Rugby Southland is the latest sporting organisation to be embroiled in pokies issues.
Yesterday an employee of the union pleaded guilty in the Invercargill District Court to two charges under the Gambling Act concerning conflicts of interest in gaming machine grants.
The man, whose name was suppressed, was discharged without conviction.
The Department of Internal Affairs said in its summary of facts that Rugby Southland was approached in 2007 by the Lion Foundation to expand its poker machine operation in the province In return, Rugby Southland, after buying the South Invercargill-based pokies venue, the Strathern Inn, could expect an increase in grants from the Lion Foundation, one of the largest pokies trusts in the country.
Internal Affairs alleged the defendant, although an employee of the union, also took an active part in the financial management of the Strathern Inn.
Grants from the charitable trust to Rugby Southland increased markedly during that time.
The Otago Daily Times contacted the union last year after a spike in gaming machine grants, to ask about apparent conflicts of interest between the directors of the Strathern Inn and Rugby Southland.
The union denied a conflict of interest existed, and dismissed the increase in grants as coincidence.
However, a confidential 2007 Pricewaterhouse Coopers report on the union, obtained by the ODT this month, reveals the union was aware of the arrangement.
"Rugby Southland has been working for some time to increase the revenue it receives from gaming trusts.
"A number of investors have recently acquired a venue in Invercargill that is reputed to have a well-run and high-turnover gaming operation. This venue will be aligned with the Lion Foundation," the report notes.
"Rugby Southland has advised that the arrangement is legally robust."
Rugby Southland chairman Owen Shaw did not return calls yesterday.
Internal Affairs gambling compliance director Mike Hill said the grants process needed to be transparent and fair.
Community groups should expect to receive fair and equal consideration when applying for funding, and owning or controlling a pub with gaming machines did not entitle any group to preferential treatment, Mr Hill said.
Charges connected with the same matter, brought by the Department of Internal Affairs against the Lion Foundation, will be heard in the North Shore District Court in February.
