The Ministry of Health spent over half a million dollars on a P Rehab contract before pulling the pin because there were no results or progress reports.
The programme ended up being run by a community trust set up to help the marginalised, including gangs, despite having been pitched as a joint service with the Salvation Army, and announced by former Prime Minister John Key as being funded through that church.
Its contract was modelled on an earlier successful programme run by the Salvation Army in collaboration with gang members after a chapter’s leaders had asked for help in dealing with addiction issues.
But in this case, the Army stepped aside when it felt unwanted and shut out before the contract was let.
The contract with the Consultancy, Advocacy and Research Trust (CART) was for $800,000 over two years and payments started in May 2017 in instalments of $33,000 a month.
Concerns were later raised by Ministry of Health officials as progress reports were not delivered and an evaluation questioned how effectively the money was being spent.
In documents obtained by Newsroom after appealing to the Ombudsman’s office, health officials spoke of the CART programme having failed to attract any clients, of no reporting on where funds had been spent, concerns over payments to trust board directors and the described combative meetings and legal letters from the trust.
Although CART had received $533,000 by late 2018, a health official’s email in January 2019 said the ministry did not have “sufficient evidence to say whether or not they have delivered any services at all over the course of the contract”.
The contract was cancelled and there was talk of trying to recover some of the money, but a ministry evaluation seen by Newsroom does not say how many people were helped with their P addiction issues or how so much money could have been spent with so little reporting or accountability.
Good money out of bad
The contract had been announced in a press release from John Key’s office in October 2016 as part of a wider approach to drug rehabilitation. It was one of 15 initiatives costing $15 million in total. The funding would come from money recovered under the Criminal Proceeds (Recovery) Act, which confiscated assets bought with drug dealing.
CART became involved after the previous Salvation Army programme caught the attention of a number of people, including trust board member Denis O’Reilly, a self-described life member of Black Power. CART had originally been established to help marginalised communities, including gangs.
The earlier anti-addiction programme designed and managed by the Salvation Army but led largely by gang leadership, had helped 90 individuals.
The Salvation Army’s Ian Hutson told Newsroom that earlier programme “came back showing really good results”.
An evaluation of it found: “The camps have a 94 percent completion rate, which is impressively high when compared with other residential AOD rehabilitation programmes.
“A total 92 percent were not using methamphetamine six months post-camp. This proportion reduced to 62 percent at 12 months and 55 percent at over three years post-camp.”
When the next funding became available, staff at CART did some initial work on a proposal with Cathy Milne-Rodrigues, who at the time worked at Wellington Salvation Army. There seemed to be a relationship and collaboration developing, but a few months in, things went quiet. The next the Salvation Army knew, the contract was being announced by Key.
This was from a different pot of money than the previous contract the army had won under the Ministry of Health.
Key said: “We are now dealing with a hard-core group of users struggling to kick the habit. So we are focusing more on them by investing a total of $8.7 million in health-related initiatives, including treatment facilities, as well as funding more innovative ways for police to work with health services to reduce demand.”
O’Reilly says CART was as surprised by the announcement as the Salvation Army.
“CART never applied for the $800,000 from Proceeds of Crime. We had a much more modest idea. The announcement of the funding came as a surprise to the board. There was no prior consultation.”
But the $800,000 contract announced by the PM was only listed as going to the Salvation Army – there was no mention of CART in the press release. This turned out to be the opposite of what happened. Before the contract was signed, the army had been sidelined and CART took control.
It was signed on May 24, 2017 by John Wareham, chairman of CART and an American motivational speaker. There was no signature from anyone for the Salvation Army.
The week after Key’s office announced the contract, Eugene Ryder – a close associate of Denis O’Reilly, a CART board member and life member of Black Power – emailed Peter Kennerley at the Ministry of Health to seek clarification on who would hold the contract – CART or the Salvation Army.
“It was a little confusing but eventually great news to hear that resources have been allocated to the Whakatika Ora Proposal. I am sure you will be fielding more questions in relation to this, given the announcement made about the funding being directed to the Salvation Anny, Wellington. For clarity I wonder if you can confirm some things?
“Which organisation will be holding the contract, CART or Salvation Army? What are next steps in regards to said funding? Is there an intended timeline covering all aspects of this contract including [evaluation] and indication of continued funding?
“I have met with Salvation Army since the announcement and they too are happy about this but are still to clarify exactly what detail there is in relation to contract holder etc.
“Anyway, as l mentioned during a conversation, it is clear that more lives will be saved as a result of this funding, and that is exciting!”
Kennerley replied: “The proposal accepted by the Prime Minister was exactly the one developed by CART and Salvation Army, as presented to the Ministry of Health. I think it would be useful for the parties to meet this week to discuss next steps. Depending on some formalities that I need to get through here at the Ministry, I would be looking to have a contract with the lead agency by December 1, 2016.”
However, the contract that was signed by MoH was not the same one developed jointly by CART and the salvationists.
Milne-Rodrigues from Wellington Salvation Army contacted O’Reilly in March 2017 asking for a meeting “… to discuss and develop an improved understanding of moving forward with Whakatika Ora (contract) and planning.” O’Reilly agreed to the meeting and Milne-Rodrigues asked for information before the meeting as the programme “needs to be signed off with Lynette Hutson and Governance Board of Salvation Army”.
But at the meeting Ian Hutson got the distinct impression that CART wanted to go it alone. A second meeting was held with ministry staff present and the impression became reality – Hutson says Eugene Ryder made it clear that CART didn’t want to work with the Salvation Army. Hutson raised questions around accountability and management of the funds, arguing that the Salvation Army had robust processes in place to manage the financial side of the operation.
Eventually, the Salvation Army could see that it wasn’t welcome, but was concerned about any reputational risk in being associated with something it had no ability on which to exercise oversight. A decision was made to cut ties to the contract. On May 16, 2017, the Salvation Army’s national director, Lynette Hutson, sent a letter to Bill English, who by then was Prime Minister after Key’s resignation, disavowing any connection with the contract.
Dear Prime Minister
I am writing in relation to a recent funding grant announced to The Salvation Army in South Wellington to deliver a methamphetamine addictions programme.
The funding proposal was submitted through the Proceeds of Crime Funding Round by CART (Community Advocacy and Research Trust) and their stated intention was to work in partnership with The Salvation Army on this initiative.
I would like to clarify that this funding proposal was submitted without our knowledge and The Salvation Army is not now any part of the design or process of this service.
We had engaged in some preliminary co-design work for a possible service but what has evolved bears no resemblance to the original proposal. Previously we have engaged in a co-design process with Maori where a genuine partnership has been developed and respect and trust built over time. This has not happened in this case.
The public announcement of funding named The Salvation Army and the dollar value of the grant. On learning of this we were initially confused as to how this came about, but met with CART to discuss and investigate how we could proceed.
As discussions progressed it became obvious that partnership was not their preference. For that reason we amended our offer of engagement to a clinical assessment and referral process on a ‘fee for service basis’ as CART do not have the clinical expertise to undertake these functions.
The Salvation Army Addictions, Supportive Accommodation and Reintegration Services deliver high quality outcomes with marginalised and hard to reach communities. We do this by having strong systems, policies and a quality framework which all assist to manage and mitigate risk. The situation with this funding grant and CART causes us concern as it has created an impression that we are connected to this initiative and this is not the case.
Because this presents a reputational risk we wish to clarify this matter. Should you require any further information we will be glad to provide it.
Yours sincerely
Lt Colonel Lynette Hutson
National Director
O’Reilly remembers the negotiations with the Salvation Army differently and says in hindsight the funding should have stayed with the Salvation Army.
“Stuart Day, a highly qualified governance specialist conducted negotiations with the Salvation Army. CART was keen to be able to refer clients who needed clinical support (The Bridge) or residential treatment. The Salvationists were unwilling to come to an MOU and withdrew of their own accord.
“The Wakatika Ora contract was a cut and paste affair and was not fit for purpose. It required a “Level One” mental health and addiction clinical capacity and capability. CART has never been or wanted to be a clinical service and herein lies the rub. On reflection the funding should simply have been given directly to the Salvation Army – and that seems to have been the underlying intent anyway.”
Despite the Salvation Army clearly distancing itself from the programme and receiving none of the funding attached to it, when an evaluation raised issues in almost two years later, in February 2019, CART manager Susan Turner told the ministry the army had made the relationship between the two parties untenable by seeking the detox funding and not being willing to work with CART “in the full scope of the service”.
She also suggested there were issues at CART with inexperience and understanding of the contract, causing a distraction to the board which led to the ministry not being notified “of significant risks” to the performance of the contract.
However the claims of inexperience and distraction of the board don’t match either the documents or the accounts of those who have worked with CART. O’Reilly and Wareham had regularly touted their experience and knowledge of dealing with gangs.
Alarms going off at the health ministry
There had been some attempt to instil accountability early on. The ministry’s Peter Kennerley had emailed CART board member Stuart Day in late January 2017 saying the contract would allow for approximately four full-time equivalent staff and associated operational costs. He also asked about adding a section to the contract regarding governance, floating the idea of a governance group to provide oversight of the project. “This doesn’t need to be too detailed but will reinforce joint collaborative approach and risk management.”
Denis O’Reilly sent Kennerley a voluble email in February 2017: “Well the new year has hardly started and the action thermometer is already heading towards high…I think one of the problems with the Waka Tika Ora initiative has been the square peg of contractual compliance with the round hole of community reality.”
He then referred to John Wareham, an American motivational speaker, who is also the chairman of the board – “I’m convinced what John is offering is the missing magic ingredient, albeit still necessarily buttressed by the programme of physical exercise, cultural uplift, and the development of marketable skills, as well as the ability to refer individuals to conventional treatment as and when required….
“I’m an impatient old bugger and have been frustrated by the slow start in practically implementing the project but I agree that we have to get it right over a number of dimensions, administratively, compliance practice wise, participant recruitment and follow through.”
If O’Reilly was expressing frustration at the slow progress, he wasn’t the only one. Florence Leota, a senior advisor at the health ministry, was not only questioning the pace of progress but also the lack of any evidence of progress. And she and others were beginning to document their concerns.
In an email to CART’s acting manager in December 2017, Leota lays out the different phases of the contract and asks how many people had been engaged in each. In an internal memo, Leota notes: “The number of clients that have used the services (three clients since May 2017).” She also noted conflicts of interest with governance members being paid to run workshops for the organisation. One of those was the chairman, Wareham.
In December 2017 the ministry’s Kennerley and Leota met CART staff and Wareham. They requested a meeting with the full CART board to inform members of their concerns and seek reassurances that the contract could be delivered.
During the meeting they were made aware of two board members being paid $22,000 for conducting a workshop. “There was only one attendee at the workshop. We also noted that the workshop may not have been fit-for-purpose in terms of the expectations for this phase of the programme.”
Two days after the meeting MoH received an email from John Wareham “outlining their justification for board members being paid to run the workshops and their concern that the issue was raised in the first place and that Florence was to be cautioned.”
In early 2018 there was an exodus of staff from CART including the clinical manager and the acting manager, which left virtually no one to run the contract.
In January 2018 Leota emailed the ministry’s lawyers about the CART contract: “In our last two follow-up meetings we have become increasingly concerned around the delivery of services and the lack of reporting that is part of their contract… Your advice on how to proceed would be welcomed, specifically the issue of the board commissioning board members to be paid for delivering a work-shop (raised in a letter from John Wareham) and any other issues you believe we should be aware of.”
By the time Leota raised the alarm the Ministry had paid over $300,000.
In February 2018, Leota sent a lengthy email to Richard Taylor, a manager at the ministry responsible for addiction treatment, outlining the timeline of events and concerns about the CART contract.
Leota mentioned the three-monthly report due in August 2017 had not been received. A progress meeting had been held the next month where the ministry highlighted the lack of reporting and “the need to step up the work as they did not appear to have attracted any clients.” The ministry agreed to accept a late report for a six-month period, by the end of October. “The report was not received.”
After a March 2018 meeting, Peter Kennerley emailed a number of other ministry staff: “The meeting itself was difficult and combative.”
Throughout the next couple of months there are discussions within the ministry about the dates and scope of an evaluation of the CART contract. At one point the ministry receives a legal letter from Rebecca Scott, who works with Hugh Rennie QC at Harbour Chambers, acting on behalf of CART. One health official comments drily in an email exchange: “Interesting choice of lawyers for what is a minor matter.”
Eventually the ministry considers terminating the contract, clawing back funding, and not paying further invoices from CART.
By November 2018, the trust had received $533,000 in funding.
By March 2019 the contract was dead in the water.
Ministry official Peter Kennerley emailed colleagues: “I had a call this morning from Denis to advise me that the chair of CART, John Wareham, will be standing down from the board this Friday and that Denis will be acting chair until a new person can be found. Denis had a fair and frank view of how things have been within the organisation. We have received a letter drafted by Health Legal regarding the termination of the contract and revenue recovery.”
Inquiries for this story first requested the ministry’s documents on the CART contract under the Official Information Act in early 2018. While some material was made available, the evaluation report – referred to numerous times in and visible as an attachment in several emails – was not released. Only two years later, after a complaint to the Ombudsman, was the audit report and signed contract provided. The OIA requires agencies to respond to requests within 20 working days but a number of other documents sought have yet to be released, including a timeline document that is visible as an attachment in one email.
In email discussions there is mention of three people going through the programme. But O’Reilly says while there were problems in the initial set-up, the programme did achieve significant results.
“A significant number of people went through the Wakatika Ora effort. As the programme was being developed and operationalised in 2017 Eugene Ryder worked successfully with 14 clients. In this period the Wakatika Ora Kaupapa was presented to 104 people over six hui from Frasertown across to Taranaki, down to Wellington and back up to Hawkes Bay.
One person went through the “Taking Wings” component of the Wakatika Ora programme. My most recent information of this individual is that he is currently eight weeks clean. Further, to the best of my knowledge, and based on the information supplied to me by the then manager, as at 31 December 2018, CART had supplied specific Wakatika Ora methamphetamine addiction recovery services to 16 clients, supported 136 whānau members and provided 5,125 hours of support. By June 2019 numbers were 35 clients, 346 whānau members, 7,937 hours of intervention and 700 hours of counselling supplied.”
O’Reilly says the evaluations of the contract did not include important information.
“We had two MoH audits. An earlier one by TAS, which showed up system deficiencies but acceptable outcomes, and then the Wakatika ora financial audit. This audit should have been supported by a performance audit which we would have welcomed. As it turned out the decision to stop funding was based on non-performance (even though a remedial plan was in place). The fiscal auditor reported to his boss that he wasn’t competent to make performance related comments but his boss insisted that he include a note that that we didn’t have a clinical psychologist on board and thus were in breach of contract. We weren’t a clinical service so this makes no sense at all.”
O’Reilly bears no ill-will towards the Salvation Army and says they will refer people to the church’s services when they think it’s the best fit. Despite the difficulties the contract encountered he says CART did its best under the circumstances and drew on other funds to carry on the work when MoH cut off payments.
“I am fiercely proud of our team’s achievements over these past two years,” he says.
While the earlier, successful Salvation Army contract had been evaluated, the CART contract was not independently done, just reviewed by the ministry itself. As O’Reilly says, there are no measures taken on the numbers who went through the programme.
The ministry evaluation says systems were inadequate in the past but have now been addressed. There is no resolution to the concerns raised by staff when the contract was failing.
