Undone: Greed sinks Swann, Harford

Michael Swann's vessel 'Townsend Cromwell' when it was seized at the Birch St wharf in Dunedin. Photo Peter McIntosh.

Greed, a passion for cars and boats, and southern business interests, were the undoing of Michael Swann, of Dunedin, who along with business friend Kerry Harford, of Queenstown, was last night found guilty of defrauding the cash-strapped Otago District Health Board (ODHB) of almost $17 million over six years until late 2006.

The compelling question was how Swann, without arousing suspicion, received on average $43,000 a week from fraudulent ODHB "contracts", gave his $145,000 salary to his then wife Anna Devereux, and went about spending almost $11.6 million on a fleet of luxury cars, boats and properties.

There were more than 100,000 pages of documents involved and 49 witnesses appeared during three weeks before Justice Stevens and a jury in the High Court at Dunedin.

During cross-examination by the Crown prosecutor, which prompted an objection by Swann's Auckland QC John Haigh, Swann was asked if the licences referred to in a multitude of invoices tendered to the ODHB, reaping him millions of dollars, was "meant to read licences to print money".

Swann, as the ODHB's chief information officer, was an acknowledged expert in computer technology and denied the charges.

However, his crime was simply a 21st-century version of the centuries-old scam of supplying fake invoices, which delivered him the lion's share of almost $17 million from the stressed ODHB coffers.

He contended the invoices of Sonnford Solutions Ltd were a form of "risk mitigation" insurance, should the hospital IT system ever need fixing, while the Serious Fraud Office (SFO) said that situation was already covered by agreements with the supplier of the hospital's three main computers, IBM.

At the time of the frauds, the ODHB was trading in deficit, grappling with the transition from the government-appointed Healthcare Otago to a new elected health board model.

Amid the large deficits, ring-fenced funding issues and major employment problems, the ODHB was being further constrained by the introduction of unpopular population-based funding, with the spiralling cost of patients' treatment always under the microscope.

Before the trial, not only were local lay people affronted by Swann's apparent callousness to defraud a struggling hospital, staff, too, were appalled at the loss of $17 million, with many people asking "just how many heart or hip operations was that worth?".

The relevance of potential operations may over-simplify the case. However, the Dunedin court heard during the past three weeks that the work undertaken on the computers, if carried out by supplier IBM, would have cost less than $3 million, against Swann's invoicing of $16.9 million.

That is an apparent difference of almost $14 million which could have offset or at least cushioned health board losses elsewhere.

Long before Swann's sacking and the subsequent trial just over two years later, discreet questions were already being asked around Dunedin's tight business community about ex-bankrupt Swann's lifestyle, seemingly so at odds with his $145,000 a year salary.