The Hillside Engineering Workshops in Hillside Rd, South
Dunedin. Photo by Gerard O'Brien.
The Office of the Auditor-general has ruled out an
inquiry into the purchasing of rolling stock by KiwiRail,
satisfied the state-owned enterprise has done nothing wrong.
In August last year, Labour Party MP for Dunedin South Clare
Curran asked the Auditor-general to investigate four
purchases of railway rolling stock by KiwiRail.
Ms Curran was concerned KiwiRail had not been fair in its
tendering process, which ended with contracts awarded to a
Chinese company over the South Dunedin Hillside Engineering
Hillside's failure to secure the contracts had led to its
demise and the redundancy of more than 100 staff, Ms Curran
There was also controversy about the quality of stock from
the China Northern Locomotive and Rolling Stock Industry
It was alleged Hillside staff were among KiwiRail workers
assigned the task of repairing inadequate CNR stock once it
arrived in New Zealand.
But yesterday, the Office of the Auditor-general (OAG) issued
a statement refusing Ms Curran's request.
The OAG said it had reviewed a substantial amount of
documentation dating back to 2005, and interviewed KiwiRail
staff, and an inquiry was not warranted.
''We have carried out enough preliminary work to be satisfied
there is nothing to suggest decisions to purchase locomotives
and wagons from CNR were made for anything other than normal
business and commercial reasons. The processes followed by
KiwiRail appear reasonable, the relevant evaluations have
been carried out properly, and we have seen no evidence to
suggest improper influence over these decisions,'' the OAG
KiwiRail chief executive Jim Quinn was happy with the
''It confirms what we already knew, that our processes were
robust. This has not impacted on our operations and we have,
and always will, fully co-operate with these requests for
information,'' he said.
The OAG found that in 2008 CNR was ranked first, and Hillside
sixth, in KiwiRail's assessment of potential suppliers.
Hillside's proposal was deemed uneconomic because it would
take longer and cost more.
KiwiRail contracted CNR to supply 20 locomotives, six of
which were delivered in November 2010 and the remaining 14 in
''We did not identify any unfairness in the way the proposal
from Hillside workshops was treated,'' the OAG said.
In late 2010 KiwiRail received nine tenders for the supply of
300 container flat-top wagons, of which CNR's was ranked
first and Hillside's third.
The OAG said Hillside's tender was the third most expensive,
could not meet the delivery schedule, and would require
KiwiRail to carry all performance, warranty and cost risk
KiwiRail awarded the contract to CNR and in 2011 it ordered a
further 200 wagons and 20 locomotives from the Chinese firm.
Hillside was considered, but again rejected because of cost
and time issues.
KiwiRail told the OAG some stock defects were ''not unusual''
and the Chinese wagons could only be comprehensively tested
once in New Zealand because of ''rail gauge differences''.
CNR had met all remedial costs associated with defects, as it
was contracted to do, the OAG said.
''We have seen nothing to suggest the defects that have been
encountered and fixed by CNR affect the original decision
that CNR provided the best value for money,'' it said.