A health board awarded “potentially unlawful” contracts for HR services, the auditor general has said.
The Cardiff and Vale board paid RKC Associates Ltd £290,000 for HR leadership services over 17 months.
Its then owner Raj Chana was later appointed as HR director when the board failed to fill the job after an advert.
Huw Vaughan Thomas criticised “numerous and significant failings” by the board, whose chief executive said steps would be taken to prevent a repeat.
The auditor general said it was a “highly unusual step” to publish but said the actions of the board “fell well short of expected standards”.
Mr Vaughan Thomas said the health board failed to comply with its own procurement requirements when it awarded consultancy contracts to RKC Associates Ltd in November 2014 and June 2015, and failed to ensure the integrity of the procurement process that led to an additional contract being awarded in February 2016.
The company had been hired to cover for the board’s director of workforce and organisational development, Tracy Myhill, who had been at short notice in October 2014.
Through her company Ms Chana served as interim director and, when it was confirmed Ms Myhill was not coming back, helped oversee the recruitment process for a replacement, the report said.
A shortlist was drawn up but when all of the candidates withdrew their applications, Ms Chana applied for the post although it had not been re-advertised.
She was interviewed and offered the job in April 2016 on a one-year contract worth £150,000.
The report found this appointment process was “fundamentally compromised, lacked transparency and was poorly documented”.
Ms Chana voluntarily left the post in November 2016. She is also no longer involved with RKC Associates Ltd.
Mr Vaughan Thomas said: “This is the first time as auditor general that I have issued a report in the public interest on an NHS body.
“There were numerous and significant failings and the actions of the health board fell well short of expected standards which has led to me taking this highly unusual step.
“There are clear procedures that need to be followed to ensure that taxpayers’ money is spent efficiently and effectively and, in this case, they were disregarded.
“I’ve issued this report to highlight these failings, to hold Cardiff and Vale University Health Board to account, and in the hope that other organisations will take heed and not repeat these mistakes.”
Len Richards, chief executive of Cardiff and Vale, said: “It is deeply disappointing that in my first month in post I have received such a damning report.
“I cannot account for the actions of others prior to my appointment but I can assure you that now I am in post we will be scrutinising a number of significant factors that enabled this to happen without challenge or following the right processes in place.
“It is my task to ensure that all staff comply with our policies and procedures and strengthen them where necessary.”
A Welsh Government spokeswoman said NHS Wales chief executive Andrew Goodall had written to all health boards “to seek urgent assurance that good governance arrangements, in relation to procurement and recruitment, are in place across Wales”.
Angela Burns, health spokeswoman for the Welsh Conservatives, said the report would “shake to its core public confidence in how the Cardiff and Vale health board’s senior management team conducts its work”.