• Wellington Water’s report reveals alleged theft, poor contractor value, and structural issues.
• The company needs $37.5 million to fix end-of-life IT systems over three years.
• Board chairman Nick Leggett apologised and promised improvements, citing unacceptable findings and higher costs.

By Nick James of RNZ

Wellington Water has released a scathing report, after a probe uncovered alleged theft, poor value for money from contractors and structural issues.

Last month, the water provider told Wellington City Council it would need $37.5 million from its shareholding councils over the next three years, largely to fix its end-of-life IT systems.

At the time, the water entity’s chief executive Pat Dougherty said their top priorities for improvement were its structure, IT and value for money from contractors and consultants.

On Monday, a report released by the organisation, detailing the amounts being charged by contractors and suppliers, showed the level of control was not in place to ensure proper oversight and prudent financial management.

Board chairman Nick Leggett said they took the issues very seriously, and investigated.

“Our investigations also confirmed a lack of oversight, assurance, and weak financial processes and controls around how the company manages its consultants and contractors, which opens us up to risks around fraud. This had to be changed immediately, and we have done so.”

The report also identified one “incident of alleged theft”.

“The person responsible no longer works for us and the matter is now in the hands of the police,” Leggett said.

He said the water provider compared the amounts it was paying contractors for maintenance and running of the network to what they had charged other councils around the country.

“In most cases we are consistently more expensive than other comparable councils, particularly for drinking water and wastewater assets.

“These higher costs are likely to be a symptom of our contractual set up with suppliers and our lack of oversight, assurance and financial controls and processes.”

He said the findings were unacceptable to the board, and to councils and ratepayers.

“We unreservedly apologise to our shareholding councils and the ratepayers of the Wellington region for these issues,” he said.

“Everyone expects and deserves better.”

He said while the investigations were under way, they had made improvements – including reassessing contracts and key performance indicators (KPIs).

It comes after a report released last year which found Wellington Water staff took four months to tell the region’s councils about an error in budgeting advice, which left the councils with a bill of $51m over three years.

This previous report was critical about the organisation, calling it immature, with inadequate systems and processes, and a dysfunctional culture.