Chastened Chathams in do-or-die talks with Govt, after spending blowout

2026-03-18 - 23:42

Chatham Islands leaders are going to ministers with a plan to restructure the ownership of the remote community’s assets, in the hope of persuading the Government to release funding to the desperately cash-strapped council. The financial woes were exacerbated by the out-of-control spending of Chatham Islands Council’s $250,000-a-year chief executive Paul Eagle, who resigned last month. Councillors held an extraordinary meeting on Wednesday, at which councillors agreed to refer a devastating Auditor-General’s report to the Serious Fraud Office, for investigation. Serious Fraud Office spokesperson Faith Thumath confirms the office is evaluating the Auditor-General’s report, against its mandate. It will decide if there are sufficient grounds to open an inquiry or criminal investigation. Newsroom first revealed in January that the former Labour MP had shipped over premium German-engineered Miele kitchen appliances for the $460,000 renovation of his council house; now the Office of the Auditor-General has highlighted that $18,000 expenditure as an aspect of his spending blowout. The Auditor-General explicitly flagged up the question of whether Eagle had broken the law by altering quotes and contracts, in an attempt to mislead investigators. “We consider that the chief executive’s actions were unacceptable and demonstrated exceptionally poor practice and judgment,” his inquiry reported. “We have not reached a view on the legality of the chief executive’s actions. In this case, we consider it sufficient to draw the council, Parliament, and the public’s attention to the matter.” Eagle was paid a salary of $250,744 (five times what the mayor was paid) to manage a team of nine FTEs; he was given rent-free accommodation in the newly-renovated house, provided six return flights to and from the mainland every year – and still saw the need to claim back $14,000 in expenses, mostly for food and entertainment, and run up thousands more on his council credit card. But the problem was not just with Eagle’s spending – it was also the lack of council controls and scrutiny that allowed him to get away with it. Noting the council’s “precarious” financial position – the Auditor-General had already expressed ‘significant doubt’ Chathams council could continue as a going concern – the report says the council will need support from central and local government partners to address its problems. Eagle’s successor as interim chief executive, Bob Penter, confirms the council has referred the Auditor-General’s report to the appropriate authority. And other agencies have offered to support the small council to work through its issues. “It’s certainly a challenging time for council and the community, and what matters now is how we respond to the concerns that have been raised in the Office of the Auditor-General report, and the council is being very proactive in fronting head on those concerns,” he says. “We’re not going to leave any stone unturned in ensuring that we respond in the fullest way possible” Penter is also chief executive of the Chatham Islands Enterprise Trust, a community trust that owns key infrastructure including the airport, a new wind-farm, forestry and and about 3,200 tonnes of valuable fishing quota. Regional Development Minister Shane Jones and his associate minister Mark Patterson are refusing to release more quota and grant funding to the Chatham Islands, until they are persuaded that the community has first called on its own resources. Jones has asked the relatively prosperous Enterprise Trust to merge with the indebted council. It sparked some acrimonious exchanges between the minister and the mayor Greg Horler, who was elected last year on a platform opposing a merger. The locals are now going back with a counter-proposal that may include handing the Government an ownership stake in key infrastructure assets like the airport and maybe the wind farm. Penter confirms ownership of the airport may be on the table, but the 600 locals are adamant their Enterprise Trust should retain ownership of the fishing quota. “That’s come through clearly every time we’ve spoken to the community.” “We always welcome Minister Jones’ support and interest in the Chathams,” Penter says. “We’re working through this at present to report back to the ministers on what we think a viable proposal might look like.” He doesn’t think the auditors’ criticisms, in reviews of the last two annual reports, is driving the community to restructure its assets more quickly. “What is clear is that the council is very finely balanced in terms of its financial abilities, and that’s a conversation that we need to continue to have as council with the appropriate Crown agencies and ministers.” Asked if his dual roles as chief executive of both the trust and the council create a conflict, in negotiations about new governance structures, he says it actually makes the job easier. “What makes it easier for me is the willingness of the council and the trust to work together with one another at a governance level.”