Claim start-up made false declaration to Creative NZ before $5.3m contract win

Wednesday, 22 March 2023

Small business network We Are Indigo allegedly misrepresented the position of Crown entity Callaghan Innovation in its bid to win a $5.3 million contract from Creative New Zealand.

But Creative NZ chief executive Stephen Wainwright said it does not believe We Are Indigo “intentionally” shared incorrect information, and the information had “no bearing” on its decision to award it the contract.

“It is not material to our process,” Wainwright said.

Last year, Creative NZ awarded the $5.3m contract to a We Are Indigo-owned business to help supply digital arts services to the arts sector. Separately, We Are Indigo had previously applied for funding from government funding agency Callaghan Innovation, but was declined after a due diligence review.

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It is understood the investigator’s review included several allegations that We Are Indigo used bullying tactics, had business performance issues and failed to pay subcontractors.

But We Are Indigo pointed the finger back at Callaghan Innovation, claiming the investigator had a conflict of interest that should have disqualified him from producing such a significant report.

Last week it was revealed the Office of the Auditor-General is probing the high-profile dispute. Creative NZ said depending on the result of the investigation, it may review its partnership with the start-up.

But Creative NZ also revealed that, during the procurement process for the $5.3m contract, We Are Indigo told it that Callaghan Innovation “accepted there was a conflict [of interest]” regarding the author of the scathing review into We Are Indigo.

Creative NZ later had to update its information, as Callaghan Innovation does not accept there was a conflict of interest.

“It has been clarified that Callaghan Innovation has a different view and that the matter of a conflict of interest is disputed,” Wainwright said.

Creative NZ did not believe it was appropriate to approach Callaghan Innovation for a discussion about the We Are Indigo review “because both the report and Callaghan’s handling of it were (and remain) matters of contention”, Wainwright said.

But Robett Hollis, a critic of We Are Indigo who’s based in the United States, said that showed Creative NZ did not do its proper due diligence before awarding We Are Indigo the contract.

According to the New Zealand Government’s procurement rules, reasons to exclude a supplier from participating in a contract opportunity includes making false declarations.

“Despite now knowing that [We Are Indigo] made false declarations, there’s no consequence,” Hollis said.

“They have relied on [We Are Indigo’s] declarations around the report and not taking any initiative to look into those, even knowing that [We Are Indigo] are likely to be biassed.”

We Are Indigo director Andy Hamilton said it was comfortable with its communication with Creative NZ.

Callaghan Innovation “did not deny” there was a conflict with its review, and therefore it “was and is reasonable for us to state that they accepted the conflict”, Hamilton said.

Callaghan Innovation chief executive Stefan Korn said the review’s author signed a declaration form confirming he had no conflicts of interest.

After the potential conflict was flagged in August last year, Callaghan Innovation investigated the matter but came to the conclusion there was no relevant conflict, Korn said.

The Auditor-General’s review is expected to determine whether a conflict existed, and is broadly supported by all parties.