No conflict of interest in BTIB business support loans to Maoate companies say lawyers

Acting on complaints, the Audit Office investigated the business support loans granted to companies of which Sir Terepai Maoate and Jnr Maoate were major shareholders. The companies, Paradise Cove Ltd and Maina Traders Ltd both received $30,000 each. The soft loans were part of the BTIB economic stimulus package in which the two Maoates were responsible for introducing when Finance Minister and Associate Minister of Finance respectively.
There were complaints of conflict of interest and taking advantage of the situation to benefit and gain personally in financial terms.
Audit concluded there was a clear conflict of interest.
The findings are set out in Audit Office’s fourth quarter report, Part 2, 1 April 2010-30 June 2010, tabled in Parliament last Thursday, commencing on page 451.
However, two legal opinions, one from the Solicitor General and the other from Heinz Matysik, Principal Director, Charles Little PC Barristers and Solicitors, concluded there was no clear conflict of interest.
The Solicitor General , in his letter of 1 July 2010 to the Director of Audit, said there was no clear evidence that the Maoates had interfered with the approval process. Also there was nothing in the Cabinet minute or the criteria excluding politicians. He said knowledge of the existence of the scheme and loan was in his view not sufficient to substantiate an allegation of conflict of interest.
In his letter to the Director of Audit, Matysik makes it clear his opinion was formed from the documents he viewed. In his summary, Matysik said there was no evidence on the documents he was provided with that suggested there was a clear conflict of interest which should have disqualified the applications from the Maoate’s companies, from being considered by the BTIB. He also said there was no evidence that there was any undue interference in the process of the BTIB board considering the applications and approving the same under the Business Support Scheme.
Matysik however said there were questions to be asked of the BTIB and the board regarding changes made to the May 2009 criteria. Only two of the changes were documented in the BTIB board minutes on 4 November 2009. No reasons were given for these changes. In his view a concern was the removal of the reporting requirements set out in the May 2009 criteria.
Matysik also said in his report to the Director of Audit that the decision to implement the business support scheme lay with Cabinet and it was for Cabinet to approve or decline the submission brought by Sir Terepai.
In its recommendations the Audit Office recommended the BTIB board implement clear policy guidelines on conflicts of interest and that board members refrain from applying for and receiving government funding of this nature.
Audit also recommended (through the Minister for BTIB) that Cabinet and Associate Ministers refrain from getting involved in schemes of this nature.

By Charles Pitt

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