Why Mahuta family contracts warrant scrutiny
Questions raised about managing potential conflicts of interest
Arecent history of government contracts, appointments and grants awarded to consultancies owned by family members of Labour Minister Nanaia Mahuta have come under scrutiny.
They have been brought to light largely through the written parliamentary questions of the Act and National parties.
And the issues involved have sparked considerable debate about the processes that should be followed under such circumstances.
To recap, Mahuta’s husband is Gannin Ormsby, and his consultancy Ka Awatea Services (solely owned since September, 2020) has been awarded two contracts and one grant from departments or agencies for which Mahuta was an associate minister. The value topped $119,000 (excluding GST) in less than two years.
Spokespeople for all three departments or agencies have said that the area of work covered by the funds or contracts did not fall under Mahuta’s ministerial responsibilities.
Ormsby’s nephew, Tomoko Ormsby, and his niece by marriage, Waimirirangi Ormsby (nee Koopu Stone), joined Gannin Ormsby as Ka Awatea directors in December, 2020. The couple have also received government contracts through their own wholly-owned consultancy Kawai Catalyst.
For reasons which officials say include time-sensitivity and limited expertise in the field, the contracts have all been awarded on a “sole source basis”, without competitive bids.
A spokesperson for Mahuta has said that, for those areas where she does have ministerial responsibility, where there have been conflicts, “they’ve been disclosed to the Cabinet Office” and that Mahuta “ensures that no conflict exists or appears to exist between her personal interests and portfolio responsibilities, in accordance with the guidance in the Cabinet Manual.”
Gannin Ormsby has declined to comment.
The Cabinet Manual
The Cabinet Manual does not directly describe the situation of Mahuta, her roles as associate minister, and the contracts to family-owned consultancies.
However, it notes: “most conflicts can be managed by taking one or more” listed measures “in consultation with, and on the advice of, the Cabinet Office”.
The list of measures includes: declaring the interest to Cabinet colleagues (it notes this will generally be sufficient in matters where decision-making is general and the minister has no ministerial responsibility for the issue); and transferring responsibility to another minister.
The manual also emphasises the importance of public perception. It notes: “appearances and propriety can be as important as actual conflicts of interest” and “ministers should avoid situations in which they or those close to them gain remuneration or other advantage from information acquired only by reason of their office.”
The transfer remedy has been used once by Mahuta. Her sister Tipa Mahuta is also a powerful political figure.
Official documents show that in early 2021, responsibility for appointments to the Ma¯ori advisory group to Taumata Arowai (the newly formed drinking water regulator) passed temporarily from Mahuta as Minister for Local Government to her colleague Kelvin Davis. In that period, Davis appointed Tipa Mahuta chair of the water regulator’s advisory group.
This remedy was not applied in 2019, when Mahuta, then Minister for Ma¯ori Development, appointed Waimirirangi Ormsby to the group that produced the He Puapua report.
A spokesperson said the Minister disclosed the relationship to the Cabinet and that she does not consider Waimirirangi Ormsby to be a “close relative”. In April of 2019, Waimirirangi married Tomoko Ormsby.
What to do?
The Opposition parties, National and Act, both argue that this history of work awarded to family members constitutes a “pattern”, and on that basis the contracts, awards and appointments bear greater independent investigation. Academic observers are divided in their views.
Michael Macaulay, professor of public administration at the School of Government, at Victoria University of Wellington, is of the opinion that in such situations, generally, the public can expect that politicians and officials put in place transparent processes to ensure the risk of a conflict or apparent conflict of interest is managed. “The public can reasonably expect to be told on what basis contracts are being awarded, to whom, why and what process was followed, including the process of managing the risk of a conflict of interest.”
At the departmental and agency level, the Mahuta family-related contracts appear to have been handled with considerable variation.
For example, Ka¯inga Ora identified no conflict of interest in its award of a $66,846 (excluding GST) contract to Ka Awatea Services in a period when Mahuta was Associate Minister for Housing (Ma¯ori). The agency said the Ma¯ori engagement work covered by the contract related to its urban development programme, and so fell under the responsibilities of Housing Minister Megan Woods.
By contrast, the Ministry for the Environment consulted the Public Service Commission in an instance where it awarded a contract to Ka Awatea Services while Mahuta was Associate Minister (though her responsibilities did not extend to the area of waste strategy work covered in the contract) and identified a “conflict of interest” which was then managed.
Macaulay said he could not comment on the particulars of the contracts tied to the Ormsby family, but said that under such circumstances the public can reasonably expect government departments to follow the same principles in identifying and managing conflicts, though not necessarily the same processes.
Macaulay — like Act Party leader
Public leaders should avoid any potential or perceived conflict of interest and be aware that this is the price that comes with the role, or choose not to take the job at all.
Professor Karin Lasthuizen
David Seymour and National spokesman for transport and public service Simeon Brown — said conflicts or apparent conflicts of interest are not problematic in themselves: “what’s important is how you manage the risk.”
However, his colleague Karin Lasthuizen, a professor who holds the Brian Picot Chair in Ethical Leadership, also at Victoria University, took a different view. Lasthuizen considered the potential for a conflict or apparent conflict was too problematic to manage in the cases involving Cabinet ministers.
“If the public perceives the hiring of a family member for a government role as nepotism or a conflict of interest, questions will be raised [about] whose interests the minister puts first and whether they can fulfil their responsibility to serve the common good. The minister then loses credibility, and I think perhaps we should just say: no, the risk is too great to manage because it jeopardises citizens’ trust in government. Public leaders should avoid any potential or perceived conflict of interest and be aware that this is the price that comes with the role, or choose not to take the job at all,” Lasthuizen argued.
She conceded this would force some good candidates from public life, but
such a hard line was only necessary in the case of ministers, who must have a special dedication to the widest public good. The Cabinet Manual requires that ministers not only act lawfully, “but behave in a way that upholds, and is seen to uphold, the highest ethical standards.”
Lasthuizen used a border control analogy to underscore her view: “saying you can manage this conflict is like saying to Customs, ‘yup I’ve got a big hornets’ nest to declare’, and then Customs says, ‘okay, here’s a form for you to fill out and you will be fine’. Of course it doesn’t work that way for a reason, and that’s the problem itself and the consequences it might have. You can’t actually bring a hornets’ nest into the country even if you declare it.”