"This was a totally above-board commercial operation," former ODHB chief information officer and IT head Michael Swann told the High Court at Dunedin yesterday.
Swann (47) and his friend, Queenstown surveyor Kerry Harford (48), both deny having misappropriated $16.9 million from the board and its predecessor, Healthcare Otago, between August 2000 and August 2006.
While the Crown says the pair used 198 invoices from the Harford-owned company Sonnford Solutions to charge the board for services which were never supplied, the accused say the contracts Swann signed on behalf of the board were genuine and provided "value for money".
Swann told Justice Stevens and the jury he devised the risk mitigation system because he was not satisfied with the support and back-up from IBM and CSI, the suppliers of the hospital's main servers.
It became apparent the hospital's senior IT staff were better able to manage system outages as they understood the clinical staff priorities.
Late in 1999 or early in 2000, he spoke to the board's chief financial officer, Ewan Soper, about the deficiencies surrounding the IBM warranties and believed Mr Soper gave him authority to look at the option, if he had operational budget available, Swann said.
So he then spoke to Kerry Harford, a person he had known since university in the 1980s, and who was "looking at other interests" after a partnership with a Waikanae surveying firm did not eventuate.
When he suggested risk mitigation and insurance-type cover for Dunedin Hospital's large RS6000 servers, Harford was keen to make a brokerage arrangement.
Because of the size of the systems, he (Swann) suggested using a company named Computer South to back up Sonnfords in an underwriting capacity.
He had formed Computer South in 1995 so he could continue working after he bankrupted himself.
Its shareholders were the trustees of the Devereux Family Trust, his wife, Anna Devereux, his lawyer, Grant Fyfe, and a friend, Peter Ibbotson.
The decision for the payments to be split 90% to Computer South and 10% to Harford came about because Computer South was carrying a higher component of risk and Harford wanted his risk to be limited, Swann said.
Swann drew up the contracts between Sonnfords and the hospital board in his capacity as chief information officer for the ODHB and assessed what fees to charge by obtaining comparative prices from other companies in the computer industry and looking at applications, software, and quirks of the hospital machines.
As to a suggested conflict between his role as the board's chief information officer and as a beneficiary from the Sonnford contracts, Swann said he considered he was "at significant arm's length between the entities" and had done his best for the ODHB in ensuring its clinical production systems were covered.
"They got very good value, as evidenced by six years of operation on their system with little or no failure," Swann said.
He said the 10-day outage at the start of last year would have been "totally unacceptable in my time as chief information officer".
"I would have been shattered if I couldn't have had the systems back up in much less time," he said, but was not criticising the people working in the crash.
The Sonnford contracts were from an "umbrella document" prepared by law firm Chapman Tripp for the board in the late 1990s.
Criticisms that the "opening the gate" provision appeared to provide nothing were not in line with what he had intended to convey, which was that Sonnfords had no engineers and was not a supplier but would ensure repairs and maintenance were provided on a job cost basis.
Swann told Harford's counsel, Greg King, that he had approached Harford after identifying the business opportunity within the hospital because nobody else could provide for the board's need.
And he would be able to provide the services "at arm's length" through Harford's company.
What Harford knew about the board's need for the service came from him.
And he had drafted all the invoices which were sent electronically to Harford, with the request that Sonnfords invoice the board in accordance.
At no stage did he consider he was doing anything dishonest, Swan said, and at no stage did he suggest to Harford it was "not all quite right".
Cross-examined by Crown counsel Robin Bates, Swann agreed that after the major crash of the hospital servers last year, they were restored for about $10,000 in external assistance.
"So, over seven years, you provided cover to the tune of more than $15 million and when there was a major crash, it cost $10,000 to fix it," Mr Bates suggested.
From the error logs he had seen, Swann said it appeared the system crash was a very simple hard disk crash which was made into "a very large outage" by whoever was working on it at the time.
Asked about firmware upgrades, the accused said such upgrades were "a simple process" but had to be done properly or they could disrupt the whole system.
He agreed he did some himself by downloading from the Internet and Harford had downloaded others, put them on disk and couriered them to him so he could install them.
As to why he had bothered getting Harford, who knew little about computers, to do that, Swann said he considered it "part of the arm's length relationship", something Mr Bates suggested was "just rubbish".
Swann's evidence under cross-examination continues today.
