Delta #EpicFail Noble Subdivision : If I were a rich man / Delta Director

Election Year : The following opinion is offered in the public interest. -Eds

Received from Christchurch Driver [CD]
Sun, 28 Feb 2016 at 9:10 p.m.

Your correspondent has used strong words to criticise the Delta Directors in recent posts in respect of the Noble Subdivision.
“Ineffectual”, “serial head nodders”, “slumbering”.

Doubtless some of the Directors concerned will disagree, violently.

Has this correspondent been too harsh ? After all, it is easy to have 20/20 hindsight.

So today let’s look at the “WWYD” test – What Would YOU Do – in the same situation.

Your correspondent had given this some thought on this sunny Sunday, and while not a captain of industry or commerce as the actual directors, is willing to give it a go.

Yesterday’s post asked if the Directors had any ability to rein in Delta’s management when necessary. This correspondent thinks that is the key issue.

In any company the executive team is tasked with running the company day to day, meeting their various KPI’s and targets, and quite properly that is their focus. No one is perfect and there will be mistakes and duds that could not have been foreseen.

The Directors are there to provide governance and limit the risk to the shareholders. This was doubly important for Delta, as Warren Larsen said DCC companies needed to have a particularly low risk threshold, being publicly funded, and because Delta was operating in the very high risk property development arena.

A further even more basic duty is to ensure that the company operates lawfully at all times.

That is the lens through which I as a Director, would view Delta’s activities.

With that in mind, I thought how I as a prudent Director would respond when at a Board meeting in late 2009, or very early 2010, when it is assumed the Directors learned of the plan change at Noble Yaldhurst just two months after starting work in October 2009.

As a Delta Director I would know that at some point it was likely there were going to be some thorny issues ahead on Noble, particularly given the experiences already encountered at Luggate and Jacks Point.

As a professional Director I would expect the management to have a response to the problem. I would also know that ‘when things go wrong’ is where there is always potential for greater risks to be assumed so Directors would need to be especially vigilant when evaluating management’s plan to fix the problem.

As a Director I would know that management in general don’t like problems – they just want to get rid of it in the fastest way generally and focus on the business and meeting their KPI’S.

They often don’t get a good perspective on the bigger picture. That’s what the Directors are for.

So when it was explained that yes, there was an “issue” with budget costs, but the plan by the Developer was to change the subdivision layout, alarm bells would have rung and the following questions spring to mind (Answers by Delta management).

1. How much of the work has already been done ?
Answer : Not very much just general site excavation.

2. How does this affect the Resource Consent and Engineering Consent ? Answer : Noble (NIL) are or have already applied for a variation.

3. Weren’t there specific provisions for the roading and layout for this zone ?
Answer : Yes there were.

4. What can we do in the meantime while we wait for the varied consent ? Answer : We can do some site clearing but NIL have assured that the consent is a formality and are keen for us to continue.

5. But we cannot do work without a consent surely ?
Answer : Err…NIL have assured us that it won’t be a problem, the CCC are relaxed about us continuing.

6. Is there anything in writing from CCC to say this ? This seems very risky – Councils have to comply with the Building Act, they don’t have a choice, otherwise people would be doing deals with Council inspectors all over the place, and Council would be liable.
Answer : No, we don’t have anything in writing yet.

7. Why don’t we just stop work until it’s sorted ?
Answer: We’ve already set up on site and we want to make the most of the Summer.

8. Directorial discussion ensues : My position would have been : We think the risk is too great. We are already financing the subdivision and not getting paid until sections are sold. We have the upper hand here. Noble will just have to wait. Changing the roads is a major. We don’t need a court case about working on a major subdivision without a consent with the CCC to tarnish the company at this point.

Clearly, a majority of Directors did not agree with the above, and voted to continue.

A key point is that the Directors didn’t only get one chance to exit Noble. From this point Noble would have been on the agenda at every meeting, and they had many opportunities to stop work, when things went from bad to worse. Instead, it appears they took ALL those opportunities to look the other way and, and one result, apart from many millions written off, was to be a party to illegal work.

Delta may say that CCC were relaxed about working without a consent, or some other vagueness, but the Yaldhurst community and the neighbours were far from relaxed. They were never going to stand by and watch a Developer cynically try to ram through a major change on a land zoning that the CCC had just spent years formulating and with public consultation, etc.

So, readers, what would YOU do ?

New Zealand Companies register: Delta Utility Services Limited (453486)

█ Directors: David John Frow (appointed 25 Oct 2012), Trevor John Kempton (01 Nov 2013), Stuart James McLauchlan (01 Jun 2007), Ian Murray Parton (25 Oct 2012)

More: Historic data for directors

Related Posts and Comments:
● 27.2.16 Delta #EpicFail Noble Subdivision Consent : Strictly Optional
● 27.2.16 Delta #NUCLEAR EpicFail —Noble Subdivision : Incompetent…
● 25.2.16 Delta #EpicFail: Mayor Cull —Forced Sale Fundamentals 101
● 24.2.16 Delta #EpicFail —Noble Subdivision: Cameron, Crombie & McKenzie
● 23.2.16 DCC: DCHL half year result to 31 December 2015
19.2.16 Delta: Update on Yaldhurst subdivision debt recovery
15.2.16 Delta / DCHL not broadcasting position on subdivision mortgagee tender
30.1.16 DCC Rates: LOCAL CONTEXT not Stats —Delta and Hippopotamuses
● 29.1.16 Delta #EpicFail —Yaldhurst Subdivision ● Some forensics
● 21.1.16 Delta #EpicFail —Yaldhurst Subdivision
21.1.16 DCC LTAP 2016/17 budget discussion #ultrahelpfulhints
10.1.16 Infrastructure ‘open to facile misinterpretation’…. or local ignore
15.12.15 Noble property subdivision aka Yaldhurst Village | Mortgagee Tender
21.9.15 DCC: Not shite (?) hitting the fan but DVL
20.7.15 Noble property subdivision —DELTA #LGOIMA
1.4.15 Christchurch subdivisions: Heat gone?
24.3.15 Noble property subdivision —DELTA
23.3.15 Noble property subdivision: “Denials suggest that we have not learned.”
17.3.15 DCC —Delta, Jacks Point Luggate II…. Noble property subdivision

● 14.5.14 (via DCC website) Larsen Report February 2012
A recent governance review of the Dunedin City Council companies was conducted by Warren Larsen.

● 20.3.14 Delta: Report from Office of the Auditor-General
Inquiry into property investments by Delta Utility Services Limited at Luggate and Jacks Point

█ For more, enter the term *delta* in the search box at right.

Posted by Elizabeth Kerr

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14 Comments

Filed under Business, Construction, DCC, DCHL, DCTL, Delta, Democracy, Design, District Plan, Economics, Geography, Infrastructure, Name, New Zealand, People, Politics, Project management, Property, Resource management, Site, Town planning, Transportation, Travesty, Urban design

14 responses to “Delta #EpicFail Noble Subdivision : If I were a rich man / Delta Director

  1. Rob Hamlin

    If nobody else said anything, then, after a pause, I would say “OK, we seem to agree – What’s MY cut?”

  2. russandbev

    As I have pointed out a number of times, the list of people specifically employed and paid to take oversight in a CCO like Delta is very big indeed and should ensure that no issues like this EVER arise.

    The chain of oversight starts at Delta, encompasses DCHL, the staff at the DCC and specifically the Mayor. Either this chain knew what was going on or they didn’t. If they didn’t know – or weren’t specifically told of the Yaldhurst fiasco, then surely they can all read the financials. So only two options remain, they knew and actively covered it up, or those further down the food chain deliberately withheld or obscured what was going on.

    It doesn’t matter whichever way. Either way the chain of command and oversight needs urgent investigation from the OAG, but knowing full-well the useless performance of that body from past “investigations” into Delta over Jacks Point and Luggate, this will prove to be pointless.

    The ONLY way to stop this rot and claw back some of the money lost to ratepayers is to take urgent CIVIL action. While there may be elements of activities that may fall under the Crimes Act and therefore could involve the Police, this would be a waste of time as well. The NZ Police are not equipped to deal with fraud and have proven to be less than interested in pursuing this type of crime. We all know that.

    The other element in this fiasco is what Chch people – particularly those close to this mess – think of the inference that the CCC turned a blind eye to work progressing without the appropriate consents. Bet that would go down well with those contractors and developers that have had to toe the line.

    • Diane Yeldon

      Two things here: first, institutional culture. Some Delta workers were fixing a stormwater drain belonging to the DCC outside my house and I knew quite a bit about this since the DCC had been putting their stormwater through my property. So I commented on the size of the pipes as maybe too small because I knew the minimum diameter to go under a public road. And one Delta workman replied to me, “We can do anything we like,” and the other grinned in agreement. Then, when the Ombudsmen’s ruling meant the DCC agreed to take responsibility for the drain, the DCC didn’t seem half so keen to carry out all the drainage by-law requirements themseves to the letter of the law which they had been ever so keen to impose on me. So I suspect that Delta, when working for the DCC, may have been taking shortcuts. After all, whoever is going to know? I think this behaviour may have similarly been transplanted to another local government jurisdiction – that of the Christchurch City Council and Canterbury Regional Council. But the trick of ‘Don’t complain to the police: we ARE the police,” didn’t work there because they weren’t and had just got into bad and arrogant habits.

      The other thing is the DCC’s extraordinary resolution in early 2011 to exclude all councillors except Cull, Staynes and Thomson (mayor, deputy mayor and chair of the finance committee – all from memory but I’m pretty sure this is close enough) from a working party called the Council Controlled Organisations Liaison Group, the purpose of which the resolution itself said was ‘confidentiality’. Do I need to say ‘all illegal?” It seems likely that they were discussing the pooh Delta was in at these meetings. Wonder if there are still in existence any ‘notes’ from that ‘group’ which had no legal requirement to keep minutes, despite the fact that virtually all councillors were excluded, because it was not officially a meeting of the council. (!) The Ombudsmen’s office has ruled that ‘notes’ can be requested from any Working Party – which is what this ‘group’ was. Think I will make an official information request to find out. Commercial sensitivity shouldn’t be an issue so many years ago.

      • Elizabeth

        Go for it Diane and quickly via Sandy and Kristy to ensure nothing is destroyed.

        [otherwise, if gents later called to the stand with tricky memory]

        • Diane Yeldon

          Done, as follows: “Dear CEO, SG and KR: I would like to know if there are any notes still in existence from the Council Controlled Organisations Liaison Group which was formed by council resolution in early 2011. Or any other records of the business of this group. If there are and finding this information is not too onerous, then I would like to view it. Electronic form would be fine.” (ends)
          Will there be plumes of smoke emitted from the DCC building as when the cardinals decide on a new pope? This group ILLEGALLY passed information backwards and forwards from the CCOs to the privileged trio and openly acknowledged that they were keeping it secret from the rest of the councillors. Bet they put something in writing. Wonder if the group made any ‘recommendations’ to council – which would be in the minutes. If they did, then that’s further proof that this group was acting ‘ultra vires’.

        • Elizabeth

          Or maybe the trio weren’t told much anyway given no one likes to shop themselves. In other words a sham CCO Liaison Group for PR purposes while the ships sink or millions go west, but where was West, again? No one knew.

  3. Gurglars

    You have just opened another can of worms, russ, the desire of one council the CCC to allow another group of council employees (DCC through Delta) advantageous behaviour.

    When one notes that council employees moving forward on the gravy train set up and nurture relationships with other council’s employees on the you scratch my back philosophy, you can start to understand why all council employees start to think the same way- even when the thoughts are befogged or stupid.

    Traffic lights in Oamaru are one example.

    Cyclelanes throughout Australasia are another.

    When you hear the mantra that such and such an action will lure tourists (build it and they will come) one knows it’s all crap.

    If every city has cyclelanes (as they now do) the tourism advantage can only be to have a city which does not.

    Dunedin’s big attraction for many was the lack of commuting time, no traffic hold ups and lunch at home in 15 minutes. That quaint but lovely concept has now been stuffed by the council employees from hell, hellbent on homogenising the city so it looks like a miniature poor copy of Dorkland.

    However the problem facing an investigator is that the DCC and the CCC will close ranks. They don’t want independents discovering their tawdry relationships. They will want another public servant with the same ethos skating across this icerink.

  4. Rob Hamlin

    The major issue with civil action is that one’s opponents would be ratepayer funded. The weakness of the civil system was appreciated by the white collar community some time ago, and that is that you lose when you run out of money. As they usually control the money (including yours if they are tax funded), all they have to do is keep the meter running until you croak.

    I have just finished reading a biography of Napoleon. (Napoleon the Great). One of Napoleon’s greatest contributions was his great legal reform, the ‘Code Napoleon’. This code replaced a mass of existing legislation a lot of which dated back to the middle ages and that was largely unenforceable. Napoleon’s code underlies a great many modern European nations’ justice system.

    My feeling is that we are well overdue for a similar overhaul in the English speaking world. Our legal systems, the basis of which also date back to the early middle ages, are clearly completely helpless in the face of a tidal wave of white collar crime that is quite literally putting our civilisation at risk.

    One good start would be to punish white collar crime far more severely than ‘blue collar crimes’, as white collar criminals are usually well educated, and don’t need to do it. Furthermore, the crimes themselves are usually carefully planned and executed over a long period of time.

  5. Calvin Oaten

    Going back to 2009 the then board of directors, by their dereliction of duty basically lit the fuse, by allowing management full rein to develop this fiasco. The next question is, at what stage did Mr Crombie take over, and why was it not his first task to get up to speed on the situation? It would seem that he either was misled by management or he chose to adopt the stance of let’s run it along and salvage the best we can out of it. Either way, he has not acted in the best interests of the shareholders (the ratepayers) who in these matters are the prime losers. Is he then in any way liable for the lack of action? Then of course there is the citizens’ elected caretaker, the Mayor. He would surely have been brought up to speed from the outset, being the mayor since late 2010. What has he done to mitigate any damage to the city’s treasure? In fact, it would seem that the mayor has done the opposite, by quelling any concerns being expressed by Cr Vandervis on this and many other aspects of Delta’s less than professional undertakings.
    All in all, it would seem that the whole system of management within the DCHL group, plus the DCC senior bureaucracy, including the Mayor’s office have been a huge ongoing failure both in business skills and integrity, with the result that the ratepayers have been seriously compromised. A sad business all round which ought not go unaddressed.

    • Hype O'Thermia

      Calvin: “What has he done to mitigate any damage to the city’s treasure? In fact, it would seem that the mayor has done the opposite, by quelling any concerns being expressed by Cr Vandervis …”
      His determination to silence Cr Vanderis may be a personality clash of epic proportions not a hundred miles from a mental health issue. Or it may be fanatical determination to hear nothing that could later be quoted back (eg that beyond parody performance over kickback for contracts in which flat denial that he had been informed by Vandervis persisted despite the councillor reprising where, when and to whom including the mayor he had provided this information) to demonstrate that he couldn’t claim to have been left out of the loop and was therefore clean as the driven snow.
      Of the two men, one appears to be rational, truth-telling and determined to root out rorts and waste and ongoing disrespect to ratepayers and the democratic process. One is doing his best to work for the wellbeing of our city. And one is working for – what? A nice income no matter what damage is done long as his salary rolls in?

  6. photonz

    Gurglers says “Dunedin’s big attraction for many was the lack of commuting time…………now been stuffed by the council employees from hell”.

    In the last five or so years, the time it takes me to get in to town has gone up by around 50%, due almost entirely to idiotic traffic design by the council.

    They’re forever putting in new traffic lights, as well as turning lights which often block all though traffic.

    We have several intersections where previously a dozen cars would get through during the green phase. Now it’s common for the straight through lane to be blocked by a car on a no-turn light, so only one or two cars get through.

    • Hype O'Thermia

      Who’s got the traffic lights contract?
      Cr Vandervis gave evidence of having to grease palms to get contracts.
      This may no longer be the case.
      This may still be the case.
      The mayor is determined not to see or hear Cr Vandervis’s evidence, which indicates (if consistent since elected) he has likely done nothing to ensure that such practices have been stomped on with a solid workmanlike boot. One is left wondering if instead they have been pirouetted past on patent leather pumps.

  7. Gurglars

    Photo, try to get a car park in South Dunedin now or in the Gardens-Oval region – impossible for short-term shoppers. Made so by public servants sitting in a glass house and not understanding that purchasers do not want to window shop, they want to get in buy and get on to the next purchase.

    Dunedin used to be a city where you could get four to five things done in a day. Now it has lost its advantage and become like Auckland or Christchurch where to see an advisor or buy a shirt is a daylong exercise, finding a park, refilling the meter, negotiating the traffic lights and avoiding the cyclelanes.

    It is easy to see why shops and commercial buidings are vacant, when you realise that the governing factor is the DCC working against commercial success.

    • Hype O'Thermia

      It’s the build it and they will come mentality. Not – what are people doing, let’s assume they know their own minds and therefore what we need to do is make their experience of living, working and doing business in Dunedin is as satisfactory as it can be.

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