Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Auditor-General wings Dunedin Council in Jacks Point report

Auditor-General wings Dunedin Council in report on Jacks Point debacle

By Pattrick Smellie

March 13 (BusinessDesk) – The Auditor-General holds the Dunedin City Council partly to blame for pre-tax losses totalling $8.7 million on Central Otago property developments in the late 2000s by its wholly-owned electricity network company, Delta.

Delta lost $5.9 million on property investments at Luggate and was reported by NBR in 2009 as “rescuing” failing finance company Hanover Finance over its exposure to the failing Jacks Point development, near Queenstown, by buying 98 plots in the 700 plot development.

Delta went on to lose $2.8 million at Jacks Point. Total losses of $8.7 million may be reduced to a net $6.4 million after $1.5 million of available tax losses are applied.

The report published today by the Office of the Auditor-General found “no evidence of impropriety or of poorly managed conflicts of interest in relation to either investment.”

“However, they did identify some breaches of the Local Government Act 2002 and the Companies Act 1993 and instances of Delta using artificial business structures to avoid public accountability.”

Potential conflicts of interest involving South Island business identity and Delta director Mike Coburn, who was also a Jacks Point director, had “caused me to pause and think,” said Auditor-General Lyn Provost.

They had also concerned members of the public and her staff, she said.

Coburn was a director of Dunedin City Holdings, which controlled Delta. He resigned in 2011 rather than be sacked by Dunedin mayor Dave Cull along with the rest of the board of DCH, a wholly-owned subsidiary of the Dunedin City Council, whose directors were also the directors of Delta.

Cull sought the Auditor-General’s inquiry.

However, the report criticises the Dunedin City Council itself for placing pressure on DCH to make up for forecasts of plunging dividends from the council-owned assets in 2006, without giving the company any guidance on the risks the city council was willing to bear.

“I consider that the Council and Dunedin City Holdings Limited bear some responsibility for the investments,” said Provost.

“The council had given no direction about how much risk it was willing to take on. Because most of the directors of Delta were also the directors of Dunedin City Holdings Limited, the governance regime that the council had in place did not provide Delta with adequate oversight of, or guidance about, the investments.”

On alleged conflicts of interest involving Coburn, Provost said disclosure processes were “largely adequate.”

“We identified some instances where there should have been earlier or fuller disclosure for better transparency, and one instance where the director's involvement in both sides of a venture would have been problematic had the venture proceeded.”

“In public office, having multiple roles and interests requires careful management,” the Auditor-General said. “People with such interests need to behave with the utmost integrity and transparency to avoid real or perceived conflicts and risks to the public entities they serve.”

“Although Delta carried out a careful process before investing in Luggate, it is difficult, because of the size of the loss, to avoid concluding that the investment was a mistake,” said Provost.

There had been too much focus on potential profit and too little assessment of downside risk.

She would issue a separate report later this year with recommendations relating to the council control of commercial investment entities.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news