An artist's impression of the proposed convention centre
SkyCity got special treatment in its pitch to build the
international convention centre - but nothing which will get in
the way of a formal deal being struck.
An investigation by the Office of the Auditor-General found
the casino's promise to cover the $350 million cost of
building the convention centre gave it a clear advantage over
any other interested party.
It means the casino and executives can get back to
negotiating over the casino's list of changes to the Gambling
Act which it wants to trade for building the centre next to
its Auckland headquarters. The casino has said it wants 300
more pokies, extra table games and an early extension to its
While the report revealed SkyCity was treated "very
differently" to other bidders, Prime Minister John Key said
it "utterly refuted" allegations his Government had struck a
"cosy deal" with SkyCity.
He blamed officials for "a few procedural matters" but said
there was "nothing of substance that would have changed any
of the outcomes".
The process problems identified by Deputy Auditor-General
Phillippa Smith emerged in the report from the time the Prime
Minister - also Tourism Minister - became personally
involved. In August 2009, Mr Key told officials to halt a
scoping project on a convention centre proposal to "close off
the SkyCity angle". He later explained he had a "broad
awareness" SkyCity had development plans.
Mr Key's understanding of the casino's desire for development
followed a meeting between himself and SkyCity executives
although neither Mr Key or the casino "can recall the
discussion" on May 14, 2009. There was also a later meeting
between the casino and the Prime Minister's chief of staff
Wayne Eagleson on June 17, 2009, at which development was
After the PM halted the scoping project, SkyCity met the PM's
senior advisers in September 2009 who said they wanted
changes to the Gambling Act which had previously stymied the
casino's expansion plans by limiting the number of pokies and
other games allowed.
Then Mr Key was briefed on options for the convention centre
at a dinner with SkyCity board members and executives on
November 4, 2009. He urged them to "think outside the box".
As the casino and Beehive moved closer together, Treasury
began raising concerns about "process and probity".
Ms Smith said: "We have concerns about the apparent readiness
of officials to support those discussions developing into
more substantive negotiations without preparing to give
advice on the Government's procedural obligations and
Warnings about process were conveyed to Mr Key in a briefing
note on November 12, 2009.
In 2010, the Government began calling for an expression of
interest from groups wanting the contract. At a meeting with
officials, Mr Key said the SkyCity deal was "a good
However Ms Smith said the process "fell short of good
practice in a number of respects". That included the fact
ministers and officials continued to have contact with
SkyCity to discuss its proposal.
Ms Smith said these meetings were "not appropriate" as it
provided SkyCity with information other bidders did not
receive. She also said the casino had the advantage in
knowing the Government didn't plan on putting any money into
the project, allowing it to shape its offer.
In September 2010, the casino put forward a list of changes
to the law it wanted. It also said it wanted the Government
to buy land from TVNZ to accommodate a large design for the
SkyCity was announced as the preferred bidder in June 2011
with Mr Key promising changes to the Gambling Act would only
come after a public submissions.
Greens co-leader Metiria Turei, who sparked the inquiry with
a complaint, said the report was "hugely damning" and showed
"the relationship with SkyCity was so cosy that the other
proposers didn't stand a chance".
Labour leader David Shearer said: "This has had John Key's
fingerprints all over it and it was a shonky deal and John
Key is donkey-deep in it."
- David Fisher and Adam Bennett of the New Zealand