Barker Rick: Urgent Debates — Hawke’s Bay District Health Board—Conflicts of Interest Report 
Barker Rick: Urgent Debates — Hawke’s Bay District Health Board—Conflicts of Interest Report 
[Volume:646;Page:14992] 
Hon RICK BARKER (Minister of Internal Affairs) 
: 
 The report of the Director-General of Health on the subject of conflicts of interest and other matters of the Hawke’s Bay District Health Board shines a torch into the gloom of the district health board. The report is enlightening; it says succinctly and clearly that the board had substantial problems—and I agree with Tony Ryall when he says there is much more that could have been said—but the torch beam we see shows something that is seriously concerning. The report without saying who was right or who was wrong says the board was seriously eroded that dysfunctional relationships had existed for some time between the board and management and that these would not have been resolved without external input. This debate about the Hawke’s Bay District Health Board is not about democracy; it is about competence. This debate is about the competence of the board to serve the people of Hawke’s Bay—the patients who seek its care—and the board failed them in a number of areas. It failed in managing its relationship with staff. It failed in managing conflicts of interest. It failed in managing its governance responsibility. It failed in managing its relationship with the ministry and the Minister. 
The report notes with great particularity that the board had no clear consistent policy of managing conflicts of interest. Instead the board applied varying standards in how it dealt with these conflicts of interest and these standards were applied differently depending on the board member. The report clearly sets out the three components in managing conflicts of interest—that is legal requirements ethical requirements and good practice requirements. The board failed to induct adequately its members; the members did not know what was expected of them. Where conflicts of interest were known the board thought that simply declaring the interest was sufficient. The report makes very clear that declaration of a conflict of interest is not sufficient; it is but a start. There had to be then a process of managing that conflict of interest that is legal ethical and subject to good practice. This board failed to manage known conflicts of interest. 
Mr Atkinson has made much of the fact that he did not know the extent of Mr Hausmann’s supposed conflict of interest. I think that is simply not true. I have information from notes written by Ken Douglas who attended a meeting on 16 December 2004. Ken Douglas attended a meeting at Craggy Range Winery which is well known in Hawke’s Bay. At that meeting were Doug Catley Peter Hausmann and himself as well as Kevin Atkinson and Chris Clarke. The meeting discussed the possibility of working with the Hawke’s Bay District Health Board on a private-public partnership. The board had for some time been considering such an approach to create transparency and so on. Both Atkinson and Clarke according to Douglas were effusive in their response to the concept and mentioned the significance of the savings and benefits that were possible. 
Ken Douglas remembers specifically that he raised concerns about Healthcare New Zealand’s intellectual property—for example innovative ideas and solutions—being protected by a request for proposal process due to what had happened to Healthcare New Zealand when it was working with Capital and Coast District Health Board. Capital and Coast District Health Board has set out now for we have the document what was happening and its intellectual ideas were stolen. So in December 2004 the chairman of the Hawke’s Bay District Health Board Kevin Atkinson knew of the proposal. It required the chief executives of both of them to work on the request for proposal process and required them to bring it to fruition. The board chair has latterly said he knew nothing about it. But this report clearly shows that at a meeting at Craggy Range Winery he knew exactly what it was. The report correctly identifies that Kevin Atkinson knowing that had a responsibility to ensure that the conflicts of interest were correctly managed. 
But there are other conflicts of interest that were referred to in the report which the National Party has not mentioned at all. The first is to do with Mr Peter Dunkerley who owned pharmacies in Hawke’s Bay but continued to participate in discussions with the board about decisions where his interests and his family’s interests were directly affected. He chose not to exclude himself from the meetings and the chair did not require him to leave the meeting. That is contrary to legislative requirements and he failed to meet all of the other tests of ethical requirements and good practice requirements. A board member with a conflict of interest should have disclosed if that is what the law requires; and if the person was going to participate the law requires that that be subject to a decision of the board. The board’s minutes require it. It must outline the reasons for giving such a waiver. On no occasion was that done. The board failed its legal requirements. The chair failed to make sure they were employed and everybody knows that that is wrong. It is plain wrong to continue to participate in those decisions when one’s personal interests and family interests are at stake. 
It was not just on one issue; it was on community pharmacy interests which involved millions of dollars. It was in the interests of opening up pharmacies to competition. Again that was contrary to the interests of Peter Dunkerley and his family’s interest and his financial interests but he still participated in that decision as well. Peter Dunkerley’s participation has been discussed as a potential involvement for the benefit of the companies in which he had interests. The report states he did not disclose the full nature of his interest so as to enable the board to assess the position with adequate information. He did not manage his interests sufficiently. The panel states that on a number of occasions the minutes record where Peter Dunkerley had disclosable interests but they were not disclosed. That is a complete failure. I would like to know how many other examples are going to come to light. The panel notes that Mr Dunkerley is but one example. 
But let us turn to another area where there are conflicts of interest. There was the recent decision by the Hawke’s Bay District Health Board to award $600000 uncontested to Royston Hospital. Again this is instructive because this is a board that has lodged complaints against a member for failing to disclose his conflicts of interest and failing to manage them. This is how this board did it. The minutes of the audit finance committee meeting on 19 December 2007 demonstrate the board’s cavalier approach to managing conflicts of interest. 
The House needs to remember that these were people who were very sensitive to this. The board itself chose not to endorse the minutes of the independent people there; it chose to doctor the minutes. But even the doctored minutes show that things were wrong. At that meeting Peter Dunkerley declared he had some shares in Wakefield and that it might be appropriate for him not to sit in on the discussion. Does the register show these interests I ask the Opposition? The audit and finance committee then decided that Peter Dunkerley’s shares were not material contrary to the advice of the probity people. The chair of the district health board— 
Dr the Hon Lockwood Smith 
: Who wrote this? 
Hon RICK BARKER 
: —it is in the minutes. I will table them shortly. The board advised Kevin Atkinson that he had a conflict of interest because his brother worked at Royston Hospital. That was overlooked. The board knew that Diana Kirton another member of the committee had a conflict of interest because her brother had shares and worked at Royston Hospital. Three board members had a conflict of interest because of their connections with Royston Hospital. None of those three members left the meeting. All three participated in the debate. In fact the chair of the district health board shaped the debate and said contrary to management advice that the $2.4 million should be contracted out $600000 of this a quarter of the contract should be given to Royston Hospital uncontested. That was contrary to the advice of the staff contrary to the probity advice but these conflicted people still participated in the decision. They did not put this money up for tender to ensure that the public of Hawke’s Bay can be guaranteed that it received best value for money. That was the appropriate process to follow. That was the advice of management and the board discarded it. 
The chair of the committee a man who sent an email saying he would not sign a confidentiality agreement because it would constrain his ability to leak to the National Party said latterly that the work had to go to Royston Hospital or else the money made available from the Ministry of Health would be lost and the operation capacity would not be available. That is simply not true. That is justification after the fact. The fact is there are lots of seedy things around this. 
The report goes on to other issues about Royston Hospital. I have been told that there are long waiting lists around failure that in fact people are being funnelled into Royston Hospital despite the fact there is capacity at the district health board. I have also heard murmurings that clinicians have been given priority in performing private operations at Royston Hospital in preference to their responsibilities to the district health board. I do not know whether this is true but I look forward to the new independent commissioner who has no personal or family interest in Royston Hospital looking into the interests and the relationship between Royston Hospital and the board. 
But there is another small matter. It concerns a protected disclosure that the National Party knows about but will not mention and that relates to Diana Kirton who was said to have been conflicted in her dealing with a contract concerning the Spring Hill trust. This has been investigated by PricewaterhouseCoopers. Its report clearly states that the handling of the conflict of interest was not in accordance with the committee’s standing orders. It stated that the recommendations agreed to by the committee had been pre-prepared by the conflicted member in advance of the meeting. It stated there was clear evidence showing procedural errors by the conflicted member but it fell short of the high threshold of serious wrongdoing under the Protected Disclosures Act. 
So we have conflicts of interest around the Spring Hill trust conflicts of interest around the Royston Hospital conflicts of interest around pharmacies. There is a hugely conflicted board involved. This board has to go—of that there is no doubt. The interests of the people of Hawke’s Bay have to come first not the interests of conflicted members their families and their personal and private interests.