$36,950 ‘FEES’
Dual roles a conflict of interest for chairman
By Charles Pitt,
Political Editor

Was it Ports Authority chairman Don Beer Jnr “double dipping”? Or was he merely seeking proper compensation for the many hours of work he put into the Western Basin Development Project at Avatiu harbour?
The Beer case raises the question of how we adequately remunerate those on government boards for their time, given board duties may impact significantly on their private businesses.
The first quarter report of the Audit Office (Part 2) Special Reviews and Investigations-1 July 2006 to 30 September 2006, outlines the findings in the Beer Jnr case.
The report was tabled in Parliament on Wednesday 13 December 2006 and consequently is now public information. Copies may be obtained from the Audit Office.
It’s not clear how the issue came to light. The Executive Summary says the CI News featured a complaint from a member of the public on 3 March 2006 about Don Beer Jnr’s fees.
However, the management report says that it was during an audit of the sand pump purchased by the Ports Authority that it was discovered Beer Jnr was also receiving consultancy fees. These were in addition to the allowance he was receiving as the Chairman.
Beer Jnr’s appointment as a consultant had been approved by the board for a short period of time for the Ports Authority’s new expansion projects.
Beer Jnr’s appointment as a consultant was endorsed at the Board meeting on 26 September 2002. He was to provide advice during stage one of the Western Basin Development project which officially began on 7 January 2003 and went until the end of August 2003.
INCREASE
Beer Jnr was initially paid $250 per month but in May 2002 this increased to $700 per month and in June went up to $1,250. From July 2002 to April 2005 Beer Jnr was paid $1,000 per month. The total fees he received amounted to $36,950.
Audit Office became concerned at Beer Jnr’s appointment process, the apparent conflict of interest between his two roles and other irregularities.
Indeed the Cook Islands Investment Corporation (CIIC), the Ports Authority’s parent body, raised its concerns at Beer Jnr’s appointment as a consultant in November 2002. The legality of the appointment was queried but the board felt the matter was covered by s18 of their Act which allowed consultants to be appointed.
Of concern was that the position was not advertised. Beer was directly involved in signing and approving payments for his consultancy fees.
His payments should have signed by the Deputy Chairman or another Board member with the General Manager.
BEFORE
The payment of his fees began in January 2002, 12 months before the project started. However, this also meant he received fees for nine months before his contract was even approved in September 2002.
Audit Office concluded that the appointment of Beer was to remunerate him for the extra hours he was putting into the various meetings.
However, there was no documentation as to these hours worked. The Board treated the appointment as informal and as an extra allowance to accommodate his services.
Audit Office considered this view unreasonable and unsatisfactory.
It was noted that at the time Beer Jnr was appointed, procedures and guidelines for this situation did not exist and did not come into effect until December 2004.
Audit’s report was sent to relevant parties for comment but it is not known what the final action will be if any. Audit have made a number of recommendations to the Ports Authority and the Board for changes
For its part, the Board, in a letter of 6 October to the Public Expenditure Review Committee (PERC), basically agreed with the findings of the Audit report. But it reaffirmed the hard work and commitment put in by Beer Jnr towards the project. The Board was disappointed the report failed to address the value of Beer’s contribution.
PERC in a letter to the Audit Office dated 15 September endorsed the reports recommendations.
The Ministry of Finance and Economic Management (MFEM) in their response of 23 August to Audit Office proposed that a legal opinion be obtained from Crown Law as to whether a demand can be made for the fees paid to be reimbursed.
MFEM said the integrity of the Chairman (Beer Jnr) and the General Manager was questionable.

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