The Ministry of Transport's former boss gave Joanne Harrison the benefit of the doubt on eight occasions while she was in the process of stealing hundreds of thousands of dollars.

Photo: RNZ / Kim Baker Wilson

It was also confirmed to MPs today that Harrison played a key role in restructuring out of the organisation the very staff who were raising red flags about her.

But the ministry's new chief executive, Peter Mersi, said he would not be holding an inquiry into that.

Photo: RNZ / Benedict Collins

Harrison was jailed for three years and seven months in February after she stole nearly $750,000 from the Ministry of Transport.

She created fake companies and invoiced the ministry many times between 2012 and 2016.

Over three years, ministry staff repeatedly raised concerns about Harrison's invoicing and contracts with then-CEO Martin Matthews - who is now the Auditor-General.

At a select committee this morning, Labour transport spokesperson Sue Moroney asked Mr Mersi why Mr Matthews did not act on those concerns.

Mr Mersi replied: "The responses that Joanne created when she was asked about some of these non-compliance issues, you can get a sense from those responses - I used the words manipulative and deceitful earlier on - and I think her responses are great examples of that."

Mr Mersi confirmed Harrison was involved in restructuring three staff who were raising concerns about her out of the organisation, but said there would not be an investigation into the restructure.

Ms Moroney said she was appalled.

"They've had their careers ruined, I understand that they've been working for the Transport Ministry for 20 years plus - not between them - each of them.

"What redress has the Ministry of Transport arranged with these people?"

Mr Mersi said Ms Moroney was "making a jump between the decisions to restructure those positions and that there was a direct link to Joanne Harrison - I don't know that".

But, at the same time, Mr Mersi acknowledged Harrison repeatedly used her senior position to target those who got in the way of her fraud.

"Joanne used her position to potentially influence in a negative way, or do things to individuals that she saw as a threat to the achievement to her primary objective [committing fraud]. I accept that.

"And I've spoken to a number of the people who are either still employed with the organisation, or who were previously employed by the organisation, and who essentially Joanne manipulated in some way or another."

Former CEO's actions defended

Following the select committee, Mr Mersi was asked if Mr Matthews' conduct was good enough.

"Martin was faced with a bunch of non-compliance issues spread over a few years and on each of those occasions he dealt with it, or thought he'd dealt with it," he said.

Minister of Transport Simon Bridges also defended Mr Matthews.

"I think he was a fine chief executive - I think in hindsight you look back and what you've got is an incredibly dishonest individual."

Police Minister Paula Bennett has revealed the Australian police repeatedly contacted their New Zealand counterparts in 2011 seeking information on Harrison.

She had previously been convicted of similar fraud.

The Ministry of Transport did not carry out any criminal background checks on her.