Inquiry finds appointment process for Wilce flawed

Former top-level defence employee Stephen Wilce was hired after an inadequate appointment process and the decision to grant him high-level security clearance was flawed, a Defence Force court of inquiry has found.

The inquiry was ordered in September after it was revealed Mr Wilce had made exaggerated comments about his background, including that he had a distinguished combat career.

Mr Wilce was head of the Defence Technology Agency from 2004 until his resignation last month.

The inquiry report, released today, found the appointment process in hiring Mr Wilce was "flawed in a number of significant respects", and the decision to grant him high-level security clearance fell short because of the inadequate screening.

Momentum Consulting, the recruitment company contracted to do reference checks on the candidates, fell short of the standards of thoroughness required in its contract with the Government.

However, Momentum's shortcomings did not absolve the Defence Force of its responsibility to ensure appropriate checks were made.

The inquiry found Mr Wilce had only limited access to highly sensitive information, and was unlikely to become a national security risk.

It also found there were "unanswered questions" about Mr Wilce claiming travel expenses and taking unauthorised leave.

Defence Force chief Lieutenant General Jerry Mateparae said the key failings were those of Mr Wilce himself.

"He represented his work history, military career, achievements, academic qualifications and activities in other fields in a way that was neither honest nor complete," he said.

"Not only have his actions damaged his reputation, they have damaged the morale of those he led at the Defence Technology Agency, and they have damaged the reputation of the New Zealand Defence Force."

The inquiry found some of his embellishments were misleading, but there was no evidence he lied about his qualifications.

"The bulk of his untruths arose during the period he was already employed by us. While telling lies in one's day-to-day life is reprehensible, further elements are required before it becomes a crime," Lt Gen Mateparae said.

A copy of the inquiry's report had been given to police so they could independently assess whether charges needed to be laid.

Lt Gen Mateparae admitted there had been some shortcoming in the hiring process, telling reporters this afternoon the Defence Force had made a number of "dumb decisions".

"What is abundantly apparent is that the Defence Force placed trust in the reliability of Mr Stephen Wilce. The report of the court of inquiry demonstrates that this trust was almost entirely misplaced."

Concerns were raised about Mr Wilce's exaggerated claims as early as 2005, while he was being vetted for security clearance.

The concerns were passed on to the Security Intelligence Service (SIS), but a witness from that agency was unable to give the inquiry any record of that conversation taking place or any actions taken in consequence.

Concerns were also raised within the Defence Force between 2005 and 2009, but the inquiry found it was unclear what, if any, steps were taken.

An investigation into Mr Wilce began in July after concerns were again raised.

The court of inquiry made a number of recommendations, including a review of employment processes.

The guidelines should be strengthened to reinstate the requirement for reference and qualifications checks, and to require criminal history and credit checks.

The inquiry also recommended a "whistle blower" phone number be established to allow Defence Force personnel to report security concerns if they felt unable to go through their command or management chain.

It ordered a formal review of the security risk posed by Mr Wilce, and an audit of Mr Wilce's travel and expense claims.

It also recommended a review of the unacceptable number of Mr Wilce's unexplained and unauthorised absences from work.

Lt Gen Mateparae said those inquiries would take place and changes to procedures would be made urgently.

He said the Defence Force had had to apologise to its closest allies over the embarrassing security issue.

Prime Minister John Key said the report had been thorough and the Government would consider its recommendations.

"I think there's clearly been lessons for everyone to learn," he said.

"Clearly there've been some very serious failings in terms of the failure to pick up on very, very simple information. It's exposed weaknesses in the system, and the recommendations that were made to tighten up and improve the system are necessary."

Mr Key said a number of people were ultimately accountable, although the issue was wider than individual actions.

"I think the system has actually failed. As the report clearly points out, there weren't people with the right level of expertise on the panel, the security clearance checks and the reference checks weren't done to a high enough standard for someone in defence."

He said there was always the risk there were others like Mr Wilce, but added that SIS security clearances were checked every five years.

"They have substantially improved their techniques in the last five years, so we are expecting a higher standard from them. So I think if there was someone in the system that was misleading the system, then hopefully that would be picked up under the new regime."

Mr Key said he had ordered the State Services Commissioner to take another look at the report he was issued in relation to the SIS.

Momentum Consulting managing director Bede Ashby said today that it had recommended high-level reference checks on Mr Wilce to the Defence Force, which did not ask the company to complete them.

"If Momentum had been asked to carry out the full reference checks...his claims about his performance in previous jobs would have been tested more rigorously.

"Although the checks were included in our proposal the client decided to take responsibility for these themselves."