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The Ministry of Business, Innovation and Employment has apologised to Regional Development Minister Shane Jones after $350,000 of provincial growth fund money was approved for a West Coast waste-to-energy project with connections to a businessman who had been referred to the Serious Fraud Office.
The waste-to-energy project in Buller, to be delivered by Renew Energy Ltd (REL), had been approved for funding but that funding was put on hold as soon as issues arose.
It later emerged REL chief executive Gerard Gallagher had been referred to the SFO by the State Services Commission in April last year for alleged conflicts of interest while an employee of the Canterbury Earthquake Recovery Authority.
Mr Gallagher resigned as chief executive and sold all his shares in REL in early March.
The internal review report, released by the Provincial Development Unit (PDU) yesterday and provided to Mr Jones, outlines the background to the issues and the process followed up until his announcement of the funding on February 23.
The PDU, which administers the provincial growth fund (PGF), said it accepted the findings of the review that due diligence on personnel associated with the waste-to-energy project should have been undertaken before approval of PGF funding for the project and a ministerial announcement.
"We also accept the recommendations made in the review.
"We fell below prudent standards of due diligence and we have apologised to the minister for not getting this right,'' PDU head Nigel Bickle said.
"The public quite rightly expects government agencies to run a robust process before awarding contracts or approving funding,'' he said.
Mr Bickle said there would have been enough time to complete the checks before any funding was approved.
"The fact that these issues would most likely have been picked up in the contract negotiations process, post-announcement and before any PGF funding was actually handed over, is no excuse,'' he said.
The PDU would be strengthening its systems and processes, he said.