Leaked documents confirm the earlier involvement of southern
racing clubs in what has become a major multi-agency
investigation involving alleged pokie money-go-rounds.
Earlier this year, the Department of Internal Affairs (DIA)
announced a major investigation - Operation Chestnut - had
been launched into the alleged manipulation of gaming grants.
That joint investigation involved the department, the Serious
Fraud Office (SFO) and the Organised Financial Crime Agency
of New Zealand (Ofcanz).
DIA documents recently obtained by the Otago Daily
Times reveal Operation Chestnut was launched more than
four years ago when investigators held interviews concerning
a dozen southern racing clubs.
In 2010, the ODT reported the DIA was investigating
the involvement of southern racing clubs in an alleged
''money-go-round'' involving pokie grants.
That investigation related to the ownership of several South
Auckland pokie venues, which were, in turn, allegedly aligned
with racing-friendly pokie trusts.
That relationship, illegal under the 2003 Gambling Act,
resulted in a ''money-go-round'' of pokie grants being
returned to southern racing interests.
While the DIA refuses to comment on whether Operation
Chestnut was linked to southern racing clubs, the leaked
documents confirm the relationship, and name clubs and trusts
A DIA spokeswoman said the department would not comment on
the nature of Operation Chestnut, but confirmed the
department formally began the investigation in June 2012.
That investigation ''evolved from a number of investigations,
which started at different times''.''
These were merged into one investigation when commonalities
were identified between them.''
Those commonalities are believed to have involved several key
players and trusts, who reprised the money-go-round in other
The documents detail how several southern racing clubs
recorded on their annual reports an investment with ''Hagley
Trustees No 10'', a trust account linked with a
That money - ranging from $5000 to $85,664 - went to the
trust account allegedly to buy two South Auckland bars.
In turn, money flowed back to the Otago and Southland-based
trusts via pokie grants.
Eight southern clubs and a sister club in the Taranaki region
were named in the original investigation, but details from
the clubs and presidents proved difficult to obtain as ''they
know very little about the investment and hold no
The report recommends the trust involved, the New Zealand
Community Trust (NZCT), no longer allocate pokie grants to
Gallop South, the Riverton Racing Club, Gore Racing Club,
Taranaki Racing Club, Central Otago Racing Club, Otago Racing
Club, Southland Racing Club, Tapanui Racing Club, Waikouaiti
Racing Club and Beaumont Racing Club.
Gallop South general manager Malcolm Little had no comment to
make ''at the moment'' concerning the investigation.
Earlier this year, DIA and SFO staff executed search warrants
and seized computers, while several trusts, including the
NZCT, Infinity Foundation and the Bluegrass Trust, were
confirmed as part of that joint agency investigation.
Last year, the ODT reported the Bluegrass Trust was
the biggest pokie funder of the southern racing industry,
despite having no pokie venues in Otago and Southland.
This month, the DIA issued a statement from gambling
compliance director Debbie Despard saying Operation Chestnut
was ''the largest investigation in the history of the
That investigation has involved more than 100,000 documents,
with key people of interest identified.
They were interviewed the previous week.
Operation Chestnut is expected to be concluded in the first
half of next year.