Capital and Coast District Health Board is being criticised by iwi for failing to pick up earlier on financial irregularities at a Maori health service.
The Maori trust board is being investigated over reports it may have mis-used health board funding.
Capital and Coast DHB says it has suspended some contracts with the Waikanae-based runanga until it can account for $590,000.
The new chairman of Te Runanga O Te Ati Awa Ki Whakarongota says the health board did not identify glaring financial irregularities.
Richard Orzecki alerted the DHB and police about financial anomalies last year. He says large amounts of money were transferred to the runanga executive and charitable trust, and to support a now failed business venture involving a cafe and gift shop.
Mr Orzecki says when he raised his concerns, the DHB put it down to naivety and poor governance.
He says the district health board must take some of the blame for failing to spot the problems in earlier audits.
However, the DHB's director of planning and funding, Sandra Williams, says an audit in 2009 showed the runanga's health service, Hora Te Pai, was delivering the services for which it was contracted.
Subsequent information has revealed not all the money was spent on health services and the DHB has asked for it back.
Ms Williams says the DHB has put arrangements in place to ensure health services are not affected. Funding is being managed by a primary health organisation.
