26 Nov 2019

Hepatitis Foundation's excessive spending 'unacceptable' - Minister

8:01 pm on 26 November 2019

The Health Minister says the findings of extravagant spending against the chairperson and trustees of the Hepatitis Foundation are unacceptable.

David Clark

Health Minister David Clark. Photo: RNZ / Dom Thomas

The Foundation and key government agencies are refusing to front over a damning report from the regulator, Charities Services.

Those findings have been kept secret for more than a year - until RNZ revealed them today.

The Foundation's received millions of taxpayer dollars through the Health Ministry.

The man who set up the Hepatitis Foundation is appalled by the chairperson's extravagant expenses and the time it's taken for an investigation to be made public.

It was Sandy Milne's complaint that led to a two-year investigation by the Charities Services.

"I'm ashamed that so-called health professionals could be party to this use of public money and in my view they've been neglecting patients,'' he said.

The Hepatitis Foundation spent more than $128,000 on travel for its board chairperson, Chris Cunningham, in just over two years and paid for lavish dinners at top Auckland restaurants.

It also could not account for thousands of dollars of credit card expenses.

Mr Milne said it's unacceptable behaviour.

"That's the thing that bothers me, they've been hiding money and dipping their snouts in the troughs.''

Mr Milne said the Hepatitis Foundation ran on the smell of an oily rag in its early years.

"I made the money stretch, then I see that this guy spent $15,500 on one trip that he didn't need to go on anyway. I'm incensed actually,'' Mr Milne said.

Health Minister David Clark said the extravagant expenses uncovered by an investigation into the Foundation were concerning.

But he declined to comment on whether Mr Cunningham - who's still the board chair - should keep his position.

It "was concerning" what the Charities Services report had concluded, said the minister.

"It's before our term of government but that doesn't mean anything, the need to respond is still there."

He understood the Foundation had "undertaken to do things quite differently" as a result of the investigations and the Foundation would now be subject to a Health Ministry audit.

But Mr Clark referred any question about the position of the board chair to the Ministry as it was involved in the "direct supervision of the organisation".

"My understanding is the organisation has turned itself around somewhat and is absolutely committed to doing the right thing in the future and I think that's the most important thing", he told reporters.

The report was completed more than a year ago and while the senior investigator recommended it was published on the Charities Services website, the regulator (which falls under the remit of the Department of Internal Affairs) chose not to.

Mr Clark suggested it had not been made public because of due process.

The regulator, Charities Services, is satisfied the Foundation has strengthened its governance and tightened its spending policies, so it didn't refer the charity for deregistration.

Former chief executive John Hornell left the Foundation in 2015 after 18 years - 13 of those as chief executive.

Mr Hornell attended the dinners in question, saying he always felt uncomfortable about them, but never refused to go.

He described them as extravagant dinners at fancy restaurants, costing thousands of dollars.

Mr Hornell said the regulator has massively let down taxpayers, and in particular the Hepatitis community.

"The Hepatitis B and Hepatitis C community have been let down badly because of this, they should have known well before this, they should have known where the money that was received from the ministry for their care went,'' he said.

Mr Hornell doesn't think the report is an accurate account of what went on.

As for Professor Cunningham, Mr Hornell has a message for him too.

"It's a bit of a cop out and I think if Chris Cunningham has got any mana he would resign as chairman of the board given his behaviour over the last few years,'' he said.

Professor Cunningham didn't respond to calls from RNZ and the Hepatitis Foundation declined to be interviewed.

In a statement, Deputy Director-General population health and prevention Deborah Woodley said: "The ministry will be formally writing to the Hepatitis Foundation to both express directly our concern and disappointment, and also to restate our expectations of appropriate expenditure controls, management and governance of organisations contracting for services with the Ministry of Health."

She said the ministry would also be formally advising the foundation that it would be conducting a follow-up audit next year "to provide assurance that these new policies and processes the foundation has now put in place have prevented similar issues occurring".

"Having said that, the ministry accepts that responsibility for managing its own affairs, including its leadership, sits with the Hepatitis Foundation."

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