South Link Health rapt $15m dispute over

The multimillion-dollar row between the Southern District Health Board and South Link Health is over, after the Serious Fraud Office decided to take no further action.

The health board referred the row to the authority last September following advice from Auckland forensic investigation firm Beattie Varley Ltd.

A health board spokesman said the dispute was now considered closed. Initially, the spokesman said the forensic accounting report would be released, but then said it was withheld for legal reasons.

The stoush initially involved $5.3 million, but the amount was said to have grown with interest to about $15 million. It concerned savings SLH achieved in historic laboratory testing and pharmaceutical contracts with the then funding entities.

SLH had not been told the case had been dropped until executive director Prof Murray Tilyard was contacted in Washington last week by the Otago Daily Times. The independent practitioner association's lawyer had since received confirmation.

''SLH board, on behalf of its members throughout the South Island, is extremely pleased to receive this fantastic news.

As we have maintained since the commencement of this dispute - over 10 years ago - the issue has been one of a contractual nature, not one of potential fraud .

''Having now had internal (DHB), external (Beattie Varley), and finally the SFO review, to have the statement ... from the SFO vindicates our view.

''We understand from the comment made by the SDHB to the ODT that the matter has now ended. This will now allow South Link Health, and in particular the Southern Clinical Network on behalf of general practices in the Southern region, to work with the SDHB in a constructive manner to address the issues ahead of us all,'' Prof Tilyard said in an emailed statement.

Allegations of political interference and bureaucratic inertia erupted early last year after it emerged the health board had legal advice in 2010 the dispute could involve fraud.

The board had referred the case to the Ministry of Health, but no progress was evident after three years.

Green Party health spokesman Kevin Hague, an outspoken critic of the apparent lack of investigation, said the time elapsed meant certain avenues for civil redress had closed.

An SFO probe was probably the only way of progressing the matter after such a long period of time. Mr Hague believed the public had been let down by a lack of rigour in pursuing the case.

Last year, then health minister Tony Ryall and senior Ministry of Health officials came under pressure over whether they had known of the fraud allegation.

Mr Ryall insisted he had no idea until it was included in an Audit New Zealand report in late 2013.

He rejected a suggestion in Parliament he discouraged the board from taking the matter to the police.

Former Southern District Health Board member Richard Thomson had brought the matter to a head by alerting the Auditor-general after growing frustrated by the situation.

Contacted this week, Mr Thomson said he was confident the board acted correctly.

Beattie Varley recommended referring the case to the SFO, and the board acted on its advice.

''At the end of the day, it's up to the SFO to decide whether to take it further.''

SFO director Julie Read said the matter had been evaluated and the SFO decided ''not to commence a substantive investigation''.

''The SFO does not propose to refer the matter elsewhere.'' 

The Ministry of Health declined to comment yesterday.


How it unfolded

2003: South Link Health dispute arises over savings from historic pharmaceutical and laboratory contracts with the then Southern Regional Health Authority from 1995-96 to 2002-03.

2010: After failed attempts at mediation, Southern District Health Board receives legal advice the row might involve fraud. The matter is passed to Ministry of Health.

November 2013: Audit New Zealand report alerts Health Minister Tony Ryall the dispute might involve fraud, after then board member Richard Thomson alerted auditor›general.

February 2014: Then Southern DHB chairman Joe Butterfield tells health select committee legal advice in 2010 warned the dispute might involve fraud. The board engages forensic accountant.

September 2014: Following advice from forensic investigation firm, the health board refers case to Serious Fraud Office.

June 2015: Serious Fraud Office confirms it is taking no further action.

- eileen.goodwin@odt.co.nz

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