DCC: What happened to $20 million cash on hand? #LGOIMA

1. Council had $22 million cash on hand.
2. Council spent $20 million (cash) on “capital projects”.
3. Council won’t account for the $20 million.
4. Council seeks open cheque to make discovery.

Report – FIN – 08/09/2014 (PDF, 2.3 MB)
Interim Financial Result – 12 Months to 30 June 2014

On 8 September 2014, the Council’s interim financial result for 12 months to 30 June 2014 was tabled at a meeting of the Finance Committee. A week later, ODT (15.9.14) reported Mayor Cull as saying there was a “significant improvement” to the Council’s core debt position.

In the same item, “Council group chief financial officer Grant McKenzie said the turnaround was partly due to a significant change in the amount of cash held by the council. The forecast had included about $22 million in “cash on hand”, but, since Mr McKenzie’s arrival, the decision had been made to slash the amount to about $2 million, he said. The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.” ODT Link

What if? flagged the ‘cash-no-longer-on-hand’ illumination with a post:
● 15.9.14 Cull’s council spent the cash

Capital projects?
How was the money spent, and who by?
Then, we completely lost sight of it.
As the following correspondence shows, Council spent $20 million of ratepayer funds but refuses to declare where the cash went. Mr McKenzie plays the convenient game of obfuscation —like so many before him, and alongside him now at DCC.

█ Apparently, I’m to be personally charged for demanding relevant paperwork to track down the Public Money.

Accountability? Transparency? What the HELL is that?
NOT something DCC values, that’s a dead cert.

[begins]

From: Elizabeth Kerr
Sent: Tuesday, 23 September 2014 11:13 p.m.
To: Sandy Graham [DCC Group Manager Corporate Services]
Subject: LGOIMA request

Dear Sandy

Re: Cull warns debt still hurdle for council (ODT 15.9.14)http://www.odt.co.nz/news/dunedin/315949/cull-warns-debt-still-hurdle-council

Within the news item it says:

“The forecast had included about $22 million in “cash on hand”, but, since Mr McKenzie’s arrival, the decision had been made to slash the amount to about $2 million, he said.

“The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.”

I would like the DCC to precisely itemise the way(s) in which the city council has spent this $20 million of “cash on hand”, to include the capital projects by name or other reference; the name(s) of the relevant council department(s) and or committee(s) that incurred this expenditure; the dates of expenditure; the spending delegations attributable to which, by name, formal signatories on account; and any other information in legible form that would assist the city council to meet my request in a forthright, full and transparent manner.

I look forward to reply.

Thanks, kind regards

Elizabeth Kerr

__________________________

From: Sandy Graham [DCC]
Sent: ‎Wednesday‎, ‎24‎ ‎September‎ ‎2014 ‎9‎:‎01‎ ‎a.m.
To: Elizabeth Kerr
Cc: Grace Ockwell [DCC]

Thanks Elizabeth

I have forwarded to staff to consider and a response will be provided as soon as possible but in any event within twenty working days. It may be that I need to come back to you with questions of clarification or refinement depending on how this information is stored/held but I will be in touch as required.

Warm regards
Sandy

__________________________

From: Elizabeth Kerr
Sent: Friday, 31 October 2014 1:42 p.m.
To: Sandy Graham [DCC]
Cc: Grace Ockwell [DCC]
Subject: Re: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy

The official information request I made on 23 September 2014 (see emails [above]) is yet to have a response, we are now well outside the twenty working day limit.

Please provide update on how soon the information will be released.

Many thanks, and kind regards

Elizabeth

__________________________

From: Sandy Graham [DCC]
Sent: ‎Friday‎, ‎31‎ ‎October‎ ‎2014 ‎2‎:‎03‎ ‎p.m.
To: Elizabeth Kerr
Cc: Grace Ockwell [DCC]

Sorry Elizabeth.

My fault. I had been supplied with a response and had not forwarded it.

The Group Chief Financial Officer advises:

“This request cannot be completed for what they are requesting as I do not know what capital and operating activity we would assign to the $20 million. In addition the work involved in getting the invoices etc would be significant. What has happened is that we have used our cash on hand to fund council activity (operating and capital) instead of borrowing to do this.”

If you would like me to pursue the possibility of tracking down invoices, I would need to consider charging for this work because there would be significant collation and research required, and even then, we may not be able to fully answer your question. Let me know if you would like me to investigate this further.

The GCFO has indicated he is happy to meet and talk through the issues but is unable to provide any further information at this stage.

Again, apologies for my tardiness.

Sandy

__________________________

From: Elizabeth Kerr [mailto:ejkerr@ihug.co.nz]
Sent: Friday, 31 October 2014 2:05 p.m.
To: Sandy Graham [DCC]
Cc: Grace Ockwell [DCC]; Grant McKenzie [DCC GCFO]
Subject: Re: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy

Thanks for getting back to me promptly today. I acknowledge receipt.

I’m considering your response fully and as a consequence looking into all my options.

Kind regards, Elizabeth

[ends]

Serendipitously, the same day (31.10.14), I heard from Cr Lee Vandervis —unbeknownst to me, a couple of days earlier he had voiced a similar query about the [MISSING PRESUMED DROWNED] $20 million “cash on hand”, and more, following his study of the Council’s Annual Report 2013-14.

Report – Council – 30/10/14 (PDF, 2.5 MB)
Approval and Adoption of Annual Report

[begins]

—— Forwarded Message
From: Lee Vandervis
Date: Tue, 28 Oct 2014 22:38:15 +1300
To: Sue Bidrose [DCC], Sandy Graham [DCC]
Conversation: Annual Report
Subject: Annual Report

Hi Sue,

The beginning of the Annual Report seems very reassuring with your highlighting our billion dollars worth of saleable assets, and our debt levels in pretty good shape and improving.

Looking further into the body of the report there is a lot of tabulation of various kinds of assets, but I seem not to be able to find the same depth of discussion on debt or the historical debt graph that I fought for years to finally get included. [A Consolidated term liabilities figure of $622,843,000 does appear on p199. I had been led to expect a historical graph of DCC debt and of total consolidated debt]
Is it possible to also have a graph of all inclusive historical staff costs included? There was one a while ago but it seems to have been dropped again.

At the end of the document I find a number of graphs that feature a fetching orange colour bar that seems to indicate that our “thriving and diverse economy” under Affordability has exceeded our LTP quantified limit on rates income in 2013 and 2014, exceeded the quantified limit on rates increase this year, slipped below the balanced budget benchmark, and also slipped below the essential services benchmark for this year.
It is no surprise to me that Citipark has not achieved targets, but I am surprised that your opening comments are so upbeat when the closing benchmarks are not met and the quantified limits seem to be exceeded.
These benchmark and limit graphs may have been misinterpreted by me because despite reading them several times I remain unsure of their real import.
Is it possible for someone to explain to me how the ‘pretty good shape and improving’ overview is supported, especially in light of the $20 million cut [from $22 million] in cash on hand and various sales that we have apparently recently instituted, combined with further expected constraints on DCHL subvention payments?

Looking forward,
Lee
__________________________

—— Forwarded Message
From: Lee Vandervis
Date: Fri, 31 Oct 2014 15:34:29 +1300
To: Debbie Porteous [ODT], Nicholas GS Smith [ODT]
Conversation: Annual Report
Subject: FW: Annual Report

Hi Debbie,
The Tuesday 28th email [above], which still remains unanswered, may help explain some of what deeply concerns me regarding yet another DCC Annual Report presented as up-beat.

Kind regards,
Cr. Vandervis
—— End of Forwarded Message
—— End of Forwarded Message

[ends]

If there was a plot to hide the way $20 million slid from sight, it thickens.
Not done yet, because I’m not a turkey dinner.

Posted by Elizabeth Kerr

20 Comments

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20 responses to “DCC: What happened to $20 million cash on hand? #LGOIMA

  1. Elizabeth

    Mayor Daaave Cull asked Cr Lee Vandervis to leave the council meeting today – see tomorrow’s ODT.

  2. Elizabeth

    DCC Group Manager Corporate Services, Sandy Graham told me at a Council meeting in January that she has passed my last year’s (LGOIMA) query about where the DCC’s $20M cash on hand went to Carolyn Howard for reply. I was grateful for this promissory but realise Carolyn has a mountain of work to get through. Occasional prompts from me will continue meanwhile, starting with another this week.
    Now sent.

    Does persistence get the chocolate fish. I doubt it.

  3. Calvin Oaten

    What is cash on hand? That is always a worry. If it is due to underspending on projects there is always the danger those projects are still in progress. Therefore it is not really cash in hand as such but funds in transit. Give Dave the briefest glimpse and it’ll be gone on another flight of fancy. Cash is merely the representation of an obligation. Either a debt or a credit, and as they say, one man’s credit is another man’s debt. $20 million is no different unless it was dug up out of the ground like gold or oil. Can’t be oil or Jinty would have fixed that. Not likely gold, so My guess is it is an obligation. To whom? That is, I suggest the reason why Elizabeth you aren’t getting a quick answer.

    • Elizabeth

      Calvin, I had an answer from GCFO Grant McKenzie originally but it said nothing and even Sandy Graham had trouble understanding it. I soon learned from DCC that the $20M cash on hand had been sitting on the books due to former CFO Athol Stephen’s accounting method…. So really, I’m after its means of dispersal and I can tell ya (circuses within circuses – large weight upon the amount being TWENTY MILLION DOLLARS) I fully intend getting the answers, plural. Although, CEO Sue Bidrose made it plain to me she wasn’t happy that I used the words ‘Pet Projects’.

  4. Rob Hamlin

    I don’t know where the twenty million came from, but the exquisite timing of this announcement of a similar sized ‘drop’ in debt means that I sure as hell know where most/all/more than all of it’s going to within the next 24 hours: ‘splish splash splurge – Steddy as she goes!’.

  5. Calvin Oaten

    Rob, that’s always assuming it was really there in the first place. With the ‘conjurors’ in that building it might be as you suggest, ‘now you see it now you don’t’.

  6. Rob Hamlin

    It was never there. As it is derivative based, the DCC’s total debt is actually unquantifiable, and a specific rise or fall in it cannot therefore be reliably calculated. The figure claimed here is already well out of date – even if it was ever in any way approaching right, which I doubt. Our liability for this debt via the DCC on call capital commitment to DCTL is precisely quantifiable however – $850 million. That’s really the only figure that matters.

  7. Calvin Oaten

    As you say Rob, the only figure that matters is the obligation of $850 million. When you look at the ‘conjuring’ in today’s announcement and look into it you can see that as at 30 June 2013 the consolidated debt was stated at ($622.843m). Today, eighteen months later it is claimed to be ($586.5m) a reduction of $36.343m. Yet the total net profit after tax across that period was just $23.1m. DCHL didn’t empty their coffers totally to reduce debt so the gap there is frankly not believable. When we see the amount disappearing into DVL and DVML and this seeming shortfall of $13.243m you have to wonder about the maths. Still, it makes good copy in the media and the councillors will believe it so what’s not to like?

    • Hype O'Thermia

      IANAM – I am not a mathematician – so I offer this suggestion based on information gleaned from a Tom Lehrer song.

      Calvin, have you tried doing the calculations of the figures above in bases other than the conventional base 10? It could be that if some were expressed in the conventional way, and others had been arrived at using, say, base 8, there would be no shortfall. Well, no apparent shortfall….

      “Base 8 is just the same as base 10 if you’re missing 2 fingers” http://www.metrolyrics.com/new-math-lyrics-tom-lehrer.html

  8. Alex Brown

    As a public entity, if the DCC and/or its subsidaries are involved in releasing false or misleading financial information to the public for its own benefit or advantage, isn’t that the same type of activity for which Sir Doug Graham and the other Directors of Lombard Finance were all convicted ?

  9. Elizabeth

    A dreadfully pointed question, Alex.
    Those at Dunedin’s hot seat of power are flying for cover.

    Council Chamber, Municipal Chambers, Dunedin [architecturenow.co.nz] 1An empty Council Chamber, with the Mayor’s throne.

    Image: architecturenow.co.nz
    (via DCC Significance and Engagement Policy Nov 2014)

    • Diane Yeldon

      I just HATE this meeting room. It is so old-fashioned and elitist. It’s the whole council who has the responsibility to make decisions. The mayor is not really much more than a chairperson. So why doesn’t he sit at the table like everyone else? And why are the members of the public present observing shoved off to one side on fiendishly hard chairs with the press sitting in the best spot in front of them. This meeting room would be much better set up with a horse-shoe table arrangement facing towards the door (not away from it as present), the stupid ‘throne’ set on fire by students (in a safe location), the council staff parked away in what in now the public seating and the members of the public sitting in reasonably comfortable chairs facing the horse-shoe council table and at the back of the room just in front of the doors. Then they would be able to see what was going on, including councillors’ faces, important to determine just how sincere speakers are.

      • Elizabeth

        100% agree, Diane, it’s a stiff disincentive to democracy (Council Chamber). Stuff the pseudo antiques.

  10. Calvin Oaten

    I’ve printed out the “Significance and Engagement Policy” which the Mayor and councillors appear to be obliged to sign up to. This is mandated pursuant to section 76AA(2) of the Local Government Act 2002.
    A preliminary look suggests that our council is in breach on so many counts that if it was seriously challenged on any issue it might find itself in “deep doodoo”. It really deserves reading in its entirety.

  11. Elizabeth

    Received.

    From: Sandy Graham [DCC Group Manager Corporate Services]
    Sent: Thursday, 5 March 2015 2:47 p.m.
    To: Elizabeth Kerr
    Cc: Carolyn Allan [DCC Financial Planner]
    Subject: RE: LGOIMA request [DCC expenditure of $20M cash on hand]

    Dear Elizabeth

    Thanks for the email and your forbearance. I have spoken with Carolyn who will provide this information as soon as the draft consultation document for the LTP is completed. This has been delayed by a series of events and has required various financial information to be remodelled after decisions on what will and won’t be in the LTP.

    I ask your continued forbearance for a couple more weeks at which point Carolyn will have the time to provide you with a full answer.

    Cheers
    Sandy

    ——————————

    From: Elizabeth Kerr
    Sent: Monday, 2 March 2015 6:32 p.m.
    To: Sandy Graham
    Cc: Carolyn Allan
    Subject: Fw: LGOIMA request [DCC expenditure of $20M cash on hand]

    Dear Sandy

    There was no written acknowledgement of receipt or formal reply to my last email.

    However, I was grateful that you approached me at a pre-draft LTP Council meeting in January this year to let me know that you had forwarded my query about (Council dispersal?) the $20M cash on hand to Carolyn for reply, carefully noting Carolyn was (and probably still is) dealing with a large amount of work for Council at this time. You have my understanding.

    Are you able to update me by email this month on timeline for reply to my query (LGOIMA) dated 23 September 2014, noting we are coming up to six months. With generosity on both sides.

    Much appreciated, Elizabeth

  12. Cars

    What you CAN be certain about whether it be the DCC or the government of New Zealand’s employees. The $20 million will NOT be returned to the ratepayers.

    • Elizabeth

      “The $20 million will NOT be returned to the ratepayers.”
      That wasn’t my intention. Although wouldn’t that have been a noble cause – nah, want to track its use by DCC, if it existed at all.

  13. Elizabeth

    UPDATE – WHERE DID DCC $20M ‘CASH ON HAND’ GO ?

    From: Elizabeth Kerr
    Sent: Thursday, 9 April 2015 11:49 a.m.
    To: Sandy Graham [DCC Group Manager Corporate Services]
    Cc: Carolyn Allan [DCC Financial Planner]; Elizabeth Kerr
    Subject: Re:RE: LGOIMA request [DCC expenditure of $20M cash on hand]

    Dear Sandy and Carolyn

    The draft LTP has recently been signed off by the Council and is now available for public consultation.

    Further to your last email, Sandy, if you can, please provide timeline for delivery of the information promised to me regarding DCC’s use of the $20M cash on hand, as referred to in the Otago Daily Times on 15 September 2014 (refer correspondence below*).

    I look forward to your update and following, prompt receipt of the information kindly requested last year.

    Best regards, Elizabeth

    *{Full chain of correspondence since 23.9.14 not included here. -Eds}

    ——————————

    From: Sandy Graham [DCC]
    Sent: ‎Thursday‎, ‎9‎ ‎April‎ ‎2015 ‎1‎:‎53‎ ‎p.m.
    To: Elizabeth Kerr
    Cc: Carolyn Allan [DCC]

    Afternoon Elizabeth

    I reviewed the draft response yesterday and provided some feedback which Carolyn is considering.
    I have two further public LTP meetings today which means I am out of the office but the finalised response should be done tomorrow.

    Regards
    Sandy

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