High-profile stoush between small business network and funder sparks inquiry

A high-profile dispute between innovation start-up We Are Indigo and Callaghan Innovation is being probed by the Auditor-General.

Creative NZ, which last year awarded a $5.3 million contract to a We Are Indigo-owned business to help supply digital arts services to the sector, says depending on the result of the investigation, it may review its partnership with the company.

The arts funding agency awarded the contract to We Are Indigo, despite it being accused of bullying, misusing government funding and taking advantage of small businesses.

We Are Indigo and its subsidiary, Manaaki, are business networks offering advice and training to Māori and Pasifika small businesses. All Blacks Roger Tuivasa-Sheck​ and Ardie Savea​ transferred their shares amid the dispute becoming public last year.

READ MORE:
* NZ First-linked company applied for $15m govt loan, pledges transparency
* Auditor-general clears Jones, but says he ‘confused the situation’
* Space 3.0 – how it will solve problems here on Earth

Creative NZ previously defended its decision, with chief executive Stephen Wainwright saying in December he was aware of rumours about the business, but was confident in its reputation.

But in a statement on Wednesday, Creative NZ said it was now aware an investigation was under way.

“If the [Office of the Auditor-General] report surfaces any material new information, then we would consider its relevance to our partnership with We Are Indigo,” the statement said.

The investigation related to “the difference of views between Callaghan Innovation and We Are Indigo”, Creative NZ said.

Callaghan Innovation previously brought in a private investigator to review businesses that had applied for its funding, saying it “took a considered decision to increase its due diligence of organisations” from which it procured services after the death of a founder in the startup ecosystem, believed to be Jake Millar.

It is understood the investigator’s review included several allegations that We Are Indigo used bullying tactics, had business performance issues and failed to pay subcontractors.

We Are Indigo and Manaaki subsequently lost out on $2.1m in funding from Callaghan Innovation’s founder and start-up support programme.

But We Are Indigo pointed the finger back at Callaghan Innovation, claiming the investigator had a conflict of interest that should have disqualified him from producing such a significant report.

In its statement, Creative NZ said that Toi Hourua – the company owned by We Are Indigo that will provide digital arts services – won its contract after an “extensive, formal, two-stage procurement process”.

During the process, We Are Indigo made Creative NZ aware it was in a “disagreement” with Callaghan Innovation “regarding a potential conflict of interest during their due diligence process”.

“We will actively monitor the delivery of the new service, as we would for any contract of this value,” Creative NZ said.

On Thursday, a spokesperson for the Office of the Auditor-General confirmed it was “doing some inquiry work into the procurement process” that Callaghan Innovation carried out for its founder and start-up support programme.

It was the office’s policy not to give updates about the substance or progress of its work while it was under way, the spokesperson said.

We Are Indigo spokesperson Andy Hamilton said it welcomed the independent scrutiny of the Auditor-General’s investigation.

It valued its partnership with Creative NZ, and, if anything “substantive or material” came out of the investigation, it would openly discuss the findings with its partners before agreeing how it should be handled.

Callaghan Innovation completely supported the inquiry and was cooperating fully with requests, chief executive Stefan Korn said.