Swann firm in top 10 ODHB suppliers

Michael Swann (left) and business associate Kerry Harford appear in the High Court in Dunedin at...
Michael Swann (left) and business associate Kerry Harford appear in the High Court in Dunedin at the start of their fraud trial.
The company which charged the Otago District Health Board $16.9 million for computer-related services was discussed by senior managers looking at cost savings because it appeared on a list of top 10 suppliers, a Dunedin High Court jury heard yesterday.

Arlee Folkers, who was the chief financial officer at the board from 2002 until early 2006, said the list of top suppliers was considered at an executive meeting to identify savings opportunities.

When she asked about the company, Sonnford Solutions Ltd, the board's then chief information officer, Michael Swann, told the meeting Sonnfords was providing service agreements for the board's servers.

"This was accepted by all those present at the meeting," Ms Folkers told Justice Stevens and the jury on the eighth day of the trial of Swann and a business associate on multimillion dollar fraud allegations.

Ms Folkers could not recall the date of the meeting.

Swann (47) and Kerry Harford (48) deny three charges of dishonestly, and with intent to defraud, using 198 invoices to obtain $16.9 million from the board.

The invoices, in the name of a Harford-owned company, Sonnford Solutions Ltd, charged the board for various computer-related services which the Crown says were never provided.

Ms Folkers said when she was appointed chief financial officer the board had been paying significant Sonnford invoices for several years and there was nothing about the invoices received that raised any flags or concerns during her time at the board.

"I only became aware of Sonnford Solutions Ltd because it showed as a company that was being paid significant sums of money and it appeared on a list of the top 10 suppliers."

As the payments had been made for several years, she assumed somebody further up the management chain with authority to enter into those contracts would have verified the position.

"I also assumed that from time to time, either the auditors or members of my staff may have checked to see whether valid contracts were in place to support the invoices being paid to Sonnford."

Each month, she would get a list of payments being made by the board to authorise.

Any review was done to look for exceptions, rather than analysing all transactions, as the sheer number meant it would be impossible to follow up on everything.

If she had been aware Swann was receiving any benefit from the payments being made to Sonnford she would have been very concerned, as this would have breached numerous policies within the hospital, she said.

Early in her appointment, she had asked Swann about Sonnford and he had told her it provided basically a service kind of insurance contract for the servers.

Lindsay Dey, Harford and Sonnford's accountant, told the court he had suggested the company name Sonnford Solutions Ltd in an email to Harford on October 18, 2001.

The Crown says Harford signed seven of the contracts on behalf of Sonnford before that date.

This includes three dated February 2000, about 18 months before the name had been suggested, and another four dated November 2000, about 12 months before the name was suggested.

Earlier in the day, Mark Radcliffe, a Gen-i senior systems engineer, said when he examined the servers, known as Kingston and Mataura, the software installed on them was very outdated.

In 2006, the computers were still running the same software programs installed in 2000, even though various upgrades and improvements had been available in that time.

Under cross-examination from Swann's counsel, John Haigh QC, Mr Radcliffe said it was possible he could not have detected other software if it had been installed using a different installation method.

 

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