 million on the house office, which opened in October 2000 and closed in February 2001.
Committee members also heard from PricewaterhouseCoopers partner John Selby that NZ Post staff entered Spain on tourist visas in apparent contradiction of Spanish law.
“We identified the fact that they needed visas to be working in Spain and that they had been coming in and out using tourist visas,” he said.
NZ Post board member Ken Douglas said the office was established to take advantage of the deregulation of European postal services. The Spanish Government had indicated a keenness to engage external consultants, but an election had produced a new government with a different attitude.
Mr Selby, engaged to investigate anonymous allegations about NZ Post’s international subsidiary Transend, said he had not found evidence of a “meaningful working relationship” between Transend and the Spanish postal service.
State-Owned Enterprise Minister Mark Burton told Parliament last month that Mr Selby had conducted a “full audit” of the allegations summarised by Wellington lawyer Cameron Mander, for a board-ordered investigation.
But Mr Selby said he had not conducted an audit.
He had documented the information available about policy compliance and financial issues.
Other allegations had been handled by members of a group set up by the NZ Post board.
It comprised Mr Douglas, NZ Post chief financial officer Nazir Awan and NZ Post chairman Ross Armstrong, though Mr Selby said he had not been aware Dr Armstrong was a member of the sub-committee till recently because he did not attend meetings.
Answering questions from Mr Hide and National MP Murray McCully, Mr Selby confirmed that:
NZ Post did not develop a business plan for its Madrid branch.
NZ Post was advised before going to Madrid that it was not a “tax-effective” option.
Transend chief executive Drew Stein and regional director for Europe and the Americas Jim Poynter signed a 10-year lease for replacement offices in London without the necessary delegated authority.
Transend spent $694,000 developing the “utilities side” of its business with a year 1 revenue target of nil.
At least four consultants engaged after July 2000 had no contracts. “Normally you would have contracts for consultants,” Mr Selby said. “That would be best practice. They should have had contracts for consultants.”
An acquaintance of Mr Stein, Ian Shaw of Kamden Marketing, was appointed to head a management contract with the British Consultancy Postal Services without a formal selection process.
The committee will hear evidence from Mr Stein and NZ Post chief executive Elmar Toime next week.
