A newly released Central Otago District Council (CODC) report reveals details of an internal investigation into invoice tampering by a company owned by newly elected councillor Dave McKenzie. 

The report was presented to the council’s Audit and Risk Committee in March 2019 and has been released under the Local Government Official Information and Meetings Act (LGOIMA) to The Central App. 

According to the report, DM Property Solutions Limited, owned and directed by Mr McKenzie, was engaged in 2018 to carry out maintenance work on the Cromwell Memorial Hall.  

Council staff discovered that the company had altered subcontractor invoices when claiming payment from the council. 

“He [Dave] admitted altering the subcontractor invoice to match the claim by adding $1,000,” the report said.

The report notes after the admission, the council’s chief executive gave one month’s notice of cancellation of the company’s contract. 

A subsequent audit of one month’s invoices found the issue extended beyond a single job. 

Of the 17 subcontractor invoices reviewed, 14 had been altered, with mark-ups ranging from $30 to $300. 

“Of the sample checked (17 invoices) 82 percent were altered,” the report said.  

“It is acknowledged that only a small sample was checked and it isn’t known for how long this behaviour has existed or to what extent there have been financial implications.”

Council staff sought legal advice on whether the alterations amounted to fraud or breach of contract.  

The opinion, provided by Anderson Lloyd, concluded that while the invoices had been changed, the lack of a formal written contract and the “murky” contractual position meant a successful prosecution was unlikely. 

“In view of the murky contractual position, we do not consider DM’s addition of mark-ups to the invoices meets a criminal threshold for fraud,” the advice said. 

The legal advice also warned that any forensic investigation could cost more than might be recovered. 

“This exercise would unlikely be an efficient use of ratepayer money in the absence of clear evidence of a breach of contract,” it said. 

The council’s 2019 committee report concluded, “unless the committee considers otherwise, the matter is now concluded”. 

In a statement released on Tuesday (October 14), CODC chief executive Peter Kelly said the matter was closed at the time after consideration of the legal advice. 

“It was deemed that CODC did not have sufficient evidence to meet the legal threshold for further action, and it would have been costly to take it further,” the statement said. 

Peter said the council had since strengthened its procurement systems. 

“Procurement processes have improved since 2019. A procurement audit was carried out in 2022 that had further strengthened policies and processes. These improvements would help lessen misunderstandings between council and its contractors,” he said. 

Dave was elected to the Vincent ward of CODC on Saturday (October 11), although final tallying of votes continues this week.  

He previously operated property maintenance businesses under Zelko New Zealand Limited, which held maintenance contracts with the council dating back to 2004, as well DM Property Solutions, which continues as a registered company. 

While Dave has admitted making mistakes, he maintains the wrongdoing was not all on him, saying the dispute stemmed from a misunderstanding over legitimate costs and that he repaid the disputed amount while the matter was reviewed.  

Despite public criticism, he has said he will not stand down from his new role. 

The 2019 council report was written by then executive manager for planning and environment Louise van der Voort, who narrowly missed election to the current council, trailing Dave by 38 votes in the latest count.

Council records reveal the 2018 chain of events: 

• In February, Dave via DM Property Solutions quoted $5,635 for a job outside his usual contract 
• The job was done by a subcontractor who invoiced Dave $961 
• In March, Dave invoiced CODC $5,635 for the job 
• Four days later, CODC queried the difference, based on information from the subcontractor, and Dave re-issued a reduced invoice of $3,068.37 
• CODC requested Dave supply for auditing purposes the subcontractor’s invoice, which was supplied and showed a sum of $1,968.15 
• CODC had been advised by the subcontractor of the approximate sum of their original invoice, so queried Dave about the discrepancy, who told CODC input error was to blame 
• The subcontractor sought to meet with CODC and produced their original receipt, showing the version supplied to CODC by Dave had been altered to increase the amount 
• In April, when provided with side-by-side copies of both versions of the subcontractor invoices by CODC, Dave admitted modifying the original 

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Read more: Councillor responds to online allegations after election win 

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