NZ Transport Agency manager failed to properly disclose links to app developer friend

Friday, 7 June 2019

The Transport Agency's high tech innovation team has been the subject of a second investigation after a whistle blower raised issues around the behaviour of former Connected Journeys group manager Martin McMullan.

An investigation sparked by a whistle blower found that a senior NZ Transport Agency manager failed to properly disclose his links with a company awarded contracts to develop a safety app costing $250,000.

A 'protected disclosure' made in early May 2018 raised concerns about 'probity and conflicts of interest' relating to Martin McMullan when he was manager of Connected Journeys, the Transport Agency's IT innovation team.

An internal investigation last year found that McMullan did not make a formal declaration of his friendship with Martin Riding who headed Lean Machine Ltd and Safety App Ltd, associated companies awarded contracts to develop Zero Harm, a health and safety app.

Deloitte has now been asked to investigate whether conflict of interest policies had been adhered to and whether there was any evidence of an improper relationship between McMullan and the companies identified by the whistleblower.

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Connected Journeys is already the subject of separate audit launched five weeks ago when the agency engaged Deloitte to look into the historical management, governance and activities of the team headed by McMullan until March when he abruptly resigned.

NZTA interim chief executive Mark Ratcliffe said they took the issues raised by the latest investigation very seriously and Deloitte Consulting would undertake a comprehensive and independent review of procurement, contracting and conflict of interest issues, with findings delivered by July.

Although the latest investigation does not say how much the app developers were paid, a separate Official Information Act response to Stuff confirmed the first version of Zero Harm cost about $60,000 and version two $190,000 for work done between November 2014 and June 2017.

McMullan set up Lean Machine Ltd in April 2014 while he was working as a 'people leader' for NZTA, and although he quit as a director in August that year, when Riding took over the running the company, he continued to report shareholder changes in 2015.

The report said that although McMullan stated he had discussed the conflicts of interest with his manager in 2014 and 2015, neither of his former managers recalled any such discussion, and he did not submit a conflict of interest declaration about Riding until 2016.

Even then, the report said McMullan's description of the conflict with Riding was insufficiently detailed and no monetary value was quantified, so it would not have raised any concerns, and as a result no steps were taken to manage the risk.

The report said McMullan's colleagues were aware of the conflict and he did not seek to hide his friendship with Riding from them.

In early 2015 he also handed over responsibility for managing the Zero Harm contract to another staff member in an effort to mitigate the conflict, but continued to approve payments to Riding's companies until mid-2016.

The report found that the contract for an updated version of the Zero Harm app was awarded to Riding's company as the lowest bidder and there was 'no evidence to suggest the company had an unfair advantage over other bidders or knowledge of the version 2 budget.'

However, Ratcliffe said the protected disclosure investigation detailed specific areas where policies and processes were not properly applied, or were not strong enough to adequately address and mitigate potential conflicts.

'The report makes it clear that Mr McMullan did not adhere to the transport agency's policies and processes during his first two years of employment with the Agency. He recognised a conflict of interest, but there is no evidence that he disclosed it through formal channels.'

Ratcliffe said that as a result of the review the agency has tightened its requirements around reporting of conflicts of interest.

To ensure complete disclosure of company directorships and shareholdings it will conduct spot checks of designated staff members' names against the Companies Office register.

The agency had also reviewed its procurement guidelines and provided additional training for staff with procurement responsibilities.

The Zero Harm app won the human resources technology award at the Human Resources Institute of New Zealand awards in 2016, but NZTA confirmed it no longer uses the app and it said had been replaced with an improved health and safety reporting system.

Stuff was unable to contact McMullan for comment on Friday when the report was released, but in an earlier interview he said he had been cleared in an earlier agency investigation.

'The investigation has been done by NZTA and the findings came back there was no issue.

'I had a friend who was working with NZTA to build the application, it was given away and open sourced and I guarantee I made no money from it at all.

'I offered NZTA my bank account … I have no concerns about any of that, I always acted in the best interests if you look at what we did.'

*The story has been clarified to reflect that the protected disclosure was made in May 2018, an internal investigation followed, and Deloitte is investigating further.