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Clark accused of cronyism over Pharmac appointment

David Clark is faced with allegations of cronyism after appointing former Labour MP Steve Maharey chair of Pharmac against the advice of officials and without interviewing other candidates, Thomas Coughlan reports.

Steve Maharey, former Labour MP and ex-Education Minister was appointed Pharmac chair on August 1 to little fanfare.

But questions are now being raised about his appointment after it emerged Health Minister David Clark went against the advice of officials in appointing Maharey.

Documents released under the Official Information Act to the No Right Turn website show the Ministry of Health advised reappointing existing chair Stuart McLauchlan for a fourth term.

A report from 3 May 2018 advised Clark, “the Ministry considers sound reasons exist that support the reappointment of Mr McLauchlan”.

“Pharmac is taking on new roles that will have a significant impact on the health sector… They will require Pharmac to develop new capabilities to carry out these new roles,” the briefing said.

It went on to say: “Mr McLauchlan has performed well as the chair and it is advisable to provide for continuity during this period of expansion of Pharmac’s role. This is particularly so, given that a new chief executive has recently been appointed”.

It went on to recommend McLauchlan be reappointed for a further term of three years or, if Clark wished to change the chair, to reappoint him for just one year, while a replacement chair was sourced.

“While Mr McLauchlan will remain in office after his term expires, reappointment for a year will provide certainty for both Pharmac and Mr McLauchlan,” it said.

“Cronyism at its worst”

But Clark chose neither option. Instead, he informed McLauchlan that he would not be reappointed, and elevated Maharey to the board.

Opposition health spokesperson Michael Woodhouse said the move was “appalling,” and raised questions about the process involved.

While Clark had the right to appoint Maharey, he went against guidelines from the State Services Commission, which advises a position description be filled out and a wide-pool of applicants be sought before appointing board members.

A workflow for appointment processes from the Department of Prime Minister and Cabinet shows that the general procedure is to identify required skills and “call for nominations”.

Instead, a statement from Clark said the position “was not publicly advertised, which is within the Board Appointments and Induction Guidelines from the State Services Commission”.

Clark told Newsroom the appointment “followed the standard process for Board chairs and was signed off by the Cabinet”.

“He is more than qualified for the governance role at Pharmac”.

But Woodhouse said the process raised issues of cronyism.

“David Clark’s appalling move to remove the previous chair and appoint a former Labour MP to the role, all with no position description, no application process, interview, or any other input into the decision is cronyism at its worst,” Woodhouse said.

He said the appointment would undermine Pharmac’s independence.

“It will cast doubt on the chair’s future decisions and raise questions about the Government's influence on Pharmac throughout his term.”

A history of political appointments

New Zealand has a history of politicised health appointments.

McLauchlan, who hails from Dunedin like Clark, was appointed as Pharmac deputy chair in 2009 by National’s Health Minister Tony Ryall. He was then elevated to chair in 2010, replacing Richard Waddell who was appointed under the previous Labour Government in 2001.

McLauchlan is the director of several Dunedin-based companies including Dunedin international airport. Ryall also appointed him Crown monitor of Southern District Health Board, a role that saw him overseeing the DHB as it returned to surplus.

In the early years of the last National Government, Ryall cleared out Labour’s appointees on District Health Boards.