The chair of Southern Response, Ross Butler, has resigned following the release of the State Services Commissioner's report on the agency's use of external security consultants.
Mr Butler's resignation was accepted by Greater Christchurch Regeneration Minister Megan Woods on Tuesday evening. He has also resigned from his roles on the boards of Otakaro Ltd and Regenerate Christchurch.
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Earlier on Tuesday, a report was released stating Southern Response - a Government owned company responsible for settling the claims of AMI customers - had acted inconsistently with the code of conduct.
Southern Response used taxpayer money to get private investigators Thompson and Clark to attend several closed meetings being held by insurance claimants considering legal action against the agency. Mr Butler had been aware of the spying.
A Thompson and Clark contractor at the meetings recorded them, despite not being a licensed private investigator, which may also have been unlawful.
Ms Woods said the actions of Southern Response highlighted in the report did not meet her expectations as Minister.
She said Southern Response originally hired the private investigators out of concern for staff health and safety, but surveillance increasingly became used "as a tool for reputation management, not for the protection of staff safety".
"Covertly attending private claimant meetings and recording closed door conversations without anyone’s knowledge are not appropriate ways for Government entities to manage their reputations.
"These actions were wrong, plain and simple. They are unacceptable to me and unacceptable to this government," she said.
A complaint has been laid with police regarding potentially unlawful recordings. A formal complaint has also been lodged with the Private Security Personnel Licensing Authority regarding the use of an unlicensed investigator.
An interim chair will be appointed in the coming days.