Regional Economic Development Minister Shane Jones has been cleared over his handling of a conflict of interest but he did confuse the situation, the Auditor-General says.
ACT Leader David Seymour lodged a complaint after it was revealed Shane Jones attended a ministerial meeting in February at which millions of dollars were awarded to Manea, Footprints of Kupe, a proposed cultural centre in Northland.
Mr Jones had previously declared a conflict of interest in the project.
According to an email exchange between officials, during the meeting Finance Minister Grant Robertson expressed concerns about the structure of the project.
The email states Mr Jones provided "reassurance that as the projected has Far North Holdings LTD, a commercial arm of the Far North District Council, involved in the governance structures, he was comfortable their presence would alleviate any concerns on this issue".
Mr Seymour claimed Mr Jones' presence in the meeting was inappropriate and he played a "decisive role" in allocating the project's funding.
However in a letter to Mr Seymour, Auditor-General John Ryan said Mr Jones "acted appropriately" by declaring an interest, and that the conflict was managed appropriately, with his decision-making responsibilities being transferred to his ministerial collegues.
Mr Ryan said the Cabinet Manual guidelines "do not necessarily require a minister with a conflict to leave the room" when the issue is being discussed, and they also don't automatically prohibit a minister from participating in the discussion.
However, he went on to question Jones' management of the meeting.
"In our view, having declared an interest, it might have been better for him not to confuse the situation by expressing a view on the Manea project when it came up for discussion.
"Alternatively, if he was going to express a view, it would have been better if a record had been kept...explaining why he was taking part in the discussion ...[and] confirming that his ministerial colleagues had agreed or asked him to participate, notwithstanding his conflict of interest", he wrote.
However Mr Ryan concluded that overall the exchange between Mr Robertson and Mr Jones did not raise any significant concerns about the decision making process.
He also noted that by the time of the 12 February 2018 meeting, three of the four Ministers whose approval was required had already approved the grant, based solely on a briefing from MBIE officials.
In a statement Mr Seymour said Mr Jones had a "chequered history" in relation to the Manea project.
"In the past he has said he had no relationship, but declared a conflict of interest upon becoming a Minister.
"Despite that conflict of interest, he was interested enough to speak up for the project in a meeting where funding it was being discussed.
"No doubt he will now downplay his association again."
"The idea that millions of dollars of taxpayer funding can be allocated with ministers who have a conflict of interest playing a decisive role makes a mockery of the prime minister's claim to be running the most open and transparent government in New Zealand's history", he said.
Mr Jones has yet to respond to request for comment.