12 Jul 2019

Ex-NZTA boss faulted over innovation unit's 'extensive disregard' for processes

2:40 pm on 12 July 2019

The former boss of the New Zealand Transport Agency's (NZTA) high-tech innovation arm has been heavily criticised in an independent report looking into his work.

Martin McMullan

Martin McMullan Photo: Supplied

Compiled by Deloitte, the report said the Connected Journey Solutions business group, led by Martin McMullan, had "an extensive disregard of proper processes for business, finance, governance, procurement and staffing".

It said that was "largely as a result of the leadership of [Mr McMullan], and the relationship between [Mr McMullan] and the former chief executive [Fergus Gammie]."

Mr McMullan, who was being paid more than $150,000 a year, quit his job in March.

He had already been the subject of an internal investigation.

The Connected Journey Solutions business group was established in July 2017 and was tasked with the development of innovative technology.

In under two years, Mr McMullan oversaw an expansion from eight full-time employees to about 100 staff, 83 of whom were either fixed-term or contractors.

Martin McMullan

Martin McMullan Photo: Supplied.

The Deloitte report offered 14 key findings, starting with concern over the bypassing of NZTA governance and controls, including the way staff were hired.

"Interviewees described various instances where standard corporate processes were "bypassed" to achieve desired results quickly and without challenge.

"Documents reviewed supported this with instances of recruitment of employees outside of recommended recruitment processes and the procurement of vendors without the consistent application of NZTA rules."

Deloitte said the hiring of contractors and fixed-term staff gave little certainty for long-term projects.

It also found Mr McMullan drew on his technology contacts in California when hiring contractors, and he was not receptive to questioning of pay rates.

"The director pushed back when challenged on the high hourly rates paid to certain contractors in leadership positions, citing the risk to particular projects if the contract was not rolled over," the reporter said.

Deloitte found the group had lax financial governance.

It said Mr McMullan side-stepped NZTA processes to obtain results and move ahead with initiatives.

The interim chief executive of the Transport Agency, Mark Ratcliffe, said the report showed failings within Mr McMullan's team, which were unacceptable.

"The report makes it clear there was a lack of adequate oversight over this group and the processes weren't followed," Mr Ratcliffe said.

"The work is now being managed by a group where I have confidence in the leadership of that team to follow all appropriate processes, and this will not be happening again."

Mr Ratcliffe said he became concerned with the performance of the CJS group when he started his job in mid-January.

"The first thing I saw was a business case that said that the project was likely to cost more money than had originally been budgeted for, and so I started to dig into it a bit."

Figures obtained by RNZ under the Official Information Act show Mr McMullan racked up $38,772 worth of travel during his time in charge of the CJS group.

That included a six-day trip to San Francisco in July last year, in which he spent nearly $1179.50 a night to stay at the Stanford Court Renaissance hotel.

The only room at the hotel in that price range is the Enterprise Parlor Suite.

Former NZTA boss Fergus Gammie signed off on the travel expenses, but Mr Ratcliffe said that spending was extreme and unacceptable.

NZTA chief executive Fergus Gammie, Transport Minister Phil Twyford and NZTA board chair Michael Stiassny at the announcement on a review of  vehicle certifications.

Fergus Gammie Photo: RNZ / Jo Moir

"Silicon Valley is the home of most of the more innovative things that are going on in IT, and I think it's quite understandable that a senior executive would visit there," Mr Ratcliffe said.

"What I don't find acceptable is spending $1100 a night for a hotel room."

Mr Ratcliffe said NZTA would enact all of the recommendations of the Deloitte report.

The CJS has been merged with other parts of NZTA.