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MBIE investigates leak of consultant payments after claim it understated the true cost

Friday 8th December 2017

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The Ministry of Business, Innovation & Employment has launched an investigation into a privacy breach involving the leak of payments to thousands of consultants, the recruitment firms that supply them and contract details for the past four years.

The data was anonymously emailed to BusinessDesk by an MBIE insider who claimed the ministry is about to "lie" about the true extent of its spending on consultants in answer to expenditure questions from a parliamentary select committee. The ministry denied it would mislead the select committee while confirming the data originated from its offices and was an internal document accessible to a very limited number of employees.

The data show MBIE spent $82.9 million on contractors in 2016/17 and another tab on the spreadsheet shows $10.9 million spent on consultants, listed by contract number. Notes to the data show how the lists are reconciled and say that there is "likely to be more spend" with other codings that could be considered as consultants.

The total of the consultants and contractor tabs is $94 million while MBIE's 2017 financial statements put operating expenditure on contractors at $40.6 million and consulting services at $15.6 million - a total of $56 million.

The figures in the 2017 annual report "represent MBIE’s fully reconciled and audited accounts as reported to Parliament," a spokeswoman said. In addition to the spending on contractors and consultants in the 2016/17 year, "we obtain professional services from external suppliers with expenditure of $48.08 million. This may include contractors where that is the appropriate means of service delivery."

The leaked spreadsheet shows totals for the two tabs for 2015/16 was $77 million compared to the $38.9 million reported operating figures. The 2015 and 2014 totals in the spreadsheet were $72 million and $62 million respectively.

The ministry says the leaked data sheet was of raw numbers compiled for different purposes and couldn't be reconciled with the officially reported figures.

The spreadsheet lists 2,260 named contractors used by MBIE over the past four years and 1,801 consulting firms and individuals listed by contract number. The top two contractors were paid more than $1 million apiece over the four years and 16 more received over $800,000. Most of the suppliers of contractors are recruitment firms, including Manpower Services, Randstad, Beyond Services, Robert Walters and Jackson Stone. The list of consultants includes PricewaterhouseCoopers, Deloitte, Martin Jenkins, Beca, Tonkin & Taylor, Davis Langdon and Sapere Research Group.

In seeking comment from MBIE, BusinessDesk has agreed not to disclose or transmit any personal and commercially sensitive information. The ministry asked for the data to be deleted as a matter of urgency.

“The information you received from an MBIE staff member alleges that MBIE is intending to mislead the select committee. This is not correct," Adrienne Meikle, deputy chief executive, corporate governance and information, said in an emailed response. "As an organisation, we place a high importance on integrity, openness and transparency. We are fully responsible and accountable for our spending, and report on that spending through our annual report and the select committee process."

Meikle said MBIE takes "a consistent approach" to annual reporting and answering select committee questions about contractors and consultants. "We believe we have answered past select committee questions accurately and fully," she said. "We take information security, and privacy matters seriously and have high expectations of our staff under the code of conduct. We have launched an investigation into how this information came to be disclosed."

MBIE staff who had issues of concern or felt put in a position of 'whistle-blower' could use the ministry's established processes and mechanisms including "an independent, anonymous 24-hour integrity line."

MBIE was criticised by Labour's economic development spokesman David Clark earlier this year for its spending on external consultants and contractors for what he said was core business. Clark, who is now minister of health, said at the time that a strong public service "is about educating and upskilling public servants to do the work of government at a reasonable rate, not about supporting the private sector to charge extraordinary fees." The then Economic Development Minister Simon Bridges defended MBIE's spending but said he had sought more information.

The so-called super-ministry has come in for previous criticism, including a reported $140,000 on a curved screen TV for its head office reception.

The cover note on the email leak says the person doesn't view themselves as an 'Edward Snowden' character "but felt there just needed to be some transparency about what was happening with this reckless spending of taxpayer money."

"I don't blame the current CFO or CE - the people responsible for signing so much of this spending are the slightly lower level DCE's and general managers," the person says. "This has been a difficult thing to do as I obviously work at this ministry and do not wish to lose my job there. It upsets me as a taxpayer to have to write this but in the end, there was little choice. I could have raised concern within govt but I don't believe my concerns would have been properly acted upon."

The person wrote that taxpayers were "entitled to transparency of where our money is spent. These people are contractors and consultants, they are not employees. I don't believe that this level of spending is moral, nor warranted. I also don't believe this was the fault of any particular political party."

MBIE said no date has been set yet for a select committee appearance on the 2016/17 year.


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