Central Otago Councillor Faces Allegations of Invoice Misconduct

The Central Otago District Council is under scrutiny following allegations against newly elected councillor Dave McKenzie regarding the alteration of invoices from DM Property Solutions Ltd. These allegations stem from a legal inquiry initiated in March 2018, which revealed that an additional $1,000 was added to an invoice submitted by the company, run by McKenzie. The council’s decision to release the legal advice from that inquiry has brought renewed attention to the matter.

In a social media post on September 24, 2023, Rachel Kerr, the widow of the council’s property and facilities manager Mike Kerr, claimed that McKenzie had manipulated contractors’ invoices for personal gain. In response, McKenzie issued a detailed public statement acknowledging his mistakes but asserting that both parties contributed to the situation. He emphasized his commitment to serving as a councillor, despite the controversy surrounding him.

An audit report presented to the council’s Audit and Risk Committee in March 2019 revealed significant irregularities in DM Property Solutions’ invoicing practices. According to the report authored by then planning and environment executive manager Louise van der Voort, DM’s contract with the council was terminated after it was discovered that 14 out of 17 subcontractor invoices had been altered. While the total of the original invoices amounted to $4,754.08, the council ended up paying $6,464.06, resulting in an overcharge of $1,709.98 or 35.9%.

Legal advice from Anderson Lloyd in October 2018 indicated that the ambiguous contractual situation made it challenging to classify DM’s actions as fraud. The firm suggested that the lack of a formal contract complicated any potential legal action and deemed the matter a civil rather than a criminal issue. The report highlighted concerns that pursuing further investigations, such as hiring a forensic accountant, might not be a prudent use of council funds.

In his statement, council chief executive Peter Kelly noted that after the initial inquiry, the council did not pursue the matter further. He stated that improvements to procurement processes have been implemented since the incident. “A procurement audit was carried out in 2022 that has reinforced policies and processes to minimize misunderstandings between the council and its contractors,” Kelly remarked.

As the council navigates these allegations, a thorough review of the 2018 investigation is currently underway, with findings expected to be shared publicly. The outcome of this review could have implications not only for McKenzie but also for the council’s operations and oversight practices going forward.