Official inquiry possible into DCHL

Bevan Dodds
Bevan Dodds
The Office of the Auditor-general is considering investigating claims of dodgy loans, financial errors and conflicts of interest inside Dunedin City Holdings Ltd (DCHL) and two of its subsidiary companies.

Former Stop the Stadium president Bev Butler has complained to the Auditor-general's office over claims relating to DCHL, Delta Utility Services Ltd and Newtons Coachways (1993) Ltd.

A second unnamed person has also asked the OAG to investigate "all matters" relating to the Forsyth Barr Stadium - the second time the OAG has been asked to investigate the issue.

An OAG spokesman yesterday confirmed two complaints were being assessed, but could not say when a decision would be made about whether to proceed with any full investigation.

DCHL chief executive Bevan Dodds, chairman Paul Hudson and Delta chairman Ray Polson all denied any wrongdoing yesterday, with Mr Hudson saying it was "disappointing" Ms Butler had approached the OAG without first approaching him.

Ms Butler said her complaints related to information gleaned from the companies using the Local Government Official Information and Meetings Act 1987.

She claimed to have found a $165,000 "error" in DCHL's annual report, as well as possible conflicts of interest within DCHL over borrowing by the company.

She also questioned a $7.1 million loan from Delta to Newtons, one of its subsidiaries, to fund property purchases by Newtons at Jacks Point, in Queenstown, and Luggate.

She claimed the loan breached Delta's statement of intent, which required the company to seek council approval for loans over $1 million, and that the recipient company, Newtons, was operating without a statement of intent between 2007 and 2011.

However, Ms Butler refused to go into detail about the perceived conflicts of interest or the $165,000 error, saying the OAG should examine them first.

Mr Dodds said he was aware of some of Ms Butler's claims, but not of any $1 million borrowing cap requiring council approval to break.

However, he had not looked into claims of a $165,000 error in the company's annual report, and did not plan to.

"It's history ... If it was an error, then $165,000 would not be material to the overall accounts."

Asked about conflicts, Mr Dodds said he did not know "the nature of her [Ms Butler's] problem", while Mr Hudson said she would "have to be specific".

"I don't know what she means."

Mr Polson confirmed $7.1 million borrowed by Delta had, in turn, been loaned to Newtons in several tranches since 2006, funding two property purchases in Queenstown and Luggate.

However, claims of a $1 million borrowing cap were incorrect.

Newtons' 2011-12 statement of intent obliged the company to seek approval from the Delta board for purchases more than $1 million, which had been obtained, a Local Government Official Information and Meetings Act request response to Ms Butler from Delta chief executive Grady Cameron showed.

However, Mr Polson said Delta's statement of intent, in turn, required the company to seek council approval only for purchases over $10 million.

The $7.1 million loan did not cross that threshold, and was anyway divided into several payments, he said.

"There's nothing mysterious about the loan at all," he said.

Newtons was an inactive company at the time of the property purchases, and therefore did not require its own statement of intent, but was used as a subsidiary property investment company by Delta, he confirmed.

It now had a statement of intent in place since being reactivated recently, and was in the process of being rebranded for Delta's property investment purposes, he said.

Ms Butler said her information from DCHL and its subsidiaries pre-dated last week's revelations the Dunedin City Council faced an $8 million shortfall caused by DCHL dividend problems.

However, she also "totally" supported the request to the OAG for an investigation of all stadium matters, saying it "forms the core" of the city's debt problems.

She hoped the OAG would agree to investigate the council's "incompetent" financial management, and believed a statutory manager should replace the council's elected arm and run the city.

Dunedin Mayor Dave Cull said when contacted it was time to focus on the future, rather than "constantly relitigating the past", and he was confident the council could manage its financial difficulties.

- chris.morris@odt.co.nz

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