Former FinSec stays calm under intense questioning

What Kevin Carr said in court

At the Operation Slush Fund trial in the High Court on Monday the former Financial Secretary, Kevin Carr kept his cool during intensive cross examination by Tim Arnold, counsel for businessman Chris Vaile.
Fiscal responsibility was the key topic with Carr asked if projects taken on by Ministers were often really used as ‘vote winners’? That is often the case said the witness.
In the context of the budget blowouts of the 2001 Atiu road project re shipping costs, the poor quality of road chip from Rarotonga plus shipping and stevedoring - were the actions to find lower quotes for crushers to provide chip on the island (instead of shipping it there) by then Minister Norman George an example of taking prudent fiscal risk?
Carr said he would not expect Crown to rely solely on one person.
Would he agree that the enquiries by Tutu Ina to Works on 1 July 2001 were ‘preliminary in nature and also acted as a second quote? Carr said none of that information had been disclosed in any of the Cabinet minutes that he had been asked to comment on at the time. He added that some remarks on the Cabinet minute seemed ‘emotional’ for instance ‘taking a big commercial hit’ comment re one of the bids.
Was there a conflict of interest with Graham Ferguson being paid by OMIA to visit the outer islands as an ‘expert’ for ‘advice’ and then offer his own company’s products as a solution?
It was a conflict of interest but also that from Keith Niederer who also offered his own products as a solution. Keith told government they did not need a jaw crusher because it would not do the job (because of flaky chip) but the hammer mill would do the job (producing rounded chip).
Carr said he would always want supporting evidence (in purchasing) because it could have been a sales pitch making people believe he was a nice guy and not just after his own commercial interests.
What about the $160,000 budget for the project? Witness said the money was the total amount to cover shipping, stevedoring, manpower etc and thus insufficient to cover the $140,000 crusher as well. While agreeing that there was a ‘lot of talk, witness said it was not an alternative to written proposals.
Then the topic changed abruptly to that of the Triad shipping company purchased by the Cook Islands government under the name of Cook Islands National Agency Ltd around that time.
Arnold said CINA Ltd was managed by Bruce McCallum who had ‘exclusive authority’ over the company and Vaile was no longer allowed to make any further transactions for the shipping company. Soon it became apparent that CINA Ltd was ‘insolvent’ and could not pay their December wages for Ngamaru III and government was anxious to avoid having creditors taking ‘undesirable action’. It made the news at the time under the heading: Ship fails first guarantee’.
Arnold said that Vaile allowed his personal account to be used to channel funds for the company or the proceeds might have been seized. The former Secretary of Finance said if that were so, then Vaile’s actions were improper.
Arnold was unfazed and asked what his relationship was with Vaile. Carr said all his dealings were cordial and there was certainly no animosity.
Next witness to be heard was Junior Areai.

Herald Issue 463 10 June
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