Corruption at council widespread, says Crown

Trial hears of bribery, fake invoices, trips abroad and cash for a Florida honeymoon

Arare prosecution of alleged corruption in the public sector has been told of a cascading culture of bribery that saw a senior Auckland Council manager collect $1.1 million and his subordinates bought a $3000 lunch.

The alleged gratuities extended to covering honeymoon expenses in Florida for the daughter of a senior council staffer, dozens of overseas trips, and regular monthly payments of about $8000 to former Auckland Transport senior manager Murray Noone by roading contractor Stephen Borlase.

Noone and Borlase yesterday pleaded not guilty to charges of corrupting a public official by bribery. Borlase, whose road maintenance firm Projenz is at the heart of the case, also denied inflating invoices.

Crown prosecutor Brian Dickey said Borlase arranged matters so the Rodney District Council (RDC) — and later Auckland Transport ( AT) — effectively paid to have their own staff bribed.

The case drew considerable interest from white-collar-crime watchers as it wound through the system over the past three years, particularly given New Zealand’s reputation for having an incorruptible public sector.

The trial in the High Court at Auckland before Justice Sally Fitzgerald is expected to take seven weeks.

Dickey outlined what he described as a pattern of transactions: Projenz laying on expensive hospitality for Noone’s staff; Noone invoicing Projenz for hundreds of thousands in sham consultation fees; and progressive larger contracts first from RDC then AT being sent Projenz’s way.

At the start of the alleged offending, Projenz was said to be barely breaking even on revenue of $1.2m. By 2012, just before the relationship was exposed and ended, the small company was making annual profits of $3.8m from sales — almost all from contracts with AT overseen by Noone and his team — of $8.2m.

Dickey said the court would hear from nearly a dozen former staffers from the RDC and AT who would show — sometimes reluctantly as they too were implicated — that corruption was deep-rooted.

“The extensive provision of benefits to staff at all levels of their teams resulted in a culture where corruption flourished and was normalised, with no questions asked,” he said.

Dickey outlined a range of former council bosses from the former RDC and AT who would testify, as well as a forensic accountant who investigated Projenz’s spending and found bribes were tagged as the cost of doing business with the council.