Minister ‘not very wise; not wrong’

Press, 26 December 1986, Page 1

Minister ‘not very wise; not wrong’

PA Wellington The Minister of Maori Affairs, Mr Wetere, was not very wise but “not wrong” in signing a letter of introduction for a key figure in the loans issue, according to the Prime Minister, Mr Lange. The Minister would not resign,. Mr-Lange said... An official inquiry has found that Mr Wetere’s departmental head, Dr Tamati Reedy, made serious errors of administrative judgment and “naive” decisions in negotiating for $6OO million in foreign money.

Mr Lange said after the release on Christmas Eve of a report of the State Services Commission inquiry that the $6OO million never existed.

Dr Reedy and the department, it seems, were almost the victims of what Mr Lange described as a “scam.”

Documents released with the report showed that the department was told that the money was’ to come from a private SUSIO billion ($2O billion) anti-Soviet trust headed by a member of Kuwait’s Royal family, Mr Achmed Omar.

Mr Lange, echoing a previously released

Treasury paper saying that at best the money was laundered and at worst non-existent, said, “The simple fact is that there was never any money.” “The idea on this type of phoney loan scam is to go upfront, put up a proposal, lock people into it, and then in effect inake them buy their way out because they don’t want to be humiliated about it.” One matter in the inquiry report, gave Mr Lange some cause to reflect on the issue of Ministerial responsibility. That was a letter of introduction for Mr Rocky Cribb, saying Mr Cribb had been appointed to follow up business opportunities stemming from a trade expo in Hawaii. The letter said that Mr Cribb had “official authority” to negotiate on the department’s behalf and enter into agreements enhancing trading opportunities between the Maori people and the Hawaiian business community.

Mr Lange noted that Mr Wetere had signed the letter.

“I don’t accept that that is very wise, but also it is not wrong,” he said.

“If you see the terms of it, he (Mr Wetere) ... never had it in his mind that he was authorising some person to go and arrange some huge loan.”

The inquiry was ordered after Opposition allegations in Parliament last week. ' The report follows up ,an .interim "document. ' '

The report said the loan negotiations were a genuine attempt to raise money for Maori development, but the proposal was never adequately developed and “poorly administered throughout.” This was highlighted by Dr Reedy’s premature and inappropriate signing of documents and even when the Maori Affairs Department sought advice, it was never properly or fully heeded.

The report said that there was a pressing need to re-examine the departmental structure, and. that this would be done.

“What has happened is a sad mixture of good intent and poor execution,” said the commission’s chairman, ■' Dr Roderick Deane.

“In the process the Minister of Maori Affairs has found himself in a position in which no Minister of the Crown should be placed — inadequately informed and poorly briefed and advised.” Dr Deane said there was a clear need to reassess the standard of management in the department and to reach decisions about a number of personnel matters.

It was important, how-

ever, to observe that the basic protections in the Public Service system “ultimately functioned to bring the matter to a close” without serious financial consequences. The commission said its concern about the premature and inappropriate signing of documents could be "confirmed by these points: © The Treasury had made it clear that neither it nor Dr Reedy had any authority to borrow funds, and this advice was given before Dr Reedy signed the letter and fee agreement on November 10.

© No authorities to borrow funds had been sought or obtained.

© The source of the funds, why they were to be borrowed, the projects involved and methods of

repayment had not been properly considered. Although Dr Reedy’s integrity was not doubted, he had failed in one of his main functions — keeping his Minister informed.

“He did not formally advise his Minister in writing of his intentions, with a view to seeking his approval, prior to communicating with Hawaii. “Indeed the form, quality and timeliness of the process of advice to the Minister was inadequate throughout the administration of the Hawaiian proposals. “Records of conversations and of briefings and understandings with the Minister on this matter are virtually non-existent, and considering the import of the subject matter this can only be viewed as

a serious lapse in acceptable standards,” the report said.

Dr Reedy and his Deputy Secretary, Mr Neville Baker, were particularly responsible for this lapse, the report found.

Although Mr Wetere signed the letter for Mr Cribb on September 30, his knowlege of the likely content of the over-all package of proposals from Hawaji appeared to have started with a 10-minute oral report from Mr Cribb on October 20. The commission said, however, that no details of the loan proposal were given to Mr Wetere al that meeting. To page 4

On October 31, Mr Cribb wrote to Mr Wetere withdrawing his services and by November 5, Mr Wetere was seeking details from Dr Reedy of the Hawaiian projects. Dr Reedy responded on November 10 by sending Mr Wetere a letter from Mr Raepple. This was the first documentation that Mr Wetere had received on the loan proposal.

He took the letter to Palmerston North on November 15 and showed it to two members of the Board of Maori Affairs, Dr Ngatata Love and Mr Bert Mackie.

After this, Mr Wetere expressed “serious concern” to departmental officials about the Hawaiian negotiations and asked for a full report on November 21. He had a short discussion on the matter with the Minister of Finance, Mr Douglas, on November 24.

Later that day, Mr Wetere directed the department to cease all further negotiations on the Hawaiian proposals and on November 26 told it to cancel arrangements for a visit to Hawaii to further the negotiations. On December 18, after the investigation had begun, Mr Wetere. repeated in writing his instructions to cease negotiations.