Shining the Light – a review, and some observations

A guest series from my husband and co-crusader in our quest for justice for Manaaki and We Are Indigo, and their directors.

This is, I hope, my last blog dealing specifically with the allegations made about Manaaki and their parent company, We Are Indigo, in the leaked due diligence reports.

A quick recap. These allegations are made in reports commissioned by Callaghan Innovation to support an RFP process.  They were written by a contracted private investigator John Borland, who had what appears to be an undisclosed conflicts of interest.  These reports were distributed by Callaghan Innovation to a number of government departments and agencies.  Since then, redacted reports of the summaries have been widely distributed, including from an anonymous Gmail address. 

This is in breach of the expectation of the confidentiality clauses in the procurement agreements – though Callaghan’s public position is that they were entitled to share the reports. 

The allegations in the redacted summaries are extremely serious, if they are true.  I cannot comment on all the allegations. There is insufficient detail.  But where there is detail, and based on this detail, I see misrepresentation and distortion.  Not what I would expect of a Government entity.  And yes, Callaghan, they are your responsibility.  You commissioned them.  They should never have entered the public domain.  But they are there, and they contain statements I suspect are seriously defamatory.  And you can contain the damage, but have chosen not to do so.

So far, we’ve seen…

  1. An allegation of ‘misappropriation of government funds’ that appears to be no more than a dispute over an unpaid invoice, which was subsequently paid.
  2. An allegation of a serious privacy breach that appears to be quite minor, with only 3 people involved (all notified) and no harm done.
  3. An allegation of failing to deliver a prize in a competition, where the winner was paid the $10,000 cash prize, and was unhappy with the free website provided (and the delay in its delivery).
  4. An allegation of ‘unauthorised acquisition of company shares’ where the partners in the proposed company failed to reach agreement on the terms of the collaboration, and the company was never actually formed and activated.  There can be no unauthorised acquisition.
  5. An allegation that inflated and false financial data was provided for potential investment purposes.  Based on the evidence provided, highly unlikely – and the complaint does not come from existing or prospective investors.
  6. Non-payment of Small Business Day Gift Cards by We Are Indigo.  The redemption of already issued cards was unilaterally cancelled by Chooice for unknown reasons – after the joint venture partners split up.  We Are Indigo immediately contacted the affected parties and issued them with replacement cards on another platform, at their cost.

So, some general comments on the reports and the extent to which we can rely on them. 

Overall conclusions from the Due Diligence reports

The reports are written in extremely emotive language and the evidence presented in the reports does not, in many cases, support the allegations.  There are what appear to be falsehoods and inflammatory representations. I am not a lawyer, but I would have thought that the defamation aspect is a significant concern for Callaghan – particularly given how widespread the distribution of the reports has been and the apparent lack of action by Callaghan to defuse the situation.  The allegations are extremely serious and are causing significant damage.  And so many of them appear to be false.

There are allegations in the reports I have not addressed as there is insufficient data.

John Borland states that “a standard Due Diligence Investigation relies on a ‘balance of probabilities’ threshold, meaning the evidence supports that ‘it is more probable than not’, that “any ‘risk issues’ identified are corroborated by evidence and therefore require the subject of the investigation to be placed in a ‘show-cause’ position due to the discoveries”.  A ‘show cause’ notice is a fairly common legal notice which gives an accused party the opportunity to show cause why the allegations are untrue or misleading, and should not be used against them.

I am curious as to how this balance of probabilities is determined.  Is a number of respondents making the same allegations a “balance of probabilities”?  Despite the allegations being improbable? I am curious that most of the allegations appear to come from referees stacked into the due diligence process without We Are Indigo’s knowledge.  Was there collusion in the responses?  Has this whole process been captured by unknown parties for unknown reasons?  I do not know, but I am suspicious.  Particularly as one of the respondents appears to be an IT contractor making serious allegations that I would have thought were well outside of his spheres of knowledge.

John Borland acknowledges that he has seen evidence in (positive) support of We Are Indigo “both in terms of business behaviours and deliverables” but he has chosen not to report it.  Extraordinary.  This is a massive shortfall in terms of natural justice.  I do acknowledge that based on the EY review report, Borland asked if he could interview We Are Indigo and this request was declined by Callaghan.  (And thank you to John Borland in being clear on your process). 

Looking at the reports I have to seriously wonder if John Borland is massively out of his depth in trying to formulate a report of this nature, or maybe I just don’t have all of the facts? There are basic issues where he appears to come up short. To name a few…

  • The recommendation that the data breach issue should be escalated to the Privacy Commissioner.  In the first due diligence report, Borland adds that the matter should also be reported to the Serious Fraud Office.  (This appears to be a minor breach and is not reportable to the Privacy Commissioner.  It is well outside of the remit of the Serious Fraud office that typically investigates cases involving more than $500,000 – and where is the fraud, bribery or corruption?).
  • Using misleading and false data for investment purposes.  Borland believes this to be professional misconduct and says it may amount to criminal behaviour if investment capital was raised.  Wow!  Possibly a massive lack of understanding of fund-raising processes!
  • Lack of understanding of basic business processes with the accusation of ‘unauthorised acquisition of company shares’.   The company was never formed as the shareholders could not agree on control.  There cannot be an unauthorised acquisition of shares.
  • I worry about words such as “attempted misappropriation of government funds” – a massive stretch from an invoice dispute, with said invoice subsequently paid. 
  • Borland notes “In my professional opinion, based on my experience both as a Senior Detective in the Police and as a Professional Investigator with experience in commercial matters, the actions of the Respondent places them a ‘show-cause’ position with respect to their application. Furthermore the contents in Section 4 of this report, if validated, showcase some of the most serious unethical practices I have investigated in a commercial capacity”.  It is a problem that these allegations have not been validated.

To give John Borland his due, he acknowledges what he has provided is based on limited interviews.  He is effectively acknowledging there may be different views.  In terms of his process, he says We Are Indigo are in a “show cause” position.  In other words, they need to be able to discuss and possibly refute the allegations.  They have not had this opportunity and in the meantime it looks as if they are being black-balled by Callaghan, and the flawed reports continue to be widely distributed.  We Are Indigo have no channels in which they can fight back, without incurring massive legal costs.  This is not right.      

We Are Indigo have only seen heavily redacted versions of the reports.  They had a very limited electronic meeting with Callaghan Innovation on 22 May 2022, and feedback they provided has been ignored by Borland, since it did not agree with evidence already obtained.  (Double Wow!).  I have been advised that evidence obtained from other government departments has also been ignored. (Triple Wow!).

John Borland requested that the report not be distributed without notifying him.  Was this done?  Was this because he recognised that We Are Indigo had not had the opportunity to “show cause”?  Borland also notes in the first Due Diligence report that “The information contained herein is based solely on information obtained during the course of our investigation.  Accordingly, we make no representations as to the accuracy of material obtained from third parties, nor do we purport to advise you or any other party on legal liability or the future conduct of this matter. In all respects, we advise that you refer to your qualified judgement and that of your legal advisers”.  In his second due diligence report he goes further saying the reports should not be distributed, including to government departments, without notifying him.  John, were you notified of the distributions to government departments?  And did you agree?

Callaghan Innovation, what were you thinking?  Were you thinking?

Where to from here?

The reports were prepared by what appears to be a conflicted investigator, who did not declare his prior knowledge.  EY were engaged to review the due diligence process, but the scope was set to exclude conflicts of interest and report content.  They did NOT, as some are claiming, “independently validate and verify” the findings or conclusions of the report.  As well, EY stated that We Are Indigo should have been given the opportunity to respond.

Callaghan Innovation – You are the only ones who can fix this.

  • Admit that the investigator was conflicted.
  • State unequivocally that the due diligence reports, commissioned under the confidentiality of a government procurement process, should never have been shared around.
  • Make it clear that you are upset and angry (are you?) at the way the reports continue to be leaked.
  • Clarify that the EY review did not verify any of the allegations.
  • Officially withdraw the due diligence reports, and apologise for the harm they have caused.
  • And clarify the rights that Government Organisations have to share a respondent’s confidential information obtained in RFPs to other Government bodies, given how serious an implication this might have for tenderers moving forward.      

Let’s hope we see some sensible action – remembering this is an election year.

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