Auditor-General to scrutinise Transend
Parliament's Finance and Expenditure Committee has unanimously recommended that the Auditor-General undertake a management review of New Zealand Post's international postal consultancy, Transend.
The committee says that after reviewing Transend's activities in Europe and South Africa it has a number of concerns and has received wide-ranging evidence suggesting Transend's management systems need improvement.
The Committee has recommended the Auditor-General undertake an audit of Transend to ensure its policies and procedures are adequate.
It has also criticised New Zealand Post for its response to a request for information and has initiated a wider inquiry into the parliamentary scrutiny of State Owned Enterprises.
In a press release made public following the committee's recommendation, New Zealand Post chairman Dr Ross Armstrong simply acknowledged developments, saying, "New Zealand Post acknowledges the recommendation by the Committee that the Auditor General undertake an audit of Transend Worldwide Ltd to ensure its policies and procedures are adequate.
"New Zealand Post also looks forward to the Committee's inquiry to consider issues relating to the balance between Parliamentary scrutiny and the ability of State Owned Enterprises to operate effectively in a commercial environment," he said.
The National Party responded to the recommendation with a press release that emphasised what it considers to be discrepancies in the remuneration package of Mr Elmar Toime, NZ Post's chief executive:
NZ Post Chair Dr Ross Armstrong has been accused by MPs Murray McCully and Rodney Hide of "a calculated attempt to deceive" over the salary package of NZ Post chief executive Elmar Toime. Material released today by the Finance and Expenditure Select Committee includes a letter from NZ Post Elmar Toime, following questions from the Committee.
Mr Toime's letter explains the structure of his remuneration, including an "at risk" component and states "For that reason, my remuneration could range from $570,000 to $1.1 million, depending on the level of at risk payment made."
Yet in a press release dated 10 February, in response to allegations that Mr Toime's salary had been increased to a maximum of $1.2 million, Dr Armstrong "strongly denied" the claims. He said "Taking into account the 2.5% increase to fixed remuneration and even allowing for the maximum possible achievement in the "at risk" component, Mr Toime's total remuneration for 2002 will be well below the $800,000 figure recommended by PriceWaterhhouseCoopers as the bottom end of the salary band."
"That statement was a calculated attempt to deceive," said Messrs McCully and Hide today.
"From examining the detail of Mr Toime's letter it is clear that Post made their claim only by not counting any element of this year's at risk salary component on the basis that it would be paid next year. Yet any reasonable person reading Dr Armstrong's statement would be led to believe that all elements of the package, including this year's at risk salary was included."
"The 2001 Annual Report records a top salary band of $540,000 to $550,000. Yet Mr Toime's letter concedes that his remuneration "could have ranged from $560,000 to $1 million. These are huge discrepancies which can only be the result of a calculated plan to deceive."
"This is a further illustration of the slippery, evasive, deceitful conduct which has characterised NZ Post's dealings with Parliamentarians and select committees and it falls well short of the standard which we are prepared to accept."
National MP Hon Murray McCully and ACT MP Rodney Hide also issued a joint release in which they welcomed the audit call and thanked unnamed whistle-blowers for taking risks in leaking documents:
"The Committee's review of Transend revealed three serious problems: a culture of corporate extravagance at the taxpayer's expense, NZ Post managers unable to control or check expenditure, and a Board that had failed in its governance duty.
"NZ Post is owned by the taxpayers of New Zealand. It employs ten thousand people and turns over a billion dollars a year. NZ Post is a business critical to the success of New Zealand economy.
"The Committee discovered a performance by NZ Post's Board and management that fell well short of acceptable practice in any business state or private whether large or small.
"The Financial Review was made difficult by NZ Post failing to answer questions clearly and honestly. NZ Post appeared through the Committee hearings not to accept the need to be held to account to the taxpayers of New Zealand. The FEC's report slams NZ Post for proving "unhelpful" in providing requested information and declares that, "We do not expect to be treated this way by any organisation that appears before this committee, including State enterprises". Chairman Dr Ross Armstrong and CEO Mr Elmar Toime are now before the Privileges Committee for having misled the Committee.
"NZ Post's failure to pass the FEC's review reconfirms our view that Minister Mark Burton, Board Chairman Dr Ross Armstrong and CEO Elmar Toime must go. These three men have overseen the waste of millions of dollars of taxpayers' money and, damningly, still refuse to accept that anything is awry. The Committee's unanimous decision after a six-month review to call in the Auditor-General shows just how wrong they are.
"The Financial Review was a difficult one as the Committee had to balance the need to protect the commercial interests and reputation of NZ Post against the need to hold management and the Board to account. The Committee's work and recommendations clearly demonstrate that the Parliamentary system can work and sends a firm signal to all government departments and SOEs that Parliament's Financial and Expenditure Committee will indeed be holding them to account on behalf of the New Zealand taxpayer.
"The Auditor General has now a big job on his hands. We trust that NZ Post's Board and management will now put an end to the spin and games that the FEC had to endure and co-operate with him and his team. The Auditor General should begin his investigations with the Mander Report documenting staff allegations against Board and management and Deputy Chairman Mr Syd Bradley's 6 September 2001 letter to Chairman Dr Ross Armstrong that documents some of the key issues. We look forward to assisting the Auditor General in his inquiries.
"Finally we pay tribute to the men and women many of whom remain unknown to us who risked their careers and legal action to bring to our attention the financial shenanigans at NZ Post. They blew the whistle on NZ Post's management and Board only after exhausting all other possible avenues open to them. We have done our best to protect them while assuring the accountability that all taxpayers deserve and desire. They are brave people motivated to help NZ Post and the country move forward. We thank them.
