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Negotiations between the Southern District Health Board and South Link Health over their long-standing multimillion-dollar dispute have come to a standstill.
A month ago, when the board announced it had referred the dispute to the Serious Fraud Office, a spokesman said it was ''still hoping to negotiate a settlement with South Link Health as a separate issue to any potential fraud''.
This week, in response to questions, a spokesman said the board had been ''advised by South Link Health that they have suspended negotiations''.
The SFO has made no comment, confirming only it has received the referral.
The dispute, which went to the SFO in late August, concerns the spending of about $5.3 million in savings (now believed to be about $15 million with interest) South Link Health achieved on contracts with South Island district health boards in the 1990s.
South Link Health rejects any suggestion of fraud, says the money was spent on approved programmes, and that it has no case to answer, commercially or criminally.
The Ministry of Health has clarified that it will not review its handling of the dispute at this stage because of the referral to the SFO.
Acting national director of the National Health Board Michael Hundleby, in an email response to questions, said as the SFO was investigating the dispute ''it would be inappropriate for the ministry to be involved in addition to the SFO at this time''.
If the SFO investigation made any recommendations relevant for the ministry, ''we will consider these and the appropriate action at that time''.
The Southern District Health Board referred the dispute to the audit and compliance unit of the Ministry of Health for investigation in late 2010.
At the time, it raised serious concerns and also considered it had exhausted attempts to reach a negotiated settlement.
The Ombudsman is still investigating complaints about both the ministry's and the DHB's decisions on Official Information Act requests related to the dispute.
Some of the complaints were lodged about 18 months ago.