Fraud possibility not disclosed

Stuart McLauchlan
Stuart McLauchlan
Stuart McLauchlan, the man charged with monitoring the Southern District Health Board, says he was not told of legal advice in 2010 that the South Link Health (SLH) funds dispute might involve fraud.

This was despite the fact the Dunedin businessman then the board's Crown monitor, was trying to resolve the long-running dispute with the independent practitioner association.

He said when contacted yesterday he would have told Health Minister Tony Ryall if he had been aware of the legal advice.

''If there was any mention of fraud, then obviously, you have to take it seriously. But as I've said, I'm not aware of that allegation.

''If it had come to me, I would have acted on it.''

Opposition MPs continued to question Mr Ryall yesterday in Parliament about what he knew of the matter.

Board chairman Joe Butterfield revealed the existence of the legal advice this week, under questioning from Green MP Kevin Hague, in Parliament's health select committee.

The admission raised questions about why the health board did not go to the police if fraud was suspected, and what Mr Ryall knew about it.

Mr Ryall appointed Mr McLauchlan to the special role to improve the board's financial performance, and report back to the Government. He was paid an annual fee of $35,000.

Asked if he was annoyed he was not told about the 2010 advice, Mr McLauchlan said:

''I don't know, because I didn't know that it existed.''

He had tried to to steer the parties to a resolution of the long-running dispute: ''In all the time I was involved, the word fraud was never raised.''

It was a ''probably a fair question'' to ask why no-one said anything to him.

However, Mr McLauchlan was sceptical about the suggestion fraud could be involved, saying the SLH dispute was a complex, historic matter.

Mr McLauchlan was appointed to the old Southland Health Board in 2009, and continued as Crown monitor for the new Southern District Health Board, before retiring from the role last year.

Yesterday, Mr Ryall insisted in Parliament he did not know the dispute could involve fraud until the Auditor-general told him.

''I have been aware for quite some time - in fact, probably even when in Opposition, because the dispute had been going on since 2002 - that there was a dispute about the terms in which those funds were being used,'' Mr Ryall told Parliament.

''I have never been told that there was an allegation of fraud associated with that. That sounded more like a commercial dispute to me.''

Mr Hague, who led the questioning, said in a media statement Mr Ryall's answers raised more questions.

''The Auditor-general should investigate this whole issue thoroughly to identify when the minister was informed that there was potential fraud, and what the minister's role in this whole mess has been.

''While the minister knew that there was a dispute for many years, how could he never know that there was potential fraud while the DHB, and the [Ministry of Health] audit and compliance unit, knew all about it?''


South Link Health dispute arises over surplus funds from 1990s contracts that were agreed with the then Southern Regional Health Authority.
2010: Southern District Health Board receives legal advice the row might involve fraud. The matter passed on to the Ministry of Health's audit and compliance unit.
November, 2013: Auditor-general alerts Health Minister Tony Ryall the dispute might involve fraud, after board member Richard Thomson warned the Auditor-general.
February, 2014: Southern DHB chairman Joe Butterfield tells health select committee that legal advice in 2010 warned the dispute might involve fraud, possibly between $5.3 million and about $15 million.

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