Monday, April 19, 2010

This stinks

The Sunday Star-Times yesterday had a disturbing story about EECA's Renewable Heating for Schools project. The project replaces dirty coal-fired school boilers with clean wood-pellet ones, in an effort to improve efficiency and reduce greenhouse gas emissions. But the person administering the scheme had a substantial shareholding in a company which installed such boilers - which just happened 6 of the 7 contracts [Link to PressDisplay because the story isn't on Stuff yet]:

Maharaj was also a director and 10% shareholder of Living Energy, a company he co-founded in 2003 to provide wood-fired heating systems to the private and public sectors. Although he resigned his directorship in January 2007, Maharaj maintained his shareholding in the company.

According to its website, Living Energy has since installed six of the seven new wood-chip boilers funded under the EECA scheme – contracts worth about $2m.

EECA chief executive Mike Underhill told the Star-Times Maharaj had disclosed his interest in Living Energy at the time of his appointment, but was nevertheless allowed to lead the team administering the grants and to review proposals from rival firms.

This seems to have been the result of a screwup, and when EECA noticed, they ended his involvement and investigated his past deals - which found "no evidence to indicate that appointment of the contractors and the allocation of the schools to the appointed contractors was influenced by the identified conflict of interest". That may in fact have been the case, but the problem is that no-one will believe it (after all, "independent" business consultants say whatever you pay them to say, and everyone knows it). It is not enough for everything to be above-board - everything must be seen to be above-board. And EECA has failed spectacularly on that measure.

But they're not the only ones. It ought to be obvious to anyone with any understanding of the above principle that in a case like this, mere disclosure of a conflict is not enough. An ethical person in Maharaj's position should have either taken positive steps to eliminate the conflict, or said "I can not do this". He did neither. I for one expect higher standards from our public service.