MAX FRETHEY and SARA HOLLYMAN
The auditor-general has decided not to prosecute a Nelson councillor over her financial interests, saying it would not be in the public interest.
The Audit Office was considering taking action over a conflict of interest relating to a family business that councillor Lisa Austin co-owns with her husband.
Both Lisa and Mayor Nick Smith insisted there had been no wrongdoing and say the council’s own legal advice differs to the Audit Office’s interpretation of legislation.
Last week, Nick called it a “daft” interpretation of law.
The Local Authorities (Members’ Interests) Act 1968 has rules around the financial interests of elected members who have contracts with a council totalling more than $25,000 in any financial year.
While Lisa’s company, Austin Transport Tippers, does not directly hold contracts with the council it does subcontract to firms that do.
The work relates to carting services for gravel, topsoil, and other materials during infrastructure projects.
During a media stand-up on Wednesday morning, Nick said that the council took a “really cautious” approach to managing conflicts of interest and in November – just three weeks after Lisa was first elected to the council – sought approval from the Audit Office for the contracts.
But the approval was declined and the Audit Office then considered whether Lisa would be prosecuted, which would result in a $200 fine.
The Audit Office told Local Democracy Reporting that pre-existing contracts with councils can make candidates ineligible for election.
“Or, if they are elected, disqualify them from office. This is the effect of the act, not a decision of the Auditor-General.
“We have previously written to [the Department of Internal Affairs] and the Minister of Internal Affairs about shortcomings of this 1968 legislation and intend to do so again.”
The Audit Office said that, under the act, it does not have the power to approve contracts between election candidates and the council – only elected members and the council.
“We also cannot approve these contracts after the candidate becomes a councillor. The act does not allow us to do that. We only have the power to approve contracts entered into after the person is elected.”
Its website also states that subcontracts were included under the rule. Nick said that the Audit Office was also threatening Lisa with dismissal from her role as a councillor, though the office said that it has no power to dismiss elected members.
The council’s advice from law firm Simpson Grierson also disagreed with the Audit Office’s “unfair” position, he added.
“It is a daft interpretation when an existing councillor can get approval – from when they were on council and may have been able to influence a decision – but not for a new councillor who would have had no opportunity to exert influence over any previous contracts or work.”
Other Nelson councillors have previously received repeated approvals for contracts held directly while they were already on the council, he said.
Such interpretations of the law likely risked the positions of dozens of councillors in similar situations across the country, Nick thought.
The council said the Audit Office has since been in contact to advise it would not start proceedings against Austin.
Nick welcomed the decision. “It enables Cr Austin to get on with her job, avoids public money being wasted on daft interpretations of an outdated law and enables the community to be fully represented around the Council table,” Nick says.
He says the law was outdated, difficult to interpret and prone to differing legal interpretations.
“There will be many mayors and councillors across the country, like Cr Austin, who could be caught by this archaic act,” he says.
“I will also be writing to Ministers of Local Government and Regulation urging that this ass of a law be replaced.”
Lisa was relieved about the decision, saying it lifted a great weight from her shoulders. She did not participate in council meetings last week, saying it felt like this was hanging over her.
“It’s been very distressing, and I am pleased it’s been resolved,” she says. “Thank you to everyone who has supported me. I look forward to getting back around the council table and working for the residents of my community as I was elected to do.”
The Audit Office intended to write to the Minister of Local Government and the Department of Internal Affairs to urge them to consider law reform again.
Last week, Nick said he felt “very strongly” about probity and disclosing conflicts of interest, but thought the situation was “truly bizarre” given how removed Lisa was from the situation.
Her financial interests in her company were listed on the council’s pecuniary interests register, and she did not sit on the council’s tenders and project delivery committees.
