The Government will pay out $107,500 to tech entrepreneur Derek Handley after withdrawing an offer of a newly-created Chief Technology Officer (CTO) role.
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The Government will now 'rethink' the entire role, halting the recruitment process.
Mr Handley's job application was controversial from the start, with former Minister Clare Curran omitting to mention an evening meeting with him in February. This resulted in her losing the Digital Services and Open Government portfolios, as well as her place in Cabinet.
That February meeting came after former minister Clare Curran extended the recruitment process after struggling to find the right person for the role.
Mr Handley expressed his frustrations in a long post on Linkedin, saying, "Earlier this week I was deeply disappointed to learn that the Government will no longer follow through with their commitment and will not be making that appointment at this time."
He was offered a settlement payment of three months plus reimbursement of costs. The payment came to NZ$100,000 (three months of the one year contract) in addition to NZ$7500 for expenses.
Mr Handley had moved back to Auckland with his family in order to take up the role.
"The last few weeks have been a distressing time for my family and I who returned to Auckland last weekend in time to take up this position from having lived for over ten years in New York."
Mr Handley has said he will donate the settlement money "towards a fund that supports ideas, programs and grants that seek to tackle this societal issue in creative ways."
In a statement today, Minister for Government Digital Services, Megan Woods, said the Government is 'rethinking the objective' of the CTO role.
"Today we've put a full stop on this process.
"What's clear is that we need to step back and have a good look at the role and see how it fits in with the other work being done in the digital transformation space."
The Opposition has wasted no time criticising the pay-out.
National's Nick Smith said the process has been a "shambles from the beginning". He's calling on the Government to release the "hidden emails from Clare Curran and the Prime Minister so we know the full story".
ACT leader David Seymour said the Government's shown its "utter contempt for taxpayer money".