The Southern District Health Board was told in 2010 its
multimillion-dollar dispute with South Link Health (SLH) might
be fraud, but the dispute was not referred to police, board
chairman Joe Butterfield has revealed.
The admission came as Mr Butterfield was questioned by
Parliament's health select committee yesterday.
The dispute involved whether SLH spent savings achieved in
laboratory testing and pharmaceutical contracts as per its
agreement with the funding authority.
It is estimated the original $5.3 million arising from 1990s
health contracts could have ballooned to about $15 million
Contacted by the ODT yesterday, SLH chairman Dr Dean
Millar-Coote categorically denied any suggestion of fraud.
Later in Parliament yesterday, Health Minister Tony Ryall
rejected a suggestion he discouraged the board from taking
the matter to police.
Board member Richard Thomson when contacted by the Otago
Daily Times yesterday, said he raised the alarm with the
Auditor-general, which brought the long-running matter to a
head last November.
He did it because of the ''absolute frustration'' he felt at
the lack of action from the Ministry of Health audit and
compliance unit, which was informed in late 2010.
''I have asked almost monthly for three years why we have not
had the investigation we requested.
''I spoke to the auditors when I believed that there was no
other way to get action.
''I did not go through the Swann fraud to be a party to what
seemed to me to be a wilful failure to act.''
Mr Ryall sacked Mr Thomson as chairman of the old Otago
Health Board in the fallout from the Michael Swann fraud.
Mr Thomson said he did not know if fraud had been committed
in this instance, but the concerns warranted proper
Under questioning by Green MP Kevin Hague, Mr Ryall said he
was alerted by the Auditor-general in November 2013 that the
dispute might involve fraud.
He said he had not been advised about the 2010 legal advice,
and rejected Mr Hague's suggestion he discouraged the board
from taking it to police.
Mr Ryall said he advised Mr Butterfield the matter should be
referred to the Serious Fraud Office if the board believed
there was a case to answer.
Mr Ryall rejected Labour MP Annette King's assertion he
pressured the Auditor-general not to use the word fraud in
the Audit Office report.
SLH chairman Dr Millar-Coote said the group had scrutinised
its role in the dispute, and ruled out fraud.
As far as he was aware, SLH was not aware of the 2010 advice
to the health board.
Earlier yesterday, Mr Hague and other MPs quizzed Mr
Butterfield and senior health board managers who appeared by
video-link before Parliament's health select committee for
the board's financial review.
Mr Hague, a former health board chief executive, asked why
the matter was not referred to police.
Mr Butterfield said the 2010 legal advice indicated further
investigation was needed to determine whether fraud had
occurred, and that investigation was continuing.
The Christchurch 2011 earthquake added to delays by
disrupting the Ministry of Health audit and compliance unit.
In the meantime, the board wanted to settle with SLH, and Mr
Butterfield did not want to prejudice talks by commenting.
''If there is fraud, of course we will refer it on to the
appropriate authorities. We have not established it is fraud,
yet, and may not.
''Our prime aim still ... is to try and get a commercial
settlement that is accepted by both parties.''
Ms King asked whether Mr Ryall told the board not to pursue
the case through the courts, which Mr Butterfield rejected.
''To the contrary, he has agreed with my view ... that if
there is fraud we have to establish that, and if that's the
case we have to go to the appropriate authorities,'' Mr
Mr Butterfield could not be contacted for further comment.
In a statement emailed to the ODT, chief executive
Carole Heatlysaid the board was working with an independent
''Our aim is to recover the money on the behalf of the
public. If we are advised there is evidence of any illegal
actions by South Link Health we will refer those to the
Serious Fraud Office.''
The Green Party has called for an investigation into whether
the independent practitioner association has a case to
Mr Hague said the lack of action over the fraud concerns