One of New Zealand’s most senior public servants said MPs effectively acted “like gangs and mafia” to force his resignation.
Martin Matthews resigned as Auditor-General in August 2017, only six months into the job.
Former Prime Minister Sir Geoffrey Palmer has called the episode an “unprecedented” breach of New Zealand’s constitution. He said it rode over the independence of the country’s most independent financial watchdog, and denied Matthews natural justice.
Matthews feels like his “scalp” was offered up by politicians who needed him gone to please voters ahead of an election.
It probably suited some to see me gone - the scalp of a very senior official ahead of the election would have had political appeal,
The Officers of Parliament Committee, chaired by then-Speaker David Carter, asked Matthews to resign or face Parliament declaring him disabled on the basis of a draft report into his handling of fraudster Joanne Harrison in his previous role as chief executive of the Ministry of Transport. Matthews has disputed that report, alleging it is “riddled” with errors.
The committee said that documents and proceedings relating to Matthews’ resignation would be suppressed.
Carter told Stuff the committee “decided, unanimously, not to release Sir Maarten’s report out of concern for Mr Matthew’s reputation”.
But a Stuff investigation has found documents are not suppressed and can be made public. This, alongside an investigation by Stuff Circuit which has lifted a key court suppression means Matthews’ full story can now be told for the first time.
Matthews is now petitioning Parliament to reopen his case.
The saga began in early 2017, when Matthews was embroiled in a scandal surrounding his time as chief executive of the Ministry of Transport.
A fraud, committed by Harrison, then a senior staffer, was exposed in the media just as Matthews was interviewing for the role of Auditor-General. Harrison had falsified invoices, allowing her to embezzle money. Before Matthews’ appointment, the committee was briefed on the fraud, but the storm continued to brew after he took up the role.
As the government’s chief financial watchdog, the Auditor-General is responsible for scrutinising all state spending, from big purchases of land to the budgets of schools.
Martin Matthews says he was forced to resign as Auditor-General.
Martin Matthews says he was forced to resign as Auditor-General.
Unlike ordinary civil service jobs, the Auditor-General is responsible to Parliament as a whole, rather than to a specific government, party or minister. It is appointed unanimously by the Officers of Parliament Committee, a group of senior MPs chaired by the Speaker. The Ombudsman and the Parliamentary Commissioner for the Environment are the only other such officers.
Officers of Parliament are meant to be nearly impossible to get rid of without very good reason. A Government isn’t allowed to remove an Officer - only Parliament can, and even then only by passing a resolution specifying four strict criteria: disability affecting the performance of duty, bankruptcy, neglect of duty, or misconduct.
Although such a resolution could be passed by a simple Parliamentary majority, constitutional experts agree the convention is that every single party would need to agree to an Officer’s removal. This is so rare that it’s never actually happened.
This is to protect their independence and to make sure an Officer doesn’t feel intimidated inquiring into politically sensitive business. The Auditor-General is protected by the natural tension that exists between all parties: it would have to be very serious to put aside partisan squabbles and agree to vote unanimously to remove someone from the job.
As the Harrison scandal deepened, questions were asked over whether Matthews was suitable for the role as the Government’s chief fraud watchdog when a fraud had been carried out at the ministry while he had been in charge.
A media storm ensued and continued to rage until May as allegations emerged that Matthews had ignored and later sacked whistleblowers. In an attempt to dispel some of the rumours, Matthews requested the committee conduct an inquiry into his handling of the fraud. In May, senior civil servant Sir Maarten Wevers was asked to review Matthews’ actions at the Ministry.
Wevers’ report was delivered, but Matthews resigned before the committee made any final decision on its contents and the report was never released. It was hidden from the public by Parliamentary privilege, a set of rules which treats everything that happens in closed select committees as strictly confidential.
But that privilege lapses at the end of each Parliament. If the committee wanted the report to remain secret, it would have to motion in Parliament for it to remain suppressed. This never happened, meaning the report and the meeting where Matthews was allegedly forced to resign can now be recounted in detail.
Joanne Sharp pleads guilty to five charges of fraud at Tower Ltd. Wins permanent name suppression.
Joanne Harrison (formerly Sharp) begins work at the Ministry of Transport.
Harrison begins her fraud.
Whistleblowers raise concerns about Joanne Harrison’s conduct and issues with contracts and invoices at Ministry of Transport.
Martin Matthews receives a tip from a contact that Joanne Harrison has another identity and a previous conviction for fraud.
April 11, 2016
Matthews informs State Services Commission and asks for advice.
April 12-13, 2016
Internal investigation into Joanne Harrison begins. Joanne Harrison claims she is on sick leave.
April 18, 2016
Serious Fraud Office advises Matthews to investigate using Deloitte forensic accountants. Matthews commissions Deloitte review.
April 26, 2016
Peter Churchman QC Appointed to undertake employment investigation.
April 27, 2016
May 16, 2016
SFO requested to begin formal investigation.
May 17, 2016
Matthews ends term at Ministry of Transport.
May 30, 2016
Knowledge of Harrison’s MoT fraud becomes public.
21 July, 2016
Matthews interviewed for Auditor-General role, fraud discussed in interview.
Matthews appointed Auditor-General.
December 7, 2016
Frustration builds at Matthews’ appointment as Auditor-General and treatment of MoT Whistleblowers.
Wevers review announced. Draft review given to Officers Of Parliament committee six weeks later.
23 May, 2017
Sandi Beatie returns investigation into treatment of MoT whistleblowers.
2 August, 2017
The normal procedure for Government reviews is that a draft review is shared with its subject to respond to allegations and question any factual inaccuracies before the report is made final.
In this case, Wevers turned his draft report over to the Parliamentary committee on June 30, 2017, without seeking Matthews’ response, despite Matthews requesting an opportunity to comment. On July 3 Matthews wrote to the Committee requesting the opportunity to look at the report and make comments, which they allowed. These comments were not included in the final report, but were given to the committee as a separate “response” to the draft Wevers report.
Matthews says it was a “major breach of natural justice” that what he considers to be factual errors in the Wevers report were not reexamined before it was read by the committee.
Wevers was scathing, finding Matthews “not suitable to be Controller and Auditor-General”.
Matthews responded to Wevers’ report in person on the evening of August 1. He gave evidence to the committee, accompanied by his wife, Heather Baldwin, and lawyer, Mary Scholtens QC, well-known for conducting the Government’s inquiry into the appointment of Wally Haumaha as deputy police commissioner.
He recalled the questioning being hostile. While the committee agreed to see three letters of support for Matthews, its minutes record that it rejected his appeal to let any witnesses speak for him.
Instead of having his response included in the Wevers report, Matthews produced an 83-page rebuttal, where he disputed several of Wevers’ key claims, in particular that the fraud was not sophisticated, that he had covered it up, and that he had not acted quickly to uncover the fraud.
Minutes show the committee continued to meet for just 23 minutes after Matthews gave his evidence. Its final minute resolved to meet the next day at 10am to inform Matthews of its decision.
When Matthews returned on August 2, representatives from every major party were present: David Clendon of the Greens, Te Ururoa Flavell of the Māori Party, Trevor Mallard and Carmel Sepuloni of Labour, Ron Mark of NZ First, Jami-Lee Ross then of National, and the Speaker, David Carter.
Scholtens recalled that Carter said Parliament had lost confidence in Matthews, and would seek his removal, unless he chose to resign.
She asked Carter on what grounds he planned to remove Matthews, reminding him that Parliament could not just get rid of the Auditor-General.
According to Scholtens, Carter said the committee would the next day put the Wevers report before Parliament and seek a motion to remove Matthews from office because he had lost the confidence of Parliament.
Scholtens said “loss of confidence” was not enough and asked “on what grounds” Matthews would be removed.
“Then there was some shuffling of paper,” she recalled, as Carter looked through his notes.
“On the grounds of disability affecting the performance of duty,” is Scholtens’ recollection of Carters’ response.
Matthews was “gobsmacked”.
“They would remove me from office for something that simply was not true and was effectively unlawful.”
But the committee offered Matthews a choice. According to Matthews, Carter said the disability declaration wouldn’t be moved if Matthews resigned by 5pm that day.
He “seriously considered” not resigning, allowing the House to remove him, and then seeking a judicial review. But this option was risky - and expensive.
This option would mean the Wevers review being made public and would see Matthews declared disabled by Parliament. The report uncorrected would likely destroy his reputation and a Parliamentary declaration of disability would likely destroy his career.
Matthews was outraged.
“There was no basis for the claim. I was not disabled. I did not have either a physical or mental incapacity that rendered me incapable of performing the Auditor-General’s role.
“It would be illegal in any other circumstances to claim this, especially without independent medical assessments. But it seems Parliament is above the law,” he said.
Looking back, he describes Parliament acting like the mafia, by using power to coerce people into actions they didn’t want to take.
“I suspect in their minds is the ends justified the means - that’s how the gangs and mafia think,” he said.
“It’s about using their position of power over people to take action against people.”
Matthews resigned at 4.45pm, delivering his letter to Parliament just before the 5pm deadline. His resignation was announced to media the next day. The members of the committee agreed to destroy their copies of the Wevers report, with just a single copy being kept in the Clerk’s office.
Details of the committee meeting leaked, with reports saying he was given an “ultimatum” to “resign or face a parliamentary vote of no confidence,” according to RNZ. Nowhere was it reported that Parliament had no legal power to remove Matthews through a vote of no confidence.
When approached by Stuff, Carter outlined the process followed by the committee, saying it began at Matthews’ request following allegations about his handling of the Harrison fraud. The Wevers’ report was “very critical”.
He said the committee considered the report and evidence given by Matthews, who appeared in person.
“At the conclusion of the meeting the committee indicated its intention to report to the House, attaching Sir Maarten’s report, and recommending his removal from office. Mr Matthews chose to resign.”
Carter said the committee decided not to release the Wevers report out of concern for Matthews’ reputation and resolved not to discuss the matter in public, so he would not comment further.
Carter did not dispute Matthews and Scholtens’ recollection of the meeting, and did not respond to questions about whether MPs breached the independence of the Auditor-General.
Mallard declined to comment saying, “David Carter chaired the committee which resolved not to make further comment on the issue and I therefore will not comment on the details of some people’s recollection of events.”
Flavell, Mark, and Sepuloni also declined to comment, while Ross referred questions to Carter and Mallard. Clendon could not be reached.
Matthews’ team continued to fight the case for him pro bono.
Scholtens, Palmer and former National Party Attorney-General Paul East QC tried to get the current Speaker to reopen the case. They met with Trevor Mallard in February 2018 but apart from a concession that the “tone” of the Wevers report “was unusual”, he refused to reexamine Matthews’ predicament.
Mallard told Stuff he declined to reopen the matter because there was no new information that would cause him to do so.
This concerns Palmer, the author of the Bill of Rights, who said politicians treated the case as a question of politics, rather than justice.
It’s a question of fundamental justice to an individual,
“What is most offensive about this is that it was treated as a political matter, not as a rights matter and that seems to me to be very deeply offensive. I don’t think a lot of MPs understand they are bound by the Bill of Rights or even care what’s in it,” he said.
The second, constitutional question concerns the crucial independence of the Auditor-General. Officers of Parliament are meant to be protected by the natural tension that exists between all political parties, but in this context, when the Auditor-General itself became a political liability, politics allowed the immense power of the committee to be used without any check or scrutiny.
“It’s weaponised the Officers of Parliament Committee,” Palmer said.
He said the Auditor-General was set up precisely to avoid situations like Matthews’.
“Sometimes [Auditors-General] get trodden under and the constitutional protection offered in NZ was to avoid that,” he said.
“This is an unprecedented danger to high officers of state, who are, because they are so heavily protected strangely enough the irony is they are not protected at all if the parliament behaves like this”. Palmer said.