Williams Andrew: Kaipara District Council (Validation of Rates and Other Matters) Bill — In Committee Third ReadingText is incorporated into the Bound VolumeWilliams Andrew: Kaipara District Council (Validation of Rates and Other Matters) Bill — In Committee Third Reading[Sitting date: 04 December 2013. Volume:695;Page:15271. Text is incorporated into the Bound Volume.]ANDREW WILLIAMS (NZ First): I take a call on the Kaipara District Council (Validation of Rates and Other Matters) Bill on behalf of New Zealand First. New Zealand First cannot support this legislation. We believe that retrospective legislation is absolutely the worst way to deal with this because it exonerates the guilty. In so doing I would like to give a corrected history of how this sorry saga came about. In about 2000 the Kaipara District Council awarded the role of head consultant for the Mangawhai sewage project toBeca Group. Reading fromBeca Group’s own website it states: “Beca is one of the largest employee-owned engineering and related consultancy services companies in the Asia-Pacific. As well as numerous engineering consultancy services [Beca offers] architecture planning project and cost management land information valuations and software services.Beca supplies engineering and related consultancy services to many markets including industrial buildings governmentwater transport and power.” At the time—and this is back in around 2000—Beca Group evaluated tenders for the project and awarded the tender to itself providing $675000 of ratepayers’ money to manage the bid process.Beca Group then in cohort with the Kaipara District Council’s Chief Executive Officer JackMcKerchar very quickly settled on an Australian outfit called Simon Engineering as the preferred bidder. This outfit was represented by one Mr Peter Elliott who was shepherded everywhere by theBeca Group project leader Brent Johnston. Mr Elliott made a sales pitch to the full Kaipara District Council. He said that his firm Simon Engineering had dozens of projects in Australia like the Mangawhai one. They were a dime a dozen for the firm he said. In fact the biggest scheme the firm had ever done was a trailer park equivalent to a single subdivision in Mangawhai. At the time Councillor Bruce Rogan who is now the chair of the Mangawhai Residents and Ratepayers Association said that what this council would really appreciate is a referral from one—just one—happy customer from among Simon Engineering’s stated hundreds throughout Australia and the Pacific so that Mr Elliott’s claims could be verified independently. Councillor Rogan was savagely attacked by both Mr Johnston and the mayor for being so rude and discourteous to a guest. The information requested by that councillor was not forthcoming.In 2002—some months after—the new Local Government Act 2002 came into effect. The Government changed the law relating to infrastructure projects. The whole MangawhaiEcoCare project had been conceived as a 25-year build-own-operate-transfer project. These were banned under the law change. NeitherBeca Group nor the chief executive officer MrMcKerchar wanted to revisit anything because the deal had already been secretly committed to. They refused a request from Councillor Rogan to reopen the tenders. He argued that because the project could no longer legally proceed as planned and because the project builder was now no longer required to finance the construction many much smaller local organisations would possibly be able to bid for the job. This was refused because that was the last thing that they wanted.Just before Simon Engineering was publicly awarded the contract—and it had already had it for months in secret—Councillor Rogan sought and got a resolution from council to advise Simon Engineering that if it exceeded its budget the entire district would have to be consulted about its willingness to pay the overrun because it was not going to fall on the hapless community saddled with the overpriced white elephant. If the district as a whole declined to wear that then Simon Engineering needed to understand that it would not get paid. The chief executive officer JackMcKerchar was instructed to write to Simon Engineering to that effect. However the chief executive officer JackMcKerchar did not write as instructed by the Kaipara District Council. This was discovered at the next council meeting where Councillor Rogan requested that that letter be tabled for perusal. MrMcKerchar stated that he had not done so because it might have frightened the horses.After the meeting Councillor Rogan himself wrote to Simon Engineering informing it of the earlier council decision. This did have an effect because it bolted and subsequently the company went belly up. Still there was no appetite to change anything so moves were made to find a replacement for the contractor Simon Engineering and leave everything else intact.Earthtech Contractors were ushered in but in parallel and possibly under separate coversBeca Group acquired the skeletal remains of Simon Engineering and created an enterprise calledBeca-Simon which promoted itself as a multinational infrastructure builder. So now we have the project manager building projects using the resources of the company that it awarded theEcocare contract to. It is not easy to ascertain what happened toBeca-Simon but it may have morphed into Tyco Wastewater or been absorbed by it. Tyco Wastewater through a subsidiary called WaterInfrastructure Group ended up running the entire wastewater system project and it still does.During this whole period other Kaipara District councillors became increasingly alarmed by the Mangawhai scheme. Requests for full financials were declined. Quarterly reviews—and we heard this at the Local Government and Environment Committee—which are usually provided by all local authorities to elected members were not given to Kaipara councillors. Councillors who stood up to the chief executive officer JackMcKerchar and to the mayor faced legal threats. But questions need to be asked about the relationship between JackMcKerchar andBeca Group over an extended period of time. How was it that MrMcKerchar was in a live-in romantic relationship with one of his council staff employees who was involved with the planning for the Mangawhai sewerage scheme? When the sexual liaison was uncovered that particular council employee transferred out of the council and guess where she turned up? AtBeca Group. She turned up atBeca Group which then contracted her back to provide services to the Kaipara District Council. What a convenient relationship this was betweenBeca Group this woman and the chief executive officer JackMcKerchar.Why was it also that another $7 million - plus sewerage scheme being planned on the west coast of the Kaipara District got awarded to the same contractors as those for the Mangawhai scheme despite the known financial blowout problems with the Mangawhai scheme? I am informed that another major contractor assessed the scheme at some $2 million less but was warned off tendering for the project because that would jeopardise it receiving roading contracts in the Kaipara District the following season. This is disgraceful. This is corruption.Where are these glaring commonly known disclosures in the Auditor-General’s report that was released yesterday? They are not there. Yet today at the Finance and Expenditure Committee the Auditor-General was asked these exact questions. The Auditor-General said she was aware of these rumours but had not made inquiries into them. She did not feel they were relevant. They are relevant. There is an insidious incestuous relationship here betweenBeca Group the Kaipara District Council the chief executive officer and others involved there. Council executives and councillors who stood up to this MrMcKerchar were knocked back very swiftly. Staff lived in fear for their positions if they questioned his decisions. Some chose to leave because the situation was intolerable. MrMcKerchar in the end was taken out when they appointed commissioners and he was given a $240000 golden handshake.New Zealand First as a result of extensive investigation discussions and analysis is of the view that this Parliament cannot confirm this legislation and cannot pass this legislation. The illegalities in entering into loans are not mere technicalities or formalities. They go to the heart of local government’s obligation to consult ratepayers before entering into large financial commitments and where the rates can be set to cover illegal loans. In this case the community consultation stopped at $34 million but the scheme ended up being double that in price.Through all this contractors have taken large margins. ANZ now we are told has taken the loans over from the former National Bank Lloyds Bank the Royal Bank of Scotland and ABN AMRO Bank at a 40 percent markdown on the loan value. The banks should have done due diligence on the whole scheme. Now ANZ should step up and write down these loans to a level that will reduce the burden on the ratepayers of Kaipara. Likewise I thinkBeca Group should be stepping up to the mark. It has been there since 2000 advising on this whole scheme and it allowed this to double in costs in the end.Beca Group should come forward and also take a haircut on this as well. At the same time the Audit Office should be taking a haircut as well. It allowed 5 years ofclean audits to go through on the Kaipara District Council. That is unbelievable. Again the Auditor-General needs to front up and this Government should front up.As a result I am challenging Mike Sabin and I am challenging this Government to step forward and ensure that all these parties come forward and pay their dues in terms of returning some of the funds that are rightfully due back to the ratepayers of Kaipara so that they do not suffer and they do not carry on paying rates for the next decade after decade for mistakes and corruption that occurred within this Kaipara District Council. New Zealand First is here to stand up for these ratepayers. We know that this legislation is going to be passed tonight but we think it is wrong. I have also got Supplementary Order Paper 406 in here for later but I do honestly believe and New Zealand First honestly believes that this has got to be investigated. The Auditor-General’s report is insufficient. There needs to be proper police investigations into this matter. There needs to be investigations carried out at the highest level and the people responsible for this should be held to account.