Freeze on grants urged

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 involved.

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 areas.

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 Christchurch-based lawyer.

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 documentation''.

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 gambling sector''.

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.

hamish.mcneilly@odt.co.nz

Why stop at racing?

Why stop at Racing, when it was the Otago Rugby Football Union which originally purchased the South Auckland bars for the express purpose of diverting 'pokie proceeds' from South Auckland to the ORFU coffers in Dunedin? This was  in direct confrontation of the law which clearly states that any and all funds from pokies must be dispersed to charities within the districts from which those funds wereraised.The ORFU subsequently  disposed of the bars to the Racing fraternity after what one could only surmise was advice received. This does not return the missing funds from the ORFU to the rightful jurisdictions. In my opinion that is a flagrant breach of the law.

Connections

The question might be: why the institutional and bureaucratic silence on connections between racing and professional rugby in the south? The whistleblowers (including the people who have worked for DIA in the official capacity of whistleblower) have repeatedly linked both 'industries' to substantial pokie rorts and siphoning of 'charitable' funds from the gaming bars of Auckland, via questionable activities of pokie trusts, licensing trusts, private property trusts, and more.

They've all been named at various sites online including names of individuals and their connections. Formal and undeniable evidence to support online and news media statements - as obtained and shared by the whistleblowers - has been cogently and decisively provided to DIA, SFO, OAG, Ombudsman, NZ Police, IPCA and others. No-one in authority appears to want to touch the multi-million dollar rorts perpetuated by our 'king sport' rugby, down here. It strongly appears investigation of racing clubs is the distraction to avoid real meat; this is politically driven... massaged by government for protection, the larger question.

The Pokie rorts

The long, sordid and sorry saga of pokie trusts continues unabated in this country and will continue to do so until there is political will to change the whole structure.  The concept of the profits from pokie machines going to fund further gambling in horse racing is plainly stupid, but despite years of this happening, there is no political will to change the gambling legislation. 

But horse racing is not the only dodgy recipient of pokie funds.  Only too often the recipients are entities that are not entitled to receive funds, but do so through front organisations, compliant accountants and lawyers.  Readers of the ODT will no doubt recall such entities. 

But what do we see?  We see John Key actively expanding the base source of these pokie empires such as Sky City, assisted by former opponents such as Len Brown who seem to have been easily persuaded.  The Labour Party also seem more than contented to leave things in the gambling sector to those that are now quite experienced at all the rorts. 

The DIA have, in the past, proved themselves to be slow to react, less than comprehensive in what investigations they have done, and incapable of stopping what is a mulit-million scam.

Gambling upon gambling

Given that so few people actually go to the track any more surely the whole purpose of racing is supporting gambling, why do they need more gambling grants to pay for the stakes for their races.

I think the racing industry (it's not a 'sport') should be solely supported by the TAB and not by other pokies.

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