Whistleblowing blues – NZ Transport Agency staff scared to speak up about management problems

Friday, 19 July 2019

The rights of whistleblowers.

Whistleblowing in the public service is once again under the scrutiny following a scathing report into mismanagement at the New Zealand Transport Agency.

A recent investigation by Deloitte into the agency's hi-tech innovation team recommended the agency up its game on whistleblowing so employees felt they could safely report improper behaviour or decision-making.

Public Service Association national secretary Glenn Barclay says staff were uncomfortable with what was going in at the Connected Journeys Solutions (CJS) group, but they were reluctant to speak up because there was a culture of penalising those prepared to stick their head above the parapet.

'These issues didn't just happen in isolation, they reflected the culture at the time.'

* How whistleblowing in New Zealand works

The police asset recovery unit earlier this year 'restrained' assets worth about $620,000 belonging to Joanne Harrison and her husband.

* 'Payback' and stress common problems for whistleblowers

* Integrity of business and government' at stake in whistleblowing**

Deloitte's 63-page report found CJS manager Martin McMullan's close relationship with then chief executive Fergus Gammie put him a privileged position with little oversight and 'an extraordinary degree of freedom.'

The unit tried to operate like a start-up company, ignoring many of the agency's rules and processes relating to spending, contracts, and recruitment, the report said.

That led to haphazard project delivery, lax financial management, and a failure to properly declare conflicts of interest.

Normal HR channels were bypassed to hire highly paid contractors, some of whom McMullan had close prior professional relationships with (the CJS team grew from eight to about 100 in two years, and 83 were contract or fixed term positions), the report said

Public Service Association national secretary Glenn Barclay says work place cultures in the public sector need to change.

Poor cyber security, including the use of staff personal devices and email addresses for agency work, meant data and intellectual property was freely transferable to the private sphere, increasing the risk of loss or theft by individuals wanting to use the IP for their own benefit.

Official Information Act releases revealed the Transport Agency (NZTA) upheld four complaints of harassment, bullying or inappropriate behaviour originating within teams led or directed by McMullan.

CJS spent $776,966 on domestic and international travel in just over two years, with McMullan making overseas trips to Australia (8), San Francisco (3) and Montreal, usually to attend transport and technology conferences.

Gammie left the agency at the end of last year after Transport Minister Phil Twyford ordered a review of the agency's performance, McMullan followed him out the door in March a week before Deloitte was engaged, and neither was interviewed for the resulting report.

Efforts to contact the men for comment were unsuccessful.

A dozen CJS staff took up Deloitte's invitation to share their experiences and interim agency chief executive Mark Ratcliffe praised their courage and integrity.

The State Services Commission is still looking at potential changes to the Protected Disclosures Act which was introduced in 2000 to encourage and support whistleblowers raising the alarm about wrong-doing in the public and private sectors.

The agency confirmed it had received five protected disclosures since 2016, with three investigations completed and two in progress.

One of those disclosures made in May last year sparked an internal enquiry into conflicts of interest involving several United States and New Zealand technology companies.

It looked at McMullan's links to an app development company he set up and later exited before it was paid $250,000 to develop a health and safety app, Zero Harm.

The enquiry found McMullan failed to properly disclose conflicts of interest but there was no evidence that he had an improper relationship or beneficial interest in any of the companies identified and no action was taken.

However, it noted a further 'forensic investigation' may provide greater evidence to support this conclusion, and a separate Deloitte report focussing specifically on the relationship between McMullan and the companies identified by the whistleblower is yet to be completed.

Barclay says there was a lot of anger and frustration from NZTA staff that their work was tarnished by the behaviour of senior management and that protected disclosures had not been better handled in the wake of the Joanne Harrison case.

The former Ministry of Transport manager was jailed in 2017 for a $725,000 fraud years after staff first voiced concerns about her behaviour.

Barclay welcomes Ratcliffe's efforts to clean house but says written policies are just the start. 'If you've got wider cultural issues then sometimes a decent policy can't trump the culture.'

Financial fallout from sorting issues at the NZ Transport Agency problems is mounting. A recent Deloitte report into problems at the agency's high tech team cost $246,465.

Since December the agency has twice updated its protected disclosure policy, clarifying who staff can take their concerns to and expanding its scope to cover serious wrong doing by agency board members.

An agency spokesperson says the latter clause was added because board members interact with staff in many settings.

'The highest standards of behaviour and conduct are expected, and the policy makes it clear the channels a staff member can use to raise concerns when any member of the board is involved.'

Do you know more? contact Amanda.Cropp@stuff.co.nz

Harrison's fraud sparked calls for changes to the Protected Disclosure Act.

The legislation was passed in 2000 to encourage employees in private and public sector workplaces to report serious wrongdoing – everything from corruption and fraud, to gross negligence and conduct posing a serious risk to public health and safety.

Last year the State Services Commission reviewed the act and consulted the public on how to improve the handling of disclosures and support for whistleblowers.

It is now working on policy options for the Government to consider in the next few months.

One option is to establish an independent oversight body to advise, set standards, monitor compliance and gather data to provide a better picture of the size, scale and nature of wrongdoing in workplaces nationally.

Getting a fix on how many disclosures are made is not easy.

The Ministry of Transport accepts confidential disclosures from five Government agencies but refused to release any figures saying it was inappropriate.

'It is critical to the integrity of the protected disclosures process that individuals have complete confidence that the ministry will treat their information confidentially.'

The Ombudsman can investigate and advise on protected disclosures and last year the office received seven requests for guidance and 72 enquiries about how to make disclosures.

The State Services Commission also receives protected disclosures if a public servant is not satisfied a disclosure has been dealt with appropriately, but it says numbers are very small.

As well as internal systems to handle whistleblowing, some organisations also have contracts with external whistle blower hotlines.

A report into the NZTA's innovation group found use of a non-Government accredited cloud service and staff personal devices and email addresses constituted a cyber security risk, making the system susceptible to theft of intellectual property.

Deloitte's hotline service is run by a specialist team in Melbourne, and Wellington partner Lorinda Kelly says it has dozens of private and public sector clients, mostly larger organisations with more than 1000 employees.

She says the firm receives about four to eight disclosures a year per client and numbers tend to rise whenever there is a campaign to inform staff, so publicity is an important driver.

'It's not very helpful having a whistle blower hotline if people don't know it exists.'

Conflicts of interest complaints are relatively common, and very occasionally there are allegations of fraud.

Whistleblowers can remain anonymous and can log back into the system with a code number to check what action has been taken. Kelly says clients are strongly advised to provide feedback.

'Then [people] feel their complaint is being taken seriously.'

Professor of public administration at Victoria University Michael Macaulay is researching whistleblowing in a joint Australia and New Zealand study that has surveyed almost 18,000 people, 2000 of them Kiwis from national and local government agencies.

Researchers found reporting rates in the public and private sectors were very similar and internal reporting was the single most important way of identifying wrongdoing.

Whistleblowers were now frequently regarded in a positive light, but about 40 per cent still were till treated badly by management or colleagues.

Macaulay says people are deterred from speaking up if they don't understand the process or think senior managers will just close ranks and look after each other.

'When people get confused and they're already feeling stressed, they're not likely to come forward and seek out these things on the off chance they're going to get it right.

'People are reluctant because they don't trust the process and they're afraid of the repercussions that might come their way, and very often they're nervous about the power differentials between them and who they are speaking to.'

Macaulay also thinks an external agency to keep track of whistle blowing issues would be worth considering.

'I don't necessarily think an investigating agency would be a good idea because that could just make things very bureaucratic and very difficult.

'But in terms of a monitoring and evaluation agency, as a coordinating mechanism, I think that could be very helpful.'

An earlier version of this story incorrectly stated that whistleblowers who flagged Joanne Harrison's offending to her superiors lost their jobs as a result of their complaint. A subsequent apology from the State Services Commission reflected that they could have remained in their jobs for longer after being made redundant.