Richard Thomson, who was sacked as chairman after the fraud was uncovered but remains a board member, said he was surprised to learn Kerry Harford had been released from prison.
Asked for his reaction, he said: "I think maybe I would prefer the many people who had to live with pain or illness a lot longer than they might have because of this, to give you their views on that. I'm flabbergasted."
Mr Harford, a Queenstown surveyor, was sentenced to four years and three months in prison for his part in the fraud, but has been released after serving one year and six months.
Mr Harford's company Sonnford Solutions invoiced the board 196 times between August 2000 and August 2006 for money in return for IT goods and services.
His company made about $1.8 million out of the deal. Most of the rest went to companies belonging to then board information technology manager Michael Swann, a close friend of Mr Harford.
Swann is serving a term of nine years and six months in prison.
The Parole Board granted Mr Harford release from prison on April 26, three days after he became eligible for it.
He had spent a year and six weeks in prison, as well as several months before that remanded in custody.
A person convicted on these sorts of crimes must spend at least a third of their sentence in prison before they are eligible for parole.
In its written decision, the Parole Board panel, convened by Judge John Macdonald, said its responsibility was solely to assess whether Mr Harford posed an undue risk to the safety of the community if released on parole, which, it decided, he did not.
"Undoubtedly, Mr Harford's offending was extremely serious but it is not for the [Parole] Board to engage in some re-sentencing exercise."
The board noted he had no previous convictions and had good support from family and friends.
It imposed special conditions on his release, which forbid him to be self-employed, be employed in any position where he is able to generate invoices to others, or to take work involving the management of the finances of others.
He must live at a specified address and notify his probation officer if he moves.
He is also forbidden to communicate with Swann, who is sentenced to a minimum jail term of four and a-half years.
Mr Harford answered the door to media at his home this week, but a woman who answered a call to the house last night declined to comment on his release.
Mr Harford reached a confidential reparation settlement with the ODHB before his sentencing in Dunedin.
Southern District Health Board chief executive Brian Rousseau declined to comment on Mr Harford's release.
