QUEENSTOWN LAKES DISTRICT COUNCIL AGAINST CRUX

Case Number: 2939

Council Meeting: SEPTEMBER 2020

Verdict: Upheld in Part

Publication: Crux Media

Ruling Categories: Balance, Lack Of
Comment and Fact
Errors, Apology and Correction Sought
Headlines and Captions
Unfair Coverage

Overview

[1] The Queenstown Lakes District Council has complained about two articles on theCrux media website. The first was headlined ‘QLDC consultants: Council broke its own financial rules over ZQN7’ and ran on June 30, 2020. The second ran the next day, July 1, and was headlined ‘QLDC admits ZQN7 money was “outside the usual frameworks”.’ Both articles were written by Crux Managing Editor Peter Newport.

[2] The stories are part of ongoing reportage and analysis by Crux into spending by the district council. These stories focus on a consulting company called ZQN7, whichCrux reports it chose at random from council accounts released under the Local Government Official Information and Meetings Act (LGOIMA).

[3] ZQN7 completed a series of bylaw reviews for the QLDC for which it was paid around $530,000 over a three year period. The consultancy is run by Ruth Stokes and Jendi Paterson, both former QLDC managers.

[4] ZQN7 was paid for six projects, including bylaw reviews required by law. For five of the six projects ZQN7 was selected via a process that permits managers to directly appoint suppliers for work costing less than $50,000. The six projects were broken down into stages. The QLDC says two of the projects had three stages, but does not break down the other projects, although the payments of under $50,000 were tied to each stage, not each project. Spending on stage two of what the council calls Project B and Project C exceeded the $50,000 limit. The Council says that “did meet financial delegated authority for the expenditure level”, however. One stage of one project was not directly appointed, but approved on the basis of a procurement plan. Crucially, the QLDC concedes that stage three of Project C “did not follow the appropriate procurement approach”.

[5] While the first story is angled around the procurement failure admitted by the QLDC, it also reports the bylaw reviews had not been budgeted for and the work was not tendered. It goes on to discuss the alleged role of QLDC’s Corporate Services head Meaghan Miller in the appointment of ZQN7 and criticisms of her work.

[6] The second story is based on a written statement by the QLDC sent hours after the publication of the first story. It answered questions asked by Newport eight days earlier, on June 23.

[7] This is the second complaint by the QLDC against Crux this year and at the same September meeting the Media Council is also in receipt of a complaint by the 75 percent council-owned Queenstown Airport Corporation (QAC). There is clearly a breakdown of trust and communication between the parties. While the Media Council will adjudicate on media standards in these complaints, it is wary of being drawn into a row that does not reflect well on either party.

The Complaint

[8] The QLDC first complained directly to Crux on July 10, raising a series of points and asking for them to be corrected. Later that day Newport replied he had taken down the articles temporarily to make amendments. He asked a series of questions challenging the need for corrections. On July 14 Jack Barlow replied on behalf of the QLDC saying it had supplied all it could on the issues raised, it would not comment further andCrux’s failure to publish a correction or apology meant QLDC would complain to the Media Council. When Newport asked if that was a refusal to supply information under the LGOIMA, Barlow replied the matter was now with the council’s legal division for consideration.

[9] In bringing its complaint to the Media Council, QLDC says Crux has made “unbalanced and inaccurate statements”. It complains under four principles:Principle 1, Accuracy, Fairness and Balance; Principle 4, Comment and Fact; Principle 6 Headlines and Captions; and Principle 12, Corrections.

[10] QLDC complains that Crux says in a caption that “over half a million dollars was paid out without procurment (sic) rules being followed”. It says that is incorrect. “Only one of the five (sic) ZQN7 projects – the Speed Bylaw – did not follow the appropriate procurement approach”. (Principle 6, Headlines and Captions and Principle 1, Accuracy).

[11] The district council also complains that Crux has made repeated offensive and damaging allegations against its staff with no supporting evidence. Miller is mentioned in the first story as “the person who appears to have guided the process for the hiring of ZQN7”. There is no basis for this statement and it is incorrect, bordering on harassment, it says.Crux’s singling out of Miller seems to rest on a single email exchange in which she refers Stokes onto a colleague. “In the absence of facts,Crux has created an entirely fictional conspiratorial arrangement by using phrases such as ‘…how these dots might connect…’. This is misleading in the extreme”. (Principle 1, Accuracy and Fairness and Principle 4, Comment and Fact)

[12] QLDC also says the report misrepresents the nature of their workshops. Crux claims they are for “select councillors” and serve as a “way of limiting or rewarding various elected councillors – but with no paper trail”. Such workshops are standard practice in local government, QLDC says, andCrux offers no evidence of its claims. (Principle 1, Accuracy)

[13] Finally, also in the first article, Crux claims Miller told new councillors last year during induction sessions not to talk to media. QLDC denies this. To the contrary, councillors receive media training. Again, Crux provides no evidence. (Principle 1, Accuracy).

[14] Together, the two articles contain “extensive misrepresentations, misleading suggestions and factual inaccuracies”. WhileCrux has taken them down, that does not undo the fact they were published and read in the first place and have not been corrected since.

The Response

[15] In response to both the QLDC and QAC complaints, Crux Managing Editor Peter Newport says they are an abuse of process designed to damageCrux, rather than bona fide complaints.

[16] Crux says it has spent three years trying to establish the extent of QLDC’s expenditure on external consultants and reliance on former – rather than existing – staff. Its official requests for information have often been “blocked”.

[17] It says the disputed parts of the stories relied on information from the QLDC. The appointment of ZQN7 did not use an open tender process, there was no procurement plan to cover total expenditure and no budget for the work. The QLDC admitted to breaking its own procurement rules.

[18] Crux hasn’t “corrected” the stories because QLDC has not provided proof of a tender, has only provided one procurement plan, and has provided no evidence of delegated authority to make the appointment of ZQN7.

[19] As for the “damaging” allegations about Meaghan Miller, Crux says as she is GM of Corporate Services, “it is not unreasonable to assume she would be responsible for recruitment of consultants, as part of leading the HR department”. Emails show “an early exchange” between Miller and Stokes.

[20] Crux says the use of workshops to avoid public scrutiny has been criticised in national and local media throughout New Zealand, so they are not alone in making that observation. They provide examples of other critiques.

[21] Anonymous sources from within the district council have spoken of councillors being shoulder-tapped for workshops, selected by Miller or mayor Jim Boult.

[22] The claim that Miller told councillors not to speak with media comes from “at least two sources” present at the inductions. Only two councillors engage usefully with the media and they tend to be excluded from workshops.

[23] In terms of providing balance, Crux points out that it has published in full any written responses from QLDC in respect of this story. It says it’s happy to run corrections, but only if facts are supplied. QLDC’s response that something is fact “because we say so” is insufficient.

[24] Crux says it seeks an improved relationship and would like better access to council staff and a free flow of information. It raises concerns about the QLDC use of the LGOIMA, but those are issues for the ombudsman not the Media Council.

The Decision

Discussion

[25] As noted in paragraph 7 the relationship between QLDC and Crux has obviously become hostile and the parties are talking past each other. We hope some goodwill can be found, but the job of the Media Council is merely to address this complaint.

[26] It’s fair to say that Newport employs an unusual style of reportage. We noted in our April ruling that it’s a type of advocacy journalism, but he needs to be careful in his blurring of the lines between fact and opinion and with his lack of attribution and proof. Advocacy journalism is not an excuse to break those tenets of journalism. Assertion is not fact and while any journalist can report assertions of a source, Newport in these news stories is the journalist, not the source. We would repeat the advice that there needs to be a distinction drawn between the facts and the reporter’s opinion, with clear labelling.

[27] It is problematic for any reportage to be littered with wording such as “a selection process thatappears not to have taken place…” or “a final point on how these dots might connect…” or “[Miller]seems to play a crucial role in all QLDC activities…”. “Appears”, “might” and “seems” are not proven evidence. Neither are any of those criticisms attributed to sources; they instead express the opinion of the reporter.

[28] The first story, for example, implies serious financial mismanagement by QLDC. It claims QLDC staff split payments into payments of under $50,000 to avoid its own rules. Newport’s evidence for this is a single email asking for distinct invoices. QLDC offers an explanation for this in an email, saying ZQN7 was paid in stages because the projects were completed in stages, with the next stage dependent on the success of the previous one. Newport fails to report that explanation, instead claiming an attempt to break the rules without providing proof.

[29] He also claims QLDC broke its procurement rules by not putting the bylaw review projects to tender, writing “There was no tender or bid process that we can find”. The Media Council notes that an absence of evidence is not evidence. And whileCrux supplies a table from the QLDC’s procurement rules in its Editor’s Response suggesting a tender is required even for work costing less than $50,000, that evidence is not in either story and is a thin foundation for a serious allegation.

[30] The QLDC, unhelpfully, is just as prone to confusing assertion with fact and the Media Council sympathises withCrux’s frustration at QLDC’s lack of transparency. It is not clear from their answers, for example, whether or not a tender process was expected in these cases.

[31] When Newport asks, crucially, why the appropriate procurement payment was not followed for Project C, the QLDC reply reads: “We are confident that on the whole the appropriate processes and decision-making gateways were followed, and sometimes those decisions will include a judgement that is outside of the usual frameworks”. That, frankly, is a meaningless sentence that offers ratepayers no clarity about a serious admission; that the QLDC failed to follow an “appropriate procurement approach”.

[32] In its complaint QLDC claims to have clarified that matter, but it clearly has not. If it wants more accurate reporting, it should provide more accurate answers. As we said withCrux, assertion is not fact. A correction requires clear evidence, as Newport has sought.Crux acted responsibly promptly taking down the stories and seeking clarification.

[33] From its complaint the QLDC seems to be under the impression it is a reporter’s job to simply print their answers to questions as fact. It is not. Journalism requires scepticism and when so little information is releasedCrux’s repeated questioning is entirely justified from any media seeking to hold public officials and expenditure to account. Indeed,Crux’s questioning and extensive use of the verbatim email exchanges means QLDC can hardly complain about a lack of balance.

[34] However, Crux’s caption that “over half a million dollars was paid out without procurment (sic) rules being followed” over-reaches. Procurement rules were broken and $530,000 was paid out, but only one of the six payments – it is notable that for all the questioning, we still do not know the amount of that mishandled payment – broke the rules. The caption wording makes the failure sound larger than it was.

[35] Further, as a caption it does not accurately reflect what is reported. In the articleCrux makes it clear that QLDC did not follow the proper approach only in relation to one stage of the Speed bylaw review. The caption misrepresents that fact.

[36] Finally on the procurement rules, Crux says in the first article that the payments of under $50,000 “look like a mechanism to stay under the $50,000 direct appointment rule, avoiding the council’s own procurement policies”. It does not include the QLDC’s explanation that the payments were paid in stages because each one was conditional on the previous stage being successfully completed. This could be seen as a lack of balance, but givenCrux has been repeatedly and clearly asking for more a more detailed explanation of these payments and QLDC chose not to explain them in any depth despite being given every opportunity to do so, we cannot find againstCrux on balance. Rather, we deal with our concerns around this issue under Principle 4, where we see fact and comment unhelpfully mingled.

[37] On the claims about Meaghan Miller, Crux says in its response to the Media Council that some of the criticism in the first story is based on council sources. While it’s legitimate to rely on anonymous sources, in the storyCrux makes claims without any explanation of where they come from. They are assertions Newport makes as a reporter without attribution, anonymous or otherwise, and muddy the lines between facts and comment.

[38] Crux writes Miller “appears to have guided the process for the hiring of ZQN7” without proof. The email exchange shows a connection, but no evidence of guidance. Indeed, the company is directly hired by council manager Myles Lind.

[39] While the claims about the workshops and Miller’s words about the media at induction sessions are disputed by QLDC, they are a matter of he says/she says.Crux claims to have sources and QLDC provides no proof sufficient to warrant a correction. They are certainly issues worthy of reporting in the public interest.

Decision

[40] Reportage into local government is a vital part of a functioning democracy andCrux is attempting to play an important role and ask challenging questions in what is clearly a difficult environment. Many of the undisputed facts in the stories, from the use of un-tendered hiring of former council employees and friends, to the QLDC not adhering to its own procurement approach are stories of significant public interest.

[41] However in other parts of these stories Crux has over-reached and failed to uphold standards expected under Media Council principles.

[42] The complaints around balance under Principle 1 and regarding the lack of corrections under Principle 12are not upheld.

[43] The complaint on the accuracy of the “half a million dollars” caption under Principle 1 and Principle 6; the complaint regarding the fairness of the criticism of Meaghan Miller’s “guidance” under Principle 1; and the complaint about the blending of comment and fact regarding Principle 4 are all upheld.

Media Council members considering the complaint were Hon Raynor Asher, Rosemary Barraclough, Liz Brown, Craig Cooper, Jo Cribb, Ben France-Hudson, Jonathan MacKenzie, Hank Schouten, Marie Shroff, Christina Tay and Tim Watkin.