Delta #EpicPowerFail 7 : Kyle Cameron —The Money or the Bag?

its-in-the-bag-with-selwyn-toogood-pinterest-com-tweaked-by-whatifdunedin

Received from Christchurch Driver [CD]
Wed, 30 Nov 2016 at 10:21 a.m.

>> Like most of Dunedin, in the last fortnight your correspondent has been looking with equal parts of fascination and horror at the torrent of deferred maintenance disasters and associated dissembling from Delta that Vaughan Elder of the Otago Daily Times has wrought upon Aurora. Mr Elder is detonating “aged hand grenade” potheads on an almost daily basis. Delta is surely beginning its death dance.

If readers think that “death dance” is too strong a term and your correspondent is a pothead of a different type, bear in mind the killer statistic revealed when last week Mr Elder publicised the results of Delta’s staff survey : 34% of staff thought that management was “honest” which, put another way, meant that two thirds of the staff considered the management dishonest. Given the preponderance of managers at Delta, this means even some of the managers considered themselves dishonest ! When the managers of an organisation are confident that the management is dishonest, then it is definitely time to do something about it…. However, we can be sure that Deloitte are not going to do anything about it by reporting to DCC what is obvious to all readers of the ODT and What if? : That the Delta and Aurora directors are either corrupt or incompetent to the point of criminal liability under Health and Safety legislation. (Only the first in a long list of fundamental director defects). Mr Crombie can spout excuses all he wants about Deloitte’s alleged “forensic expertise”, the issue is not about forensic expertise but independence and integrity.
Your correspondent has found that accountants’ ethical considerations and field of interest stops precisely at the door of whoever is paying their bill.
Lawyers have a more muscular process and even many lawyers who operate at, shall we say, the barely acceptable margins of their profession have a healthy regard for the disciplinary processes for unethical behaviour. Added to that, there are a number of lawyers available who view taking other lawyers to task as a form of sport. Yes before you ask, your correspondent has seen this in action, and there are regularly reported cases of lawyers being punished by the Law Society.
What your correspondent has not seen, is one accountant taking action against another, or any recent examples of accountants being censured by their professional body. Accountants policing their own ? That won’t work – the cost/benefit is all out of whack. But what we have here is not just one accountant looking the other way. It is the quadruple accountant play for maximum obfuscation and back scratching. One accountant, Mr Crombie (The Godfather) has carefully selected another of the brotherhood, a young go-getter, Kyle Cameron, wanting to make his mark in the Dunedin network (Tartan Mafia if you will). The Godfather carefully explains the rules of the game. The young go-getter knows there may be some short term consequences to him but understands that he will become a corporate career corpse if the rules aren’t followed. The go-getter will question the ‘change manager’ at the bottom of the play, Matt Ballard (Capability and Risk), a former Deloitte brother and member of the tartan clan. The young go-getter will hear no evil, see no evil, and most importantly, find no evidence of deliberate underfunding of the network from 2007 to 2016. That now protects the ‘older’ accountant, the sulphurous Stuart McLauchlan. The go-getter, will report that all is under control, the issues are not new and have been known for a long time. It was just a dreadful and unfortunate coincidence that whistleblower Richard Healey resigned and “some unfortunate publicity” meant it was timely to reveal Grady Cameron’s secret plan to spend $30M on replacing poles. ‘Grady’ will be gently chided for keeping this plan so secret that no one else knew about it and it wasn’t actually in the Long Term Plan, but you know, can’t make an egg without breaking an omelette. To diffuse that particular wet bus ticket, ‘Grady’ will also be commended for his vision and determination to create a safe network out of an aged one. Nothing less should be expected of a Deloitte Young Energy Executive of the Year. (Shameless plug for Deloitte also included).
The villain of the piece will be that Bad Man, John Walsh. He neglected to properly fund the network from the 1990s until his departure in 2009. It is, most definitely, All His Fault.

It hardly needs to be said that what is needed here is not Kyle Cameron, but a lawyer or former judge, someone with some real forensic cross examination talent, who levers the facts from liars and dissemblers every day. Someone with no ties to the incestuous and stifling Dunedin mafia.

However, Mr Crombie is correct that Deloitte does have “forensic” experience – from a besieged client perspective – and that experience is very useful in subtle engineering of the terms of reference, not asking relevant or difficult questions and indulging in Key-style vagueness. Deloitte specialise in appearing to provide a report that involves some gentle chiding, and wet bus tickets, but protects the client from further scrutiny.

In the event Kyle Cameron is the mouse that roared, and actually produces a factual report detailing the disgusting complicity of the directors who created a major public safety hazard by deferring essential maintenance to allow unsustainable dividends to Council, it will be amended by his superiors at Deloitte who have a very simple choice. Do Deloitte want to continue to receive lucrative work from Council, or do they provide a truthful report ? Mayor Cull will do almost anything to avoid ratepayers knowing that they are facing imminent and large de facto rates increases in the form of exponential lines charge increases ….because, huge amounts of Aurora line charges have been squandered on bloated and self-interested management, failed property deals and of course, paying for the stadium, over many years, and for many years to come.
The Crombie and Cull playbook 1 is to get malleable and weak individuals to say what you tell them to, hacking and modifying the facts to suit. Ratepayer funds at risk ? – a trifle as light as air ! What is important is that Mayor Cull and his council’s dividend drug habit is not exposed.

>> All right, readers, stop thinking that someone put genetically modified aggression supplements in the Bells ! Proof of these bald statements you say? Very well, here is the proof….  Until very recently a firm of property management consultants completed Building Warrant of Fitness inspections for the City. Now the firm had a sudden change of ownership recently, which may or may not have had something to do with the “non-voluntary” (careful words needed here readers) ! departure of an individual from the City, not unrelated to someone at the firm, at around the same time.

It appears that the firm may have lacked the necessary, ahem, independence or distance to enable them to provide, shall we say, a more accurate picture of the Building Act compliance status of ratepayer-owned facilities, including the Dunedin Town Hall and Wall Street Mall. When the new owners of the business produced their Warrant of Fitness report this year on those facilities, there was a list – a very long list – of 360 fire rating defects in Wall Street alone. These fire rating defects and other faults dated back to when the buildings were constructed in 2008 and 2011.

(By way of confirmation, If ratepayers care to check the publicly displayed Building Warrant of Fitness at Wall Street they will find there is no certificate, and we understand there are recently lodged official information requests to get to the bottom of this matter).
The establishment, allegedly very unhappy with this burst of unpleasant fire rating revelations from the new and improved firm, may have said words to the effect of “We have 50 buildings that need inspections ! Do you understand what we mean?” …. “We want you to issue the WoF on the basis that we will get around to do some of the work when we feel like it, when we are good and ready and not before !” (We could call this the Aurora option….). The response from the new firm was basically, “We have standards and professional obligations, and we can’t certify something on that basis as you have a record of ignoring previous identified serious faults.” We understand the establishment was then invited by the new firm to employ a specialist Fire Engineer to review the list and the new firm’s report.

So what did the establishment do ? Did it immediately start work on fixing the problem ? Of course not, it sacked the new firm from all work for having the cheek to put in writing things that were deemed “inconvenient”.

Kyle Cameron, what will it be ?

Truth or Consequences?
The Money or the Bag ? (To dispose of the Delta’s directorial corpses).

Dunedin is watching and waiting.

[ends]

Posted by Elizabeth Kerr

This post is published in the public interest.

*Image: pinterest.com – ‘It’s in the Bag’ with Teneke Stephenson (formerly Bouchier) and Selwyn Toogood, tweaked by whatifdunedin [Kyle via Deloitte]

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13 Comments

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13 responses to “Delta #EpicPowerFail 7 : Kyle Cameron —The Money or the Bag?

  1. Elizabeth

    Further criticism, sharply and well conceived ~~~

    What is this thing called Delta, the organisation which manages Aurora Energy’s electricity network in Dunedin and Central Otago, asks Hilary Calvert. (ODT)

    Wed, 30 Nov 2016
    ODT: Time for Delta to be brought back into DCC fold
    OPINION Delta does not follow the rules of a central government creature, or we would by now have seen the forced resignation of both the chief executive and the board members. Usually, ministers take a dim view of being made to look fools, especially where members of the public and employees have been put at risk. Then there is the matter of providing successive annual budgets which did not mention deferred maintenance, and the announcement that to avoid the public relations fallout, $30million dollars would be found, without consulting the owners. Delta is not a part of the DCC, or it would have been under DCC rules in regard to payment of staff salaries, health and safety, the whistle-blower regime and the management of vehicles. Cont/

  2. Just the beginning

    The level of “interesting decision processes” within council at present is concerning […] I was talking to someone the other day who has taken them on […] and the information they have collected both privately and through OIA is staggering, their exact words were “it would make Mugabe blush”.

    {Moderated. What if? contributors may not comment negatively on DCC staff by name if they issue from manager level or lower tier – however, there is an element of safety if ODT, Stuff or other MSM publishes first (public domain). -Eds}

  3. Calvin Oaten

    As Hilary Calvert says it is time to take these companies back into the folds of the DCC. Fine thoughts but pray, who there is going to manage them effectively? No, as has been stated by a prominent councillor the whole kit and kaboodle ought best be sold and the DCC relieved of the dangerous risk of having to run them. The cash resulting would go to reduce the outstanding debt of the DCC. We ratepayers would see immediate value in this I’m sure. It would take a plethora of unelected big receivers of lustrous amounts of monies from the city purse as well. Let them go back to their own businesses and do it for them.

    • Elizabeth

      100% disagree Calvin (a democracy) – such a view demonstrates lack of familiarity with staff engineering expertise, the value of continuous knowledge, and any full assessment of what is at stake.

      Cr Vandervis is WRONG too.

      You two are as bad as Harland.

  4. Hype O'Thermia

    Is there any reason to lose “staff engineering expertise” though? As people best suited to do the job because of their background of “continuous knowledge”, wouldn’t they be the logical people to be hired by the new owners?

  5. nick

    Deloitte will also have to weigh up the very pertinent matter of ‘public perception’ as it considers what shade of white to use in the whitewash.

    Mayor Cull has already defended the $30m cost to improve the public’s ‘perception’ with regard to the chaotic state of Aurora’s lines network. Already it seems the more perceptive estimates are considerably higher.

    However, the public won’t be treated as fools forever. And nor will the Chairman of Aurora / Delta boards of directors.

    My guess is Dr Parton is quietly seething at the reputational damage that he has been exposed to over the levels of duplicity that Delta executive management team have dished up regarding the appalling condition of the network before the whistle was blown. Then there is the matter of Health and Safety legislation which no Board can pretend doesn’t impact on them personally. They have been let down as well.

    And Aurora/Delta are not flavour of the year with the Commerce Commission which has been looking at them closely over three separate matters: Network reliability, likely breach of the Commerce Act, and related party transactions between Aurora and Delta.

    Add in the dismal morale and dissatisfaction of the many solid employees at Delta who are expected to work daily (and nightly) miracles. These people no longer back their CEO, who even cancelled their Xmas party.

    Crombie has sensibly bought himself some time by instigating the Deloitte inquiry. With those few weeks of no public comment, and the chance to draw plenty of deep breaths, he now has to face the reality that as chairman of DCHL, he needs to act, regardless of how weak the report’s recommendations might be.

    It can no longer be business as usual at Delta where there is a desperate need for capable management. And there are plenty of proven people who would jump at the opportunity to run this business honestly and efficiently.

    Or perhaps with the rules around related party transactions between Aurora and Delta likely to be changed, this charade may cease, and the management of the Aurora Network will be performed by a bona fide contractor.

    It is another sad and sorry saga for the DCC but the situation is recoverable.
    Let’s see just how innovative the Deloitte recommendations will be. . .

  6. Rob Hamlin

    nick,

    I find it very hard to believe given their positions and qualifications that the boards of Delta and DCHL did not know exactly what was going on. Ditto the senior executives various within the DCC to whom they answer. This appears to be an example of ‘strategic neglect’, and strategy is a governance role. The chief executive officer, as their title implies, merely executes upon strategy laid down by their board and those even higher up. While the reports of mass staff ‘outings’ of management practice may now make the CEO’s position untenable if they come to fruition, the buck should not stop there – But it probably will.

    On the basis of the blatant conflict of interest relating to it, I suspect that the upcoming report will be an entirely political document. Given the authors’ lack of the necessary in-house technical knowledge on electrical power networks and how they are managed, I cannot readily see how it could be otherwise, with the investigation and preparation timescale concerned, lack of field presence and the existing skill sets of the preparers.

    If its purpose does indeed turn out to be entirely political then one might presume that the primary objective may well not be to avoid blame, as it is now patently unavoidable; but to minimise it and to sheet home said minimal blame to a minimum number of ‘current’ individuals – Who will no doubt then be swiftly redeployed on to other opportunities by those for whom they will take the (temporary) fall.

    We saw this process taken to its ultimate format recently, where blame for an entire long-term system of larceny was sheeted firmly home to one conveniently deceased individual – who did not need to be redeployed anywhere. In addition to convenient corpses, those who are retired or have moved on can, either willingly or unwillingly, be similarly utilised as handy blame receptacles.

    A document of this type would be a skillfully prepared and beautifully crafted object. The one weakness would be that however refined it is, it is still a mere tool that will need to be adroitly handled by its ‘official’ recipient – who, surprisingly, may not be one of the planned beneficiaries of it.

    If that official recipient is demonstrably a compete idiot, who typically pig-headedly denies everything, rather than deftly using the tool that they have been given for the sad but necessary purpose of diverting, concentrating and offloading blame in the desired directions, then there could still be a bit of an issue with satisfactory responsibility containment for said planned beneficiaries.

    “Therein”, as Shapespeare said, “lies the rub”. I will wait upon the official recipient’s words with interest, and a degree of anticipation!

    No doubt the current debacle will be put down to ‘unforeseeable circumstances’. How unforeseeable were they? Below is part of a footnote to the submission that I made to the DCC on 15 April 2008:

    “2. It is my understanding that Mr. Paul Hudson, who is a City Councillor has declined to vote on the Stadium issue, citing conflict of interest due to his position as Chair of DCHL, the major source of funds for it. As DCHL is wholly owned by the DCC which is itself a public body, a conflict of interest cannot actually occur – as Mr. Hudson has no interests in either of them. – unless he is paid a bonus or other remuneration related to either organisation’s performance or income.

    However a conflict of legal responsibility may well apply to him in the current circumstances. Mr. Hudson’s decision not to vote may be justified, because, as the Chair of the Board of DCHL Ltd. his activities, and any personal liabilities that may arise as a consequence of them, would be dealt with under the Companies Act – which is much more tightly defined than the Local Government Act in these areas. Under the Companies Act his responsibilities to prudently discharge his duties as a director of this registered plc. would almost certainly require him to reject the proposal – or at the very least the proposed funding requirement via DCHL Ltd. which is essential to it.

    The proposed milking of DCHL that associated with the funding of the Stadium is so vicious (and so unpredictable in terms of DCHL’s capital expenditure reduction and borrowing requirements over a long period of time) that voting for it would almost certainly lay him open to legal action if DCHL’s sole shareholder (the DCC) suffered harm as a result of it – perverse though this possibility is. Mr. Hudson’s decision not to vote on this issue is therefore noteworthy.”

    • nick

      Rob.
      While strategy is a governance role, the manipulation of information re asset health (rotting poles reclassified etc) and the frantic red tagging of thousands of them after Richard blew the whistle shows a systemic management ploy at work.

      I prefer to give the directors the benefit of the doubt around their knowledge of the true state of Aurora’s assets and Delta’s management of them. Directors have to be able to trust their managers’ reports, and have been badly let down.

      However I agree that the scale of this problem won’t be easy to fix.
      Delta has a growing appetite for largesse. The CEO and his ever expanding team of generously paid managers illustrate extravagance, beside the dilapidated state of their network. As does the recent rebranding of Delta, and the corporate box perks. Grady Cameron may hold worthwhile technical industry knowledge, but that alone doesn’t qualify him as CEO material. Does he deserve the salary for the position he holds, and has he earned the respect of his staff? Why is there such a culture of distrust within Delta? Why did Richard Healey have to resign before he could state the obvious? Who ignored his many attempts to address the serious Health and Safety concerns within Delta?

      It is not hard to identify where the management problems are.

      Other publicly listed companies of this size would have had heads rolling long ago.

      There are many sets of eyes and ears watching how this plays out. Deloitte will have to present a truthful summation.

  7. Gurglars laugh meter

    Directors do not have to take management’s version of events, thus relieving them of any responsibility.

    The Directors need to utilise their intelligence and experience to evaluate important issues like they now face for two reasons.

    1. They are personally responsible at law for errors leading to death or injury.

    2. They are responsible for the continuing employment of the CEO and perhaps other key figures and therefore need to keep a handle on the incumbent’s performance which he is unlikely to denigrate in his own representations.

  8. Hilary

    The outcome of any inquiries held begins with what questions are asked.
    Mr Kyle Cameron can only look into the questions he is tasked with seeking answers to.
    The questions that may most usefully be asked, such as:
    What did Grady know, especially after the report he apparently commissioned soon after appointment?
    What did the directors of Delta and DCHL know?
    What did any of the above do with the information they had?
    What was actually passed on to Council?
    There should be records of these transfers of information in the records of the companies.
    The underlying question seems to be is Grady the only one responsible?
    Usually the staff member involved in something such as this would be stood down while the questions were being answered. If it is the CEO you would expect a resignation letter to have been tendered.
    How DCHL can commission an inquiry into what they knew in case they are responsible I don’t understand.
    It is indeed time for the turkeys to organise Christmas it would seem.
    Are there some birds here who expect Christmas is not imminent?

  9. Gurglars for change for the better

    The terms of reference need to be concise and precise.

    When did the directors of Delta/Aurora become aware that the maintenance programme was falling behind normal prudent requirements?

    When did the Delta management become aware that the maintenance programme was falling behind normal prudent management requirements?

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