Monthly Archives: November 2012

Dunedin City Council vs Anzide Properties decision: The road “has no legal basis”

Concerning the State Highway 88 realignment, skirting the new stadium.

Judgment-221310 (PDF, 109 KB)

DScene breaks the news at Stuff:

Dunedin City Council fined for road botch up
A High Court decision has slammed Dunedin City Council’s (DCC) handling of a roading realignment in the city, ordering the cash-strapped authority to pay affected parties more than $185,000 in costs. Justice Alan Mackenzie indicated in a written decision the legality of the stretch of State Highways 1 and 88 through the city remained in question because of the council’s botch up.

Related Posts:
9.6.12 City Property to compete more obviously in the market
27.5.12 SH88 realignment – information
25.5.12 SH88 realignment costs (injunction)
27.2.12 Bringing DCC councillors, staff, related entities and individuals to account
23.8.11 Stadium project tangles
24.11.10 SH88 realignment for stadium disrupts traffic
29.10.10 DCC Chief Executive resigns – timing is everything!
21.7.10 SH88 realignment – update
7.7.10 Goodbye to great store buildings in Parry St
21.4.10 SH88 realignment – update
31.3.10 SH88 realignment
24.2.10 SH88 realignment: Are ratepayers buying the land twice?
20.11.09 Interesting. SH88 realignment.
2.9.09 SH88 realignment past stadium
27.8.09 $294.8m investment for Otago region
19.5.09 There’s more, really?
12.2.09 DCC, and the right to ask?

Posted by Elizabeth Kerr

72 Comments

Filed under Business, Construction, DCC, Geography, People, Project management, Property, Site, Stadiums, Town planning, Urban design

Martin Legge: DIA audit criticism #pokierorts #coverup

Comment received from Martin Legge
Sunday, 18 November 2012 5:41 p.m.

In 2007, the National Party criticised the Labour Government following a damning report by the Office of the Auditor General into DIA’s regulation of the pokie industry. The boot has been on the other foot for four years, and yet do we hear calls from anyone in the Labour Party, particularly in Dunedin?

Press Release [2007]
Auditor-General slams Internal Affairs over gaming says National Party MP

Internal Affairs Minister Rick Barker must act now to address the criticisms of his department over its failure to effectively control the operation of non-casino gaming machines, says National Party Internal Affairs spokeswoman Sandra Goudie.

The Controller and Auditor-General, Kevin Brady, today released his report Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines.

The report shows the department’s policies and procedures do not comply with the Gambling Act 2003 and includes 17 recommendations for change.

“The department’s own ‘comprehensive licensing manual’ outlines policies and procedures that do not comply with the Act and shows licensing staff were issuing and renewing licenses without delegated authority.

“The report also found that the department’s audit checklist and manual were not consistent with the Act, and information was missing from the department’s risk profile rating of operators.

“This report shows a department clearly out of touch with its key role and clearly being ignored by the Minister.

“How could the Minister have let his department get into such a state where any old staff member can approve a licence?

“Its [sic] no wonder eyebrows have been raised over the department’s inability to get convictions of operators in breach of the Act.

“It is time Mr Barker gave his department some much needed ministerial direction.”

Audit Report from Kevin Brady
14 February 2007

Foreword
Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines.

I felt it timely to review the effectiveness of controls on non-casino gaming machines because of the large amount of money placed in the machines (estimated by the Department of Internal Affairs at more than $8,500 million annually), the potential for the machines to cause harm in the form of problem gambling, the amount of funds from the machines going to clubs and the wider community, and a relatively new legislative framework covering gambling.

The Department of Internal Affairs administers controls on non-casino gaming machines. My review focused on three main areas of controls. These were the controls on licensing of non-casino gaming machine operators and venues, on operator and venue costs, and on the distribution and application of funds to the community including through grants.

I found that the Department of Internal Affairs has extensive policies and procedures for licensing and auditing of venues and operators, and a risk-based approach to compliance. However, there were areas of its policies, procedures, and practice that did not meet all of the requirements of the Gambling Act 2003. These included its procedure for renewing licences and for auditing. I also found that its licensing staff were issuing and renewing licences without the necessary delegated authority. The Department has committed to rectifying this issue, and had largely done so at the time this report was being finalised.

While the Department of Internal Affairs has committed to comprehensively monitoring the outcomes being achieved in the non-casino gaming machine industry, it is not yet doing this in a systematic or comprehensive manner. This limits the Department’s ability to demonstrate the results of its work and refine the way it works to achieve better outcomes.

I thank staff in the Department of Internal Affairs for their assistance, responsiveness, and co-operation during the audit. I also thank people in the industry who generously gave their time and views during the audit.

The Department has been very engaged in, and supportive of, the audit process. Its commitment to implementing the audit findings to make improvements is pleasing.

K B Brady
Controller and Auditor-General

[ends]

Recent Posts:
13.11.12 Martin Legge replies to Sunday Star-Times story #DIA #coverup
11.11.12 Department of Internal Affairs #pokierorts #coverup #TTCF

Posted by Elizabeth Kerr

29 Comments

Filed under Business, Economics, Media, Name, People, Politics

DCC Annual Report to 30 June 2012 – borrowing and interpretation

DCC Annual Report (PDF, 1.1 MB)

Comments received.

Mike
Submitted on 2012/11/18 at 12:48 pm
well spotted – so in essence DVML quietly borrowed an extra $8.5m and managed to transfer it to the DCC without incurring any tax because it was a ‘capital gain’ rather than a ‘dividend’

Rob Hamlin
Submitted on 2012/11/18 at 2:07 am
Another little gem from the DCC annual accounts. A positive little Kimberly it is. Calvin Oaten and I found this little morsel from the sewers of local government yesterday and will now share it with you.

On page 132 it has a table of figures titled ‘Separately Disclosed Revenue’. One line entry towards the bottom is particularly interesting. The title is ‘Profit on sale of Stadium (2012)……. $8,480,000’. This profit appears in both ‘Core Council’ (DCC only) and ‘Consolidated’ (Council & DCHL) columns.

Initially, this seems like great news. We’ve sold the bloody thing and got eight and a half million dollars for it. But, as is always the case, things are not all as they appear.

Nearly sixty pages later, on page 188, we have the following sheet of gibberish:

“Sale of Forsyth Barr Stadium to Dunedin Venues Limited

On the 31 May 2012 the Council sold it’s [sic] interest in the stadium to a wholly owned subsidiary Dunedin Venues Limited. This was the culmination of a project spanning five years during which time the method of delivering the project changed and as a result there is a technical accounting surplus on disposal of $8,380,000. The following note is an explanation of these technical accounting issues.

Book Surplus on disposal of the stadium $ ‘000
Sale price 225,000
Capitalised stadium cost including interest 216,520
Surplus on sale of asset as per 2012 Annual Accounts 8,480
Less stadium costs written off to operations in 2007-2008 5,537
Plus stadium revenue included in operations in 2007-2008 (583)
Surplus on disposal 3,526

Book surplus on disposal of the stadium
The method of undertaking the stadium project changed over the years of the project. The accounting treatment always followed the method of project delivery and was audited as being the correct treatment at the time. In 2007–2008 year it was expected that the project would be delivered by a third party and that the Council expenditure was therefore operational. This resulted in $5,537,000 being correctly expensed in 2007–2008 year. In subsequent years once the decision was made that the Council would build the stadium, the expenditure was correctly capitalised. The surplus of $3,526,000 would remain as it is the difference between all the costs incurred by the Council and the sale proceeds received.”

Also on page 123 we have this note to one of the CCO fragmentary reports:

CCO Property Plant and Equipment
All CCO property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
The Stadium is a separate class of asset and is recorded at cost less any accumulated depreciation and any accumulated impairment losses.”

So what happened? Well, you may remember that the total cost of the Stadium came in at around $216.5 million. Then, last year the DCC acquired a ‘valuation’ for the Stadium (God knows how and God knows from who) of $225 million. Its commercially realisable value is in fact, as we all know, the commercial value of the site minus the costs of demolition and removal, which is as near zero as makes no difference.

However, it now appears that DVL then ‘bought’ the stadium from the DCC at this higher valuation. It is hard to see any good reason why they would do this, as the historical cost of the stadium itself was $216.5 million – this figure would have fitted well with their own policy for valuation in the note on page 123. As the structure was brand new when ‘bought’, a second valuation was unnecessary. The historical cost of construction would have been more than adequate as a transfer price.

However, it appears that this unnecessary valuation exercise and its absurd outcome has allowed a further $8.5 million to be transferred from DCHL to the DCC this year on top of the $17.95 million handed over as a dividend, for a total of $26.45 million. It can also be claimed now with a straight face that DVL are acting in accordance with their requirement to record assets at cost as $225 million is what they ‘paid’ for it!!

Now let’s deal with the gibberish on page 188, which covers the financial year 2007-2008 (presumably ending 1 April 2008). Apparently, this specific structure incurred over five and a half million dollars of costs and over half a million dollars of REVENUE!!! before it had been fully designed or even approved as a specific entity that the DCC was actually going to construct! The final approval came nearly a year later I seem to recall.

I personally find this reduction in this ‘accounting profit’ to be wholly incredible. I can also find no adjustments matching this $5 million or so in the costs side of the DCC’s figures – even though the $8.5 million extra revenue appears in its entirety. Mind you, in the 200 pages plus of fragmentary and largely useless figures, I guess that I could have missed it.

Page 13 is also interesting. It is entitled ‘Audit Report’. Properly audited accounts require a signed statement by the auditor to form part of them, stating that the auditor’s unqualified opinion that they are satisfied with the accounts – or a statement of their reservations (qualifications) if they are not.

Page 13 is blank (surprised?)

On page 1, we have the following statement:

“This report asks the Council to approve and adopt the Annual Report for the year ending 30 June 2012.

The Director of Audit New Zealand responsible for the audit and the Audit Manager will attend to discuss the audit and answer any questions from councillors.”

In my opinion this is utterly inadequate basis upon which to approve this report. It should not have been even presented to Council, let alone approved, without a complete auditor’s report being attached to it.

It seems that the Council will have to find $25 million plus in savings by next year just to tread water, and that’s if we don’t get any more unpleasant surprises. Interesting times.

[ends]

Posted by Elizabeth Kerr

16 Comments

Filed under Business, DCC, DCHL, DVL, DVML, Economics, Name, People, Politics, Project management, Property, Site, Stadiums

Otago Polytechnic EXCITE 12 student showcase

Promising a compelling fortnight of emerging talent
from the diverse disciplines of art, carpentry, design, fashion, horticulture and information technology, excite 12 is the culmination of the time, effort and creativity Otago Polytechnic students have invested in their studies.This innovative and varied series of events offers the public a chance to see and even purchase a range of exceptional student work.

● School of Design – DEBRIEF design exhibitions
● School of Design – SURFACE creative studies exhibition
● School of Architecture, Building and Engineering – OPEN HOMES
● Dunedin School of Art – SITE 12 exhibitions
● School of Natural Resources – PLANT SALE
● School of Information Technology – exhibition ended

CHECK WEBSITE FOR DETAILS
Exhibitions open this weekend: DEBRIEF and SITE 12

http://www.otagopolytechnic.ac.nz/about/events/2012-excite.html

Posted by Elizabeth Kerr

4 Comments

Filed under Architecture, Construction, Design, Events, Fun, Innovation, Inspiration

NZIA Southern: Inaugural Ted McCoy Lecture – David Trubridge

All welcome
No admission charge

Friday 23 November 3.30-5pm
University College of Education Auditorium, 143 Union Street, Dunedin

Posted by Elizabeth Kerr

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Filed under Architecture, Business, Design, Events, Innovation, Inspiration, Name, People

Martin Legge replies to Sunday Star-Times story #DIA #coverup

### Sunday Star-Times Sun, 11 Nov 2012
Pokie man stopped from rort inquiries
By Steve Kilgallon
A senior Internal Affairs investigator says he was prevented from probing pokie rorts by his own department because it did not have the confidence to prosecute major crimes. Dave Bermingham, an investigator and analyst who left the department in August, said Internal Affairs was incompetent and should be stripped of its role investigating gaming machine fraud. {continues}
*No weblink available. Full text reproduced at post.

Comment received from Martin Legge
Tuesday, 13 November 2012 11:37 a.m.

Tony Molloy QC had this to say about a Government Regulator after his enquiry into the collapse of the finance industry:

“The destruction of billions of dollars of ma and pa retail wealth, through finance company meltdowns was the inevitable consequences of at least three decades of unreadiness, unwillingness and inability of regulators, enforcers, courts, lawyers and accountants to fulfil their roles with integrity.”

The Commission of Enquiry into The Pike River Disaster had this to say about another Government Regulator, the Department of Labour:

“DOL’s compliance strategy did not require an assessment of Pike’s safety and operational information. The inspectors did not have a system, training or time to do so. When, at the hearings, they were shown examples of safety information obtained by the commission from Pike’s records, the inspectors were visibly dismayed. This was not a case of individual fault, but of departmental failure to resource, manage and adequately support a diminished mining inspectorate.

DOL’s main public accountability documents, the statements of intent and annual reports to Parliament, did not reveal any concern about DOL’s ability to administer the health and safety legislation. The statements of intent and the annual reports contained many high-level statements on outcomes and outputs but it was impossible to gain much insight into the performance of the mining inspectorate, or the health and safety inspectors as a whole. Measures used, such as the raw numbers of investigations carried out by the health and safety inspectorate, were not informative.

The gap between the high-level statements in those documents and the reality on the ground was remarkable.”

Maarten Quivooy was the NZ Safety Manager at the DOL over this period but left DOL to become DIA’s head of Gambling Compliance. When the Sunday Star-Times put the allegations of cover ups and closing down of investigations within the pokie industry which he now oversees he had this to say:

“They do their investigation work to the best of their ability and from their perspective it can seem like it goes into a black hole but it has had active and thorough scrutiny by senior management.”

His comments suggest that the “remarkable gap” between high level statements and reality is now opening up within DIA !!!

To comfort the public and Politicians, Quivooy is quick to claim their investigation into TTCF was reviewed by Office of the Auditor General. What he doesn’t tell the public is that in July 2009, over the same period that Bermingham and DIA investigators were conducting their investigations into TTCF, Audit NZ was conducting its own independent and statutory audit of TTCF, as a public entity. That audit also found serious issues involving expenditure but neither Audit NZ or its parent body (OAG) took action or followed up on the findings at the time. DIA and OAG only bounced into life when I appeared as a “whistleblower” in October 2010.

OAG have never given me a satisfactory explanation as to why they didn’t immediately act or follow up to protect millions of dollars of public money but their own failure to act might explain why OAG have been so willing to endorse the DIA investigation that I have labelled a whitewash and Bermingham recently describes as a cover up.

A case of two well- resourced government regulators sticking together to avoid embarrassment.

[ends]

Posted by Elizabeth Kerr

7 Comments

Filed under Business, DCC, Economics, Geography, Media, Name, ORFU, People, Politics, Project management, Property, Site, Sport

Delta purchases | Vandervis OAG complaint accepted

Read latest comments at this thread

### ODT Online Mon, 12 Nov 2012
Councillor lodges Delta purchase complaint
By Simon Hartley
A complaint has been lodged with the Office of the Auditor-General by Dunedin city councillor Lee Vandervis over Central Otago subdivision purchases which soured and left the council millions of dollars out of pocket.

DCC infrastructure company Delta bought part of a subdivision in Luggate in July 2008, and another at Jacks Point, near Queenstown, in May 2009, but their value has subsequently been written down by millions of dollars.

In mid-October, the DCC announced a $9 million write-down of Delta investments, including the subdivisions, which contributed to the Dunedin City Holdings Ltd (DCHL) group of companies’ booking a $5 million loss for the year to June.
Cr Vandervis claims pre-purchase details of the Jacks Point and Luggate subdivision acquisitions, plus details of City Forests’ mothballed wood-processing plant at Milburn, are being withheld from him.
Cr Vandervis contacted the Otago Daily Times yesterday, saying the Office of the Auditor-General had accepted his complaint and it had been passed on to its investigation unit, but he was yet to hear if the OAG would launch a full investigation.
Read more

A copy of the formal complaint was forwarded to What if? Dunedin on Thursday, 8 November 2012.

Fairfax | DScene publishes Cr Vandervis’ questions (page 3):

Mayor sees red over Vandervis questions (ODT, 30.10.12)

Related Posts:
31.10.12 Dunedin City Council – all reports posted, belatedly!
30.10.12 DCHL ‘run by a bunch of fools’ -agreed
26.10.12 No cloud has lifted off DCC, the sins are too great and numerous
26.10.12 DCHL: New directors for Aurora, Delta, City Forests
26.10.12 DCHL borrowed $23 million to bail DCC
17.10.12 The only thing up…. (for sale)
17.10.12 DCC on DCHL, subsidiaries and DCTL
12.10.12 DCHL, subsidiaries and DCTL
28.9.12 The End of The Golden Weather?
11.9.12 Delta Utility Services Ltd
30.8.12 DCC seen by Fairfax Business Bureau deputy editor Tim Hunter
24.8.12 Dunedin’s 3 waters, no CCO
16.8.12 Dunedin water assets
29.3.12 Dunedin City Council company sponsors Highlanders
7.3.12 DScene: Call for full inquiry into stadium project
20.12.11 Delta and the GOBs #DCHL #DCC
18.11.11 Delta rebrand
29.7.11 WE ALL SAID IT #DunedinCityCouncil #SHAME
9.2.11 DCC and DCHL, was there ever any doubt?
26.8.09 DScene: Delta, STS, DCC larks
9.7.09 Delta dawn what’s that flower…

Posted by Elizabeth Kerr

196 Comments

Filed under Business, DCC, DCHL, Economics, Geography, Media, Name, People, Politics, Project management, Property, Site