On Tuesday, the Gambling Commission upheld a decision regarding the Trusts Charitable Foundation, which paid $468,000 in fees to a company operated by Queenstown businessman Murray Acklin.
Those payments resulted in the Levin-based foundation, which operates 893 gaming machines in 74 venues, having its gaming licence suspended for six days.
Internal Affairs gambling compliance director Mike Hill, when asked if he would prosecute the foundation or seek to recoup the money, said the department would consider its options.
"The department will consider its options in the light of the Gambling Commission decisions case by case, including whether it is now appropriate to take action retrospectively," he said.
Tuesday's decision relates to Mr Acklin's appointment as the foundation's "executive trustee with special responsibilities".
Those special responsibilities include approaching high-turnover gaming venues, and offering free TAB upgrades so they would switch allegiance from other gaming trusts as part of an aggressive expansion project by the foundation.
More than half of gaming machine proceeds then would be granted to the racing industry by the foundation, which was a major supporter of the racing industry.
For his role with the foundation, Mr Acklin was paid $468,000 over a three-year period, including $43,000 for travel, accommodation and meals.
Yesterday Mr Acklin, declined to answer questions from the Otago Daily Times, and referred comment to foundation chairman, Malcolm McElrea, of Milton.
Mr McElrea could not be reached for comment yesterday.
The New Zealand Racing Board, which administers the TAB, distanced itself from any involvement with Mr Acklin, a former board member.
Board spokeswoman Jessica Venning-Bryan said Mr Acklin finished his three-year term on the board on March 31, 2006 and "we have had nothing to do with him for a very long time".
However, she confirmed for three months before the end of his term, Mr Acklin had visited gaming machine venues with a TAB business development manager. The visits would have looked official, she said.
Any offers Mr Acklin made to venues for $10,000 upgrades of TAB facilities, were "his own volition" and made without knowledge of the board, she said.
An internal investigation, which began after the board was approached by the Department of Internal Affairs, cleared the TAB business development manager of any wrongdoing.
"It was an innocent act and he was cleared," she said.
As a result of the board's internal investigation, clear protocols were established for staff, she said.
Yesterday, the racing board talked to Internal Affairs over the issue, she said.
The ODT also understands New Zealand Thoroughbred Racing, has also launched an internal investigation. Mr Acklin was appointed to the board of NZTR (the governing body) in January.
Internal Affairs Minister Nathan Guy said "these decisions by the Gambling Commission have significant implications for gambling operators".
"This sends a clear message to the sector about its fundamental obligations in raising funds for community benefit. These decisions will also assist the department in targeting non-compliance."
Martin Cheer, chief executive of Pub Charity, the third-largest trust in New Zealand, said he was "shocked, embarrassed and disappointed by some aspects of what has occurred".
Mr Cheer said $500,000 appeared "excessive" and he was certain there would be further proceedings on the matter.
Problem Gambling Foundation chief executive Graeme Ramsey said the money should have gone to community groups and the amount was "gobsmacking".
The Gambling Commission's decision to suspend the foundation did not go far enough, Mr Ramsey said. He believed the five trustees should be prosecuted for the "unlawful" payments.
The $18,000 spent over 17 months by TTCF on entertainment expenses for trustees, the majority of which was for food and alcohol, was an excessive amount for just five trustees, he said.
"The trustees have fed off the misery of others and should be made to pay the money back.
"There are lots of community groups for whom this amount of money would have made a massive difference," Mr Ramsey said.
"That $500,000 should have gone to community groups.
"That such a huge sum of money was paid to a trustee or his company is 'gobsmacking'."
Mr Ramsey questioned how New Zealanders could trust the trusts, when Internal Affairs said 30 of the country's 50 trusts had similar issues of non-compliance.
"The number of snouts in the trough of this public money is shameful.
"This is money that is supposed to be going to community purposes not into the pockets or stomachs of trustees."
He also hit out at the Dunedin-based Southern Trust, after it spent $190,000 refurbishing four gaming machine venues - including a Wellington strip club - and had its licences suspended for five days.
"Money which should have gone to a local kindergarten has been spent on 'tarting up' the Mermaids Strip Club on Courtney Pl."
In regard to the strip club, $26,000 was used to refurbish its gaming machine room, Southern Trust chief executive, Karen Shea, said.
She called for legislation governing gaming trusts to be reviewed, to prevent further "grey" areas.
The suspension of its 89 venues which house 954 machines, was expected to cost the society $400,000, of which $160,000 would have gone to the community.
