Five years after the charity Quit Group ceased to function, it continues to pay board members tens of thousands of dollar a year from funds that were not invested in smokefree services.
One of the board members is Chris Cunningham, who recently left his role as chair of the Hepatitis Foundation, after RNZ revealed late last year that he had spent $128,000 on overseas travel on top of lavish dinners at expensive Auckland restaurants.
Quit Group - the charity originally commissioned to run Quitline - stopped operating in 2015.
A trust under the same name was set up to hold more than $3 million of reserves, including more than $400,000 of surplus taxpayer funds it received from the Ministry of Health, which were never spent on smokefree initiatives.
Through an official information response to the Taxpayers' Union, the Ministry of Health revealed it was aware of the reserves built up by the trust but chose not to recoup them.
An audit was done in 2017, which covered the period from 2007 to 2015, "but could not reach any further back due to the limits of records then available,'' the ministry said.
The audit found $435,700 of surplus Ministry of Health funds paid to the trust, which the trust disputed.
"Following negotiations the ministry and the trust reached agreement in December 2017 that the ministry would not attempt to recoup the funds, but the trust would reinvest them,'' the ministry said in its OIA response.
RNZ approached the Ministry of Health for further comment but a spokesperson said nobody was available for an interview.
According to the Quit Group's latest financial statements the board still has assets totalling $2,726,737, down from $3,164,394 in 2016.
While no staff work for the trust it continues to gain investment income and has paid out $702,296 since 2016.
That includes paying itself $72,000 per year - or $18,000 per board member - travel expenses, legal fees and IT costs and maintenance.
The trust has also invested in several smokefree initiatives since 2015.
In its 2019 annual report it noted, "the trust will remain in operation and ongoing costs will be met from these reserves for at least 12 months after the authorisation date of these financial statements, or until a decision is reached as to how to disburse these funds.''
RNZ has approached Chris Cunningham for comment about his involvement in both the Quit Group and the Hepatitis Foundation - he remains a board member for both - but he has not responded to requests.
The Quit Group's four board members are Cunningham, Janet Pearson, Mary McCulloch, and Annette Milligan.
In its OIA response, the ministry said it has a work programme ready on reducing smoking among Māori and would be in discussion with the trust about how best to use the surplus funds.
It would not be referring the group to Charities Services - the regulator - because the ministry was in discussion with the charity.
Taxpayers' Union campaign manager Louis Houlbrooke said "this beggars belief''.
"The ministry has already let this group off the hook for four years.
"It's an insult to the ailing New Zealanders who desperately need anti-smoking support and other core health services,'' he said.
The ministry said it had provided the trust with some options for spending the reserves, but accepts how the money is spent is at the discretion of the trust.
"The ministry also acknowledges the length of time that has passed between agreeing to the reinvestment of surplus health funds and that happening.''
"The ministry is aware that the trust's operating costs are continuing to eat into its reserves and as such we will encourage the trust to commit to spending its reserves, including the $435,700 of identified surplus health funding, in a timely and appropriate manner,'' the ministry said.
Houlbrooke said the Health Minister needed to step in and refer the trust to Charities Services so the funding could be recouped.