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

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