First published on 
By Lee Scanlon, Westport News
Photo: RNZ / Tracy Neal
The Buller District Council (BDC) lost access to road funding for seven weeks and is facing three years' scrutiny from the New Zealand Transport Agency (NZTA).
This follows a forensic audit which found contractors working for BDC's Project Management Office (PMO) made ineligible claims for NZTA funding.
Auditor KPMG said PMO contractors had been told they could include travel and disbursements in costs claimed from NZTA, apparently as a "work around NZTA's stated funding parameters".
BDC's chief executive, Simon Pickford, told The News in September that no government agency had taken punitive action as a result of the KPMG report.
However, NZTA says it froze BDC's access to Transport Investment Online (TIO) on August 22.
Responding to an Official Information Act request from The News, NZTA said that during the freeze, BDC was able to claim for urgent road work. This ensured Buller people were not disadvantaged by council's compliance issues, the NZTA spokesman said.
The agency restored council's access to TIO and the National Land Transport Programme (NLTP) claims process on October 10. The spokesman said this followed an agreement on interim assurance processes with BDC, pending the expected completion of NZTA's full assurance review later this year.
The News asked Pickford why he had claimed NZTA had taken no punitive action against council.
Pickford replied: "We don't see the NZTA action as punitive ie a punishment.
"Understandably NZTA wanted assurance on the progress made to address the issues identified in the KPMG report.
"NZTA recognised the work BDC has undertaken to address the issues identified and lifted the brief pause in processing claims."
Pickford said the freeze had had no impact on BDC or its contractors.
"We claim funding from NZTA retrospectively once a month and there was no impact on the work programme."
No planned work had been delayed, he said.
Pickford did not mention that NZTA would be continuing to scrutinise BDC for three years.
He revealed NZTA was not the only government agency that had taken action following KPMG's report.
"Similarly, there was a brief pause in the reimbursement of claims by Crown Infrastructure Partners, but this has also been lifted and was also not seen as punitive."
NZTA said it was continuing to review the findings of the KPMG audit and to assess the value of potentially ineligible claims made between 2021 and 2023.
"NZTA has requested further evidence of invoices and procurement spend to further analyse so we can determine if there has conclusively been ineligible claims and the total value that is in question," the spokesman said.
NZTA had visited BDC to review council's policies and procedures and interview current staff.
NZTA had also looked at findings from NZTA's previous procedural audit of the council and had completed a technical roading audit last month.
The spokesman said NZTA expected to complete the assurance review by the end of next month.
"We will have ongoing assurance requirements and reviews planned to maintain confidence in Buller council over the next 36 months, this will enable sufficient evidence to prove robust financial assurance processes are in place."
Asked if NZTA had any concerns about lack of detail on PMO claim invoices, the spokesman said: "We have not formed an opinion on this as part of our assurance."
He would not reveal which contractors/consultants had allegedly made ineligible claims.
He said NZTA was working with other government agencies over potential BDC issues.
"In April 2024, several Government entities including NZTA were made aware of potential issues with Buller council and started working collaboratively to look into the matter. Investigations are ongoing."
The Office of the Auditor General was aware of the situation, the NZTA spokesman said.
The News has previously reported that the National Emergency Management Agency is contesting more than $90,000 worth of claims from one PMO consultant, Team Projects Advisory.
NZTA declined to say whether it agreed with KPMG's finding that there was no evidence to warrant any prosecutions.
BDC received $17.08 million NLTP funding in 2023/24, the spokesman said.
Pickford told The News TIO records showed the councils's total claim for 2023/24 was $15.4m, (emergency works $7.9m, local road maintenance $3.3m, local road improvements $1.3m, special purpose road maintenance/improvement $2.5m) and the balance for miscellaneous work.
BDC set up the PMO in January 2021 to handle external funding from the Government. The office was staffed mainly by consultants.
The council commissioned the forensic audit after a former staff member alleged BDC had failed to properly manage PMO consultants and costs. The audit found inadequate management, lack of critical controls, and ineligible claims for costs.
BDC closed the PMO and replaced it with a capital works team from July 1 this year. By then the office had cost almost $9 million, including over $1m from ratepayers.
- Westport News
