Auditor-General resigns but report stays secret

A parliamentary report into Auditor-General Martin Matthews has not been released, after he resigned from the role. Photo: Lynn Grieveson.

Auditor-General Martin Matthews has fallen on his sword over allegations he could have done more to stop a major fraudster while at the Ministry of Transport.

However, an independent report into Matthews’ conduct has not been released - leading to calls for greater transparency.

Matthews was chief executive of the Ministry of Transport while Joanne Harrison stole over $700,000 to pay off credit cards and her mortgage.

A State Services Commission report earlier this year found ministry staff who blew the whistle on Harrison were humiliated and forced out of their jobs in a restructuring process involving her.

Matthews stood down as Auditor-General in May while an independent review into his appointment took place, amid suggestions he should have acted earlier on warnings about Harrison.

In a written statement confirming his resignation, shortly before the review was due to be released, Matthews said the speculation about how he had handled Harrison while at the Ministry of Transport had “made it untenable for me to continue in this role”.

'As angry and aggrieved as anyone'

“I deeply regret and apologise for the fraud that was committed by an accomplished fraudster when I was Secretary for Transport, prior to my appointment as Controller and Auditor-General.

“I wished it had never happened but I accept I am accountable for everything done in and by the Ministry when I was CEO and I am ultimately responsible.”

Matthews said he had regarded Harrison as “an able and high-performing member of the leadership team”, until he received “some concerning information” in April last year.

He believed he had acted swiftly and thoroughly to detect the fraud, but on reflection said he should have been more suspicious about Harrison’s explanations regarding “some internal business procedures”.

“I deeply regret and am sorry that I did not detect earlier her fraudulent actions. I feel as angry and aggrieved as anyone about her stealing and breaches of trust.”

When Matthews stood down in May, Speaker David Carter and the Officers of Parliament Committee tasked Sir Maarten Wevers with carrying out a review of his suitability to hold the Auditor-General position.

As part of the terms of reference, Wevers was asked to investigate and report on the suitability of Matthews to hold the Auditor-General’s position, and whether there were any “material and relevant matters” that could have made a difference to the committee’s original decision to appoint him had it known.

A briefing from the committee said Wevers had completed his review at the end of June, and it was given to Matthews to read and respond before MPs could view it.

The committee received the draft report and Matthews’ response on July 24.

However, Matthews’ resignation as the committee was considering the issue “concluded the matter we were considering” - and Wevers’ findings have not been released.

MPs appeared reluctant to make hay with the news of Matthews’ resignation.

Labour leader Jacinda Ardern told media: “Look in my view he’s made a decision, it’s obviously something that he’s now dealing with with his family - I don’t have any further comment to make on it.”

Green Party co-leader James Shaw supported the decision not to release the Wevers report, and said he trusted the committee’s process.

“Ultimately that decision [to resign] was up to [Matthews] - the most important thing like I said is the integrity of the office, and I think now we can move on, appoint a new person to that role and make sure the office works effectively in the future.”

However, UnitedFuture leader Peter Dunne argued there were still unanswered questions about Harrison and Matthews.

“Questions about how it got to this point still aren’t clear in my mind and they need further, if you like, investigation.”

Asked whether Wevers’ report should be made public, Dunne said: “Given the extraordinary nature of the circumstances, and the fact the Auditor-General’s chosen to resign, I think it’s pretty difficult for it not to be made public frankly.”

The Public Service Association also called for the report to be released, saying the public needed to have confidence that appointments to office “weren’t made lightly”.

"It’s vital that public trust in the integrity of the Office of the Auditor-General is maintained, and the reluctance to release this report could call that into question and invite all manner of speculation on the case," PSA national secretary Glenn Barclay said.

ACT leader David Seymour did not believe the furore had revealed any shortcomings in the appointment process, instead laying blame squarely at the feet of Matthews.

“The fact that all parties signed off on this, nobody saw this coming, it was all checked, it’s all on him: he had opportunities to fall on his sword earlier, he didn’t go for it, and I think that speaks to the kind of person who’s been involved rather than any of the processes that were there to protect him.”

Transport Minister Simon Bridges said he did not have any regrets about how he had handled the issue, saying he had taken the right steps since becoming aware of it last year.

“I think really it’s a period earlier than that, when there's been some questions in relation to whistleblowing and the like, and I think now the best we can say is they seem to have been resolved, there’s further reform to come from some of what’s happened, and that’s a good thing - that's some silver lining, if you like, from this sorry saga.”