But the letter did prompt some action by the board and its acting chief executive, he says.
However, neither current health board chairman Richard Thomson, nor chief executive Brian Rousseau, were made aware of the warning letter until more than eight years after its delivery - and the health board has never found its copy.
Swann and his friend and business associate Kerry Harford were on Friday found guilty of defrauding the board of $16.9 million.
Mr Black contacted the Otago Daily Times yesterday to raise matters surrounding the contents of a letter, dated July 13, 1998, from two prominent Dunedin businessmen.
He stressed he was not defending the employment of Swann, who was initially a highly regarded new employee, noting the contentious letter was not delivered until almost eight months after Swann started as a casual contractor - about December 1997.
It is understood the letter is likely to call into question whether the health board can claim up to $5 million from its insurers because of the fraud.
That issue was yet to be debated between the board and its insurers, Mr Thomson said last night when contacted.
"It [the letter] was an important piece of information. I would have preferred that information was made available from Ross [Black] when I took over as chairman, [in December 2001], as I am sure Brian Rousseau would have [when he was appointed in February 2003]," Mr Thomson said.
Mr Black was Healthcare Otago chairman from March 1998 until December 2000, when the organisation had become the elected Otago District Health Board.
Michael Swann was initially employed for six months as a casual contractor. He was employed full-time in May 1998 as a technical leader, and became chief information officer in November 1999. He was sacked in October 2006 for "gross mismanagement".
Serious Fraud Office charges followed, culminating in Swann (47), and accomplice Harford (48), being found guilty last Friday on three counts each of defrauding the health board of $16.9 million over six years.
They are likely to face sentencing in February.
Mr Black highlighted yesterday that the letter was sent more than two months after Swann gained full-time employment.
"[The claims in] the letter were totally unsubstantiated . . . and could not be used by the hospital to review his [Swann's] employment," Mr Black said.
"It would have been different had he had an [undisclosed] criminal record. That would have been grounds to review his employment."
The SFO eventually found the letter during its investigation into the fraud allegations in late 2006.
The SFO would not let the health board release a copy of the letter to the ODT despite an Official Information Act request in December 2006, a request which Mr Thomson wanted to comply with at the time.
Mr Black said he was verbally warned by one of the two businessmen involved of two separate "bad experiences" he and another businessman had with Swann. The July 13 letter was delivered about a fortnight later.
The then acting chief executive, Dr Bruce Gollop, was informed of the letter's existence and he took legal advice.
The letter was raised with Swann at the time and Audit New Zealand was made aware of the letter's existence, Mr Black said.
He was unable to recall what action that prompted.
Mr Thomson yesterday said Dr Gollop undertook some "investigations" but found "no evidence of Swann doing anything wrong". He was not aware that Audit New Zealand had been advised of the letter.
Mr Black said Swann initially "added value to IT systems" and was seen by management as being supportive of cost-saving measures.
However, Mr Black now believed that while Swann was "building his reputation", he was "surveying the scene to see how the system worked" with a "view to implementing his schemes".
Mr Black said when Healthcare Otago became the ODHB its budget increased from about $225 million to more than $400 million. He could "best speculate" that the budget increases "created opportunities" for Swann to implement the frauds.
