IT costs fell after Swann sacking

Actual spending by the Otago District Health Board's information technology (IT) department dropped from $7.996 million to $1.876 million in the year after the board sacked its chief information officer and IT head, the High Court at Dunedin heard yesterday.

Michael Andrew Swann (47) and long-time friend and business associate Kerry Gray Harford (48) both deny misappropriating almost $17 million from the board over a period of six years by fraudulently using 198 invoices from Sonnford Solutions Ltd, a Harford-owned company, to charge for computer-related services never delivered.

The Crown says the two men charged the board a total of $16.9 million, effectively for nothing, but the defence says the charges were for an insurance type of risk mitigation service, and that if a major problem occurred with any of the hospital servers, Sonn-fords would call in the expertise and services needed.

In evidence to Justice Stevens and a jury at the start of the second week of the trial, a board senior business analyst Grant Paris said he analysed historical information after Swann's dismissal to check the IT department's actual costs and spending trends during the years Swann was in charge.

During the years from 1999, the budget for software, hardware maintenance and operating leases increased from $1.4 million to $5 million, the actual expenditure for those items being almost $8 million in 2006.

But Mr Paris told Crown counsel Robin Bates, the charges that came through were actually inflated as although the invoices presented for payment were dated 2006, they were for the 2007 period. And when Swann left the organisation, they had to account for the charges within the 2006 year.

Asked whether he had spoken to Swann about variances in maintenance costs increasing beyond the budget, Mr Paris said he had and Swann had asked him "what to you want me to do - turn the f . . . . . . things off?" (referring to the hospital's three main servers).

He had not discussed the matter with Swann any more after that as he sometimes found conversations with him "intimidating".

The analysis he carried out after Swann's departure was of the Sonnfords contract schedules and the payments made by the ODHB from the invoices. Although it was difficult to tie the invoices to the contracts with 100% accuracy, Mr Paris said he established that between 2000 and 2006, the board paid Sonn-fords $16.9 million.

Earlier yesterday, board CEO Brian Rousseau said contracts signed by Swann with Sonn-ford's were "very irregular", and that Swann's signing authority was limited to invoices totalling not more than $200,000 a year.

Assuming the various Sonn-ford contracts were executed at the times dated, which was about a month after his appointment as CEO in February 2003, Mr Rousseau said they would have fallen outside the board's existing policy of delegated authority.