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The response by the Rotorua Lakes Council’s Chief Executive (CE) Geoff Williams to the decision by the Office of the Auditor-General (OAG) not to conduct an inquiry and forensic audit of Mudtopia is unsatisfactory. It fails to appreciate the limitations of the process used or to properly discharge formal accountabilities. It suggests that little will be done to correct and prevent the aspects of maladministration revealed or to promote appropriate professional and organizational learning.

The first problem is that the CE does not appear to appreciate the limitations to the quality of knowledge used by the OAG. The CE asserted that “It has been a thorough process.” This is not entirely true.

The process was asymmetric. Council was given access to the substance of the complaints and yet the complainant (Rotorua District Residents and Ratepayers, RDRR) was not given equivalent access to the Council’s responses. Neither the RDRR nor the Council got to correct matters of facts or to advise the OAG on its interpretation of facts before its conclusions were announced. There were no rigorous truth tests of complaints or responses, other than OAG personnel talking to Council staff, but with no equivalent consultations with RDRR personnel. The AOG made its conclusions known in a “Dear Geoff” letter to the CE on 4 December, with a (dis)courtesy copy sent to the complainant closing matters.

The process ignored or dismissed instead of resolved or arbitrated contradictions. One complaint was that Council had stopped providing answers to public questions about Mudtopian transactions. Another was that four attempts by elected councillors and the RDRR to have the Council refer Mudtopia to independent and forensic audit to evaluate transactions had been rejected. It was therefore curious that the OAG concluded that “The expenses incurred by the Council from the Mudtopia event are already in the public arena for scrutiny. The public has the ability to question the Council about individual expenses and hold the Council accountable for those.” The CE would have known that these statements are widely contested and should have advised the OAG accordingly.

The second problem is that the CE appears unable to take a critical view of his own performance and the performance of the organisation he leads, which unfortunately precludes organizational learning. Instead, the CE asserted that “I have remained confident in the staff’s management of both the event itself and related procurement and transactions.” This is despite the OAG pointing out serious shortfalls in governance and event management that can be attributed directly to the performances of the CE and his Chief Operating Officer (COO).

For example, the muddled governance arrangements described by the OAG stemmed from an ambiguous resolution passed at the 17 December 2015 Council meeting. It expected officials to develop the structure of a management entity (other than the Council) to run Mudtopia, and refer it back to the full Council for a decision. The OAG found that “We have not seen evidence that the entity proposed to run the event, and governance arrangements, was referred back to the Council for a decision.” The CE is directly responsible and accountable for the quality and improvement of administrative structures in Rotorua Lakes Council.

Instead, the OAG found, the COO established and appointed members to an advisory board that contracted, guided and supported an event management company (Event Engine Ltd.) to run the event. The OAG also found that the advisory board reported to the COO, and that the CE or his representative, attended the board’s meetings.

These structural arrangements were reported to the Council’s Operations and Monitoring (O&M) committee in 2016. They meant that the COO and the CE were effectively in control of, and therefore accountable for, the planning and management of the event. The OAG confirmed that they did not seek formal authorization by Council to raise the cap on financial exposure above the maximum set of $500,000, a very serious matter that should been referred to Council’s Audit and Risk Committee.

On the other hand, the OAG also confirmed that the O&M committee meeting on 3 August 2017 was advised about a higher level of financial risk, specifically about the likely revenue level, but decided to proceed nevertheless, and eventually achieved a $740,387 loss. It is a pity that, as guardians of the public interest, the OAG did not investigate the quality of risk analysis provided to the O&M Committee by the COO and the CE, and evaluate the extent to which event planning and management functions controlled by them were responsible for the losses incurred, albeit in a context of ambiguous governance.

It was therefore startling that the CE steered around any need for immediate remedial action, such as performance appraisals, restorative justice for ratepayers, and professional and organizational development when he blandly noted that “We acknowledge the OAG’s views regarding having clear, recorded Council decisions for the increased financial risk and endorsement of the event advisory panel. We will take this on board for future reference.”

Finally, in effect, the CE exonerated himself and the COO from any further accountability around Mudtopia by concluding that “The event has been well scrutinised from every aspect and we now look forward to continuing our focus on the ongoing work and community outcomes the organisation has been tasked to deliver.”

In sum, the CE’s response to the OAG’s decision not to inquire further into the financial management, accountability, and governance of the Mudtopia event, especially to provide an independent and forensic audit of transactions, highlights three general problems. The process was asymmetric and did not resolve factual contradictions. The CE failed to take any responsibility for manifest structural and managerial failures. The AOG’s decision has been taken by the CE to imply his exoneration from any further accountability for the Mudtopian financial disaster, and to obviate the need for any remediation, restorative justice, or professional and organizational development.