Received from Christchurch Driver [CD]
Fri, 16 Dec 2016 at 1:04 a.m.
Your correspondent has been spending some time in airport bookstores recently, and it is hard to escape the plethora of get-a-plan-and-get-your-life-in-order books that seem to breed like unwanted spawn in such places.
While your correspondent has no truck with such boilerplate muck, he will admit to a quiet sense of satisfaction this week of some goals achieved. It is a good thing to have a goal, and a plan to get there. This year, your correspondent was disgusted by the arrogant lawlessness and simply fantastic level of self interest and waste of public funds by DCC and DCHL directors at the Noble subdivision, Yaldhurst. He made it a goal to put his shoulder to directorial posteriors and assist in the push of the dismal Delta directors into the Delta wood chipper (leased of course). Aided by some insider knowledge (what? – reveal my sources – never !) and plenty of tangential side trips, your correspondent is proud to think he has helped (in some small way) What if? and the majestic Richard Healey achieve a clean out at Aurora and Delta.
This week’s dismissal of Parton and McLauchlan is the start, and more will follow.
Mr McLauchlan’s risible statements in the ODT yesterday show your correspondent was 100% correct when he predicted that blame would be sheeted home to That Bad Man, John Walsh.
Mr McLauchlan’s arrogance was in full view with his claims that his decision to step down was unrelated to the billion dollar problem he has co-authored. Mr McLauchlan cannot admit what all of Dunedin knows – he troughed literally while lines exploded, and failed as a director. To do so would jeopardise his other sinecures, and Mr McLauchlan is nothing but self interest. Mr McLauchlan had absolutely nothing to offer the DCC, Delta or DCHL, and we should be at least grateful to Mayor Cull that the scales appear to have finally have fallen from his eyes and he sees Mr McLauchlan for what he is.
Let us not forget the most telling example of Mr McLauchlan’s invertebratedness : In the 2007 directorial decision to waste $8-9M at Luggate Mr McLauchlan’s sole contribution was : “If the other directors agree the I agree”. Not forgetting also that in the case of the Scenic Circle Dunedin City legal dispute with the JV partner, Mr McLauchlan was found by the Court to be an unreliable witness.
Mr McLauchlan is so toxic he doesn’t just need to be signposted, he is a walking talking accounting contamination.
On the subject of contamination, Kyle Cameron – stand up and take a bow, Kyle Cameron! – has made it very sure that Grady Cameron will never lead either of Delta or Aurora, by recommending that they need separate CEOs. As Mr Healey has said, the board will do to Grady what he has done to many others – disestablished their positions, creating new roles, and of course Grady will not quite have the “most appropriate skill sets” for either role. Sorry about that old chap, terribly close call of course, better luck next time– (in another continent please).
Grady, you have just been right-sized.
Another right-sizing would be to appoint Kyle Cameron to the Aurora board, and remove former ORFU/Highlanders director Mr Thompson with links to the $5M ORFU pokies scandal. Mr Thompson is tight with Mr McLauchlan of course, Mr McLauchlan being the Chairman of the Highlanders at the time the South Auckland pokies scandal was in full swing. McLauchlan – scandal – bees – honey.
Not right-sized, of course, is the matter of the Aurora replacement budget. We all know – now – that Aurora were going to spend $443M in deferred maintenance over 10 years (yes, stop dissembling Grady, it’s $443M, not $417M, but what they haven’t set out is where the money is coming from. Lines charges are fixed, and in very, very broad terms if we, the ratepayers, have to spend $443M to basically maintain what we have – then the very big question is – what is the depreciated, deteriorated asset worth …right now?
[An alarming example that comes to mind is the DCC purchase of the Dunedin Railway Station in the early 1990s. A wonderful asset now (pity about the decks) after a number of millions have gone into its restoration and upkeep over a 10-12 year period ….but what did the DCC pay ? ….the answer ? precisely one dollar.]
Now the Aurora 2016 Annual Report says in its headline “Trend Summary” (aka the good news feel-good piece early in the report at page 12) is that the ratepayers have equity of $183M in Aurora, and equity to assets is 42.1%, but unsurprisingly (this is Grady and the gyroscope we are dealing with here) the very bad news – the debt is $253M and is not going away – doesn’t quite make it into the good news piece.
So if we are charitable and assume that only say $250M of the $443M is actually for direct Dunedin infrastructure renewal and the balance being for actual expanded capacity then, then $250M of shareholder equity is needed for the upgrade. But wait Batman ! We only have $185M of equity. Holy exploding potheads Batman !! What do we do ? Batman: Elementary, my dear Doctor Parton —In the immortal words of Christine Fletcher, mayor of Auckland in 1986 when asked the same question by Fletcher Construction (of the cost to finish the Aotea Centre), “That’s what the ratepayers are for.”
Readers, you might well be thinking at this stage, CD has it wrong again – when I put in a new kitchen and bathroom in my villa in Belleknowes, it was worth more, so it didn’t matter that there was more debt ….because the asset was worth more. However, the value of power networks is determined by the Commerce Commission, who regulate what amounts each network can charge ….based on the value of the asset. Your correspondent surmises that the next scandal to unfold at Aurora is that resident Delta toxicologist, Matt Ballard of Capability and Risk, has overseen a massive overstating of the present value of the network. The bottom line is : with $250 – $400M of work needed FOR MAINTENANCE, ie NOT GENERATING EXTRA CAPACITY, it is worth nowhere near $436M right now. What does that mean? It means, readers, that the “jewel in the crown” of the DCHL, our cash cow HAS NO SHAREHOLDER EQUITY and has 100% debt to equity. Hilary Calvert is correct – if this were DC Ross, or any other private company, the receivers would have been called in long ago. However, accountants like the caustic Mr McLauchlan prefer companies with no shareholder equity because the returns on equity are out of this world…. until something happens.
Readers, what dissembling Mayor Cull will never tell you is that just like in Central Otago, as helpfully described by Nick Loughnan in the ODT a few weeks ago, you are about to experience in your future either some eye watering rates increases or, if the Commerce Commission allows, some similar exponential line charge increases. It’s one or the other. There is no other way.
Mayor Cull is aware of the consequences set out above : he said at the outset of Mr Healey’s crusade that he did not want public confidence shaken.
The questions or scenarios above are not pleasant – as the biblical line goes, these are hard questions, who can answer them ? They are the lines industry equivalent of farting in church – rude, inappropriate but better to get it out in the open before there is a big mess (or at least know the mess is coming). Yes, the air will be blue for a while – a long while. Messrs McLauchlan, Parton, Kempton, Frow, Wood, Thompson have done more than farted, they have created a stinking “code brown” mess. They will not be missed.
[ends]
*Note: New Zealand Companies Office records show McLauchlan and Parton ceased being directors of the Aurora/Delta Boards on 12 December 2016.
Aurora Energy | Delta Utility Services
Legal advice to the DCC on new 3-term limits for CCO directorships ‘may have’ forced this change. Debatable.
█ For more, enter the terms *delta*, *aurora*, *grady*, *luggate*, *jacks point*, *dchl*, *auditor-general*, *noble*, *yaldhurst* or *epic fraud* in the search box at right.
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Posted by Elizabeth Kerr
This post is offered in the public interest.
*Image: markeweebly.com – farting dog by mark cable, tweaked by whatifdunedin
What if? Dunedin... 
It’s a very lonely place for any mayor when the reality dawns that most of his close and trusted advisers are crooked.
Be kind to Cull. He needs genuine support.
One of the attributes expected when we elect a Mayor is good judgement.
Dave Cull has shown awful judgement and also no decisions as to guilt.
He’s failed to perceive, failed to acknowledge his failings, and failed to prosecute when persons are found guilty or incompetent.
Do not feel sorry for him, elect someone who has the correct attributes.
He is a lost cause.
Next week would be a good time for him to do a John Key. I’m no astrologer, but I’d say Wednesday.
Or Tuesday, Thursday, Monday or Friday.
He’s still all we’ve got Gurglars until next election, and he does need quality guidance in that time.
The good city of Dunedin is in a dreadful position over this Carisbrook-Stadium-Aurora-subvention fiasco, and the architects of it are quietly slipping out the back door.
The options ahead for Dunedin people are all extremely costly.
The City can’t declare bankruptcy and its best ‘assets’ are now horrendous liabilities. Owners equity = what figure please City Treasurer?
Who can now plot the best course ahead?
I doubt that Steve Thompson will know how to do points and plugs on his ’62 Cortina, he doesn’t realise that the thing hasn’t had any gearbox oil in it for 20 years, the diff is stuffed, and the wreckers won’t even take it.
He’s had quality guidance all along if he hadn’t been to “attitudey” to listen to Cr Lee Vandervis, who actually knows stuff. But no, instead of having the mature wisdom to listen and learn, Cull went flat to the slats into vengeful mode. If you think he’s going to take guidance from anyone who’s both smart and ethical now, Nick, you’re more of an optimist than anyone else on the planet.
You’re right, Nick.
Anyone with a spare truss in fair condition is urged to leave it at DCC customer reception desk, clearly labelled. They will pass it on to him.
Christchurch Driver and I agree on this one. Aurora is now worthless. To this roll of dishonour may be added a number of other ‘assets’ that sit on the DCC/DCHL budget sheet. Dunedin Railways is probably worth less than zip, ditto the Foobar Stadium. DVL/DVML? – Ho Ho Ho! A lot of the other assets that have large capital values next to them on the DCC balance sheet are non-negotiable. City forests – who knows? Delta is probably also worth zip once its debts and true value of assets and earning capacity in a truly open market beyond Aurora is taken into account. On its non-Aurora/DCC track record you probably couldn’t even give it away as a going concern.
We come back to that missing DCC billion that I was talking about earlier (it’s probably more). We also come back to the MOVRNF and its associated $850,000,000 on call capital commitment that the DCC has made on our behalf to DCTL. Talking about worthless DCC assets, DCTL had $500k of equity in it last year. Now it’s minus more than $5 million.
We simply do not know what the DCC’s debt is due to the fact that 98% of it or so is in the MOVRNF and the level of secrecy that surrounds this arrangement. However, rather like neglecting the power poles, its Foobar funding related initial purpose in life appears to have been a short-term boost in cash flow – in exchange for an unspecified additional long-term liability.
How big an additional liability? A Google search on ‘multi option variable note facility’ still brings up no hits bar those on this website, which should be a real red flag – We have all our civic debt invested in the only one on the planet it seems. ‘It’, as I have commented earlier appears to be some form of interest rate swap related derivative, administered by a trio of banks some of whom have an interesting background with regard to swap arrangements – one would assume for fat fees all round. We do not know who we have swapped with or where in the World they are . We also do not know the terms – if we have taken on any risk with regard to principle repayment. We have no idea how long the commitment is.
Guarantees are always dangerous, especially if you have little or no idea of what you are guaranteeing – Just ask any over-trusting parent, Kaipara ratepayer or Irish taxpayer. It is for this reason that the law forbids the DCC to directly guarantee DCTL’s debts, and that is why they found this smart ‘on call capital’ way of sticking us all firmly on the hook, because as is noted above, there now appear to be no certain negotiable DCC assets to meet this guarantee – so it will fall to us ratepayers (local property owners) if it is called – Thanks guys.
I harp on about this because I have always believed that the real fiscal bomb that lies beneath us is located within DCTL. It is here that the missing billion bucks plus noted above will re-emerge, and it may re-emerge with great rapidity – with say, any whiff of a law change or legal precedent that might get us personally off the hook that these guys have gaffed us on.
Note I say ‘will’ not ‘might’. There is nothing more implacable than a creditor with a binding contract. Have you all individually got that $17,000 cash handy? – Better make it $30,000 – God knows what’s on the way.
It is not looking to be a good Christmas for one or two people but I guess that a lot of their discomfort will be greatly relieved by the fact that they don’t sit on their bums – they are well insulated by the very fat wallets in their back pockets.
I too noted the interesting dates being tossed round by McLauchlan. As Rob Hamlin has pointed out, the date of the decision about the stadium, and also the date of his “resignation” from the Board of Delta.
The GOB Tartan Mafia network that caused the stadium to happen numbered less than 20 and many of them are now swanning round in either Qtown or Wanaka in the sure and certain knowledge that they are terribly well insulated from the devastation they have caused. It doesn’t take much effort or insight to name the 20 individuals. Some may spring to mind as noisy frontspeople, but they were merely bit players that may have had a vote around the Council table, but they were doing nothing other than do as they were being told or “advised” by the real players. They weren’t a member of the real kitchen mafiosa.
McLauchlan was one of those as CD has so ably pointed out.
The ORFU pokie scandal was a sideshow in many ways, but it clearly demonstrated the way that the network operated. The tentacles extended into all the areas of influence they needed and the network also relied on incompetence within places like the DIA. That could be relied upon.
As always the adage of following the money is a good one to follow. Examine just who has profited from the stadium or Aurora fiascos.
CD is right regarding ratepayer liability. The Tartan Mafia and troughers can absolutely rely on the law that no matter how badly they screw up, manipulate, defraud, then the ultimate out is that the ratepayers will cough up and no-one will be held accountable. We can make deductions that Cull and Crombie have been made aware of just how much Dunedin will be up for and they will be desperate to want to limit the damage as much as possible. But the inevitable will happen. The stadium is a debt ridden weight that makes huge operational losses each year and has no savings for maintenance. The cash cow holding the lot up through borrowing and subvention payments has now been exposed as a liability of gigantic proportions. As CD points out, the only options are gigantic rates increases and huge line charge increases. Unless the GOB Tartan Mafia members have a sudden collective pang of conscience and become accountable. I can see that happening when hell freezes over.
Nick, you say “Be kind to Cull. He needs genuine support”. So did Adolf Hitler in 1945, but they are both idiots of varying degrees and have caused havoc and destruction. Do we ignore Cull’s countless massive fiscal and management gaffs? Including the ongoing stadium sly syphoning of ratepayers’ monies to the extraordinary point where we have power poles falling down! Then the cycleways debacle, Citifleet fraud and coverup, the Moana Pool vending machines, South Dunedin floods and the shameless deferral of blame? Then there’s the massive ongoing rorts via Delta. Here we have seen tens of millions squandered. Had the initial Jacks Point and Luggate inquiry been worth the paper it was written on the even more shameful and wasteful Yaldhurst sham may not have occurred, or at least been openly scrutinised and mitigated. These, plus numerous other cockups are directly attributable to Cull. He has been absolutely instrumental in keeping in place his fellow accomplice clowns, such as we now see with his spineless stance on Delta’s latest disaster. Add to this Cull’s infantile tantrums directed towards any criticism. This points to a bumbling indecisive bloke who you wouldn’t trust to run a hot dog stand in the Octagon. We are dealing with an incompetent ego maniac. I don’t doubt Cull needs “genuine support” as it all turns to custard. It is more a case of being cruel to be “kind”.
So long as the poles feeding power to the stadium are all good -who cares? The Dunedin Ratepayer votes for all the negligence and the smoke and mirror structures behind DCC!!
The veiled threat of rate rises by Cull really worries me. With extensive revaluations of our properties we are looking at significant rate increases anyway. Accordingly, one of my New Year Resolutions is to try and persuade my colleagues in SDAG to host a public meeting early next year where Cull and Co can front up to the people and try explaining how come this lovely City is in this mess. It is clear that right from 2010 our money (rates and line charges) have been siphoned away from the Network and put into dodgy schemes that Delta should never have been involved in. At that meeting we need to ask all the Councillors how come only Councillor Vandervis picked up the warning signals but got little support. Where’s the adequate governance of DCHL. As I have said before the vision of the late Mayor Richard Walls for these CTOs has turned into a nightmare and things need to change, including how that Stadium should be funded and particularly by the ones that use it.
Hi Lyndon
Other Councillors knew about it.
Cr Doug Hall, a developer, with conflicts because his business interests include working for Infinity and DCC. He has possibly…. made more money since becoming an elected representative than beforehand. If that’s not so, I’m sure Cr Hall will be happy to supply the figures.
Business woman and former councillor, Hilary Calvert, was acutely aware of the problems with Delta, perhaps more so than Cr Vandervis.
Even when Hell freezes over there will be no recompense from the ‘Tartan Mafia’ people. Too well organised, and face it, the ratepayer is a fool individually or even collectively. They know that because they have made it a science over the years to pluck the chicken close to the fire so he won’t notice, or as the saying goes you toss the frog in the water before lighting the fire then slowly but surely bring him to a simmer without him noticing. The problem then is the next bits. That’s why as Russell says they are now mostly in the far depths of Central Otago.
As Rob Hamlin says, the frightening thing is the unknown, which is the banking arrangements made with the ‘derivatives’ and hedge funds they have committed to. As a few might be aware these have variable terms which go haywire once the debt becomes unreasonable, and as Rob says, it certainly has risen beyond the pale, as indeed has the Equity and assets been exposed as frankly, crap. This is a long smouldering catastrophe of monumental proportions, going on since the days of “Jimbo Harland” and his gang of no hopers in the form of senior managers.
But at the end of the day it gets back to the runners of the place, figuratively: the Mayor, and the chairs of the various Finance Committees, several over the years, not one of them capable of seeing a balance if it was in front of them.
It is all a case of a democratic system that elects the Mayor and Councillors regardless of their training or capacities, the inefficient staff, all screwed by the ‘Tartan Mafia’, the scrambling interest groups (how else did the city get involved in a Stadium), a Mosgiel swimming pool complex, Cycleways etc. It all rightfully should have been expressed on the rate bills. That of course would have caused a riot long ago before we got to where we are. But no, our crafty lot of operators conned the barely warm Mayors and Councillors over time to take it by way of dividends from the DCHL group of companies. This was done for years while at the same time holding rates increases below inflation and taking all the kudos for doing so. [Rates have been running above inflation. -Eds]
DCHL largely did this by increasing its debt and we now are seeing the results of that. The Directors of DCHL should at the outset refused, as indeed should have the Directors of the individual companies. This all proves if nothing else, the competency and integrity of these folk who were/are largely only there for the money, of which there seemed to be much of.
If only there had been a Mayor or Directors over the time with a bit of spine and or competence and integrity to stop these goings on Dunedin would be in a much happier place. As Rob says, in effect, God help us. The foxes have taken all the chickens and all we have are the droppings. Oh dear we say. Who does it all come back to? As Rob points out the ratepayers.
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{Moderated. -Eds}
At Facebook:
I note in today’s ODT that S&P have renewed the DCC/DCHL’s credit rating at a high level. This is solely due to their legal ‘as of right’ access to our wallets. They also very surprisingly claim that the City has no overseas debt. With the MOVRNF in place I very much doubt that, but the technicality may support the claim. We shall see. They talk about hedging I would not assume as a ratepayer that you are on the sheltered side of any such hedge.
However, S&P is one of the three credit rating agencies that delivered AAA ratings to shyte derivative debt right up to the 2007/collapse. They have never really been challenged in this activity, which without doubt assisted that situation in its development.
But just think – these three agencies deliver ‘credit ratings’ on pretty much every instrument company and country on the planet. I guess that this must mean that each one of these Olympian pronouncements must be backed up by at least 45 seconds of actual analysis. I suspect five minutes’ analysis (likely far more than their fair share) would see DCHL/DCC reduced to CCC-
CD replies : A further pointer to how badly Aurora had been mismanaged, is that it has precisely $4,000, yes $4,000 in cash reserves. The financial statements show the actual network assets have accumulated depreciation of $115M but but ….the directors and the disgraceful Grady Cameron apparently believe that basically NO provision for a depreciation is needed for an essential public asset and ALL the expenditure should be financed from cash flow, with a never ending upward spiral in line charges being the result. It shows the moral bankruptcy of successive directors and councils that they would completely strip out Aurora’s funds for vanity projects with no thought to the long term health of essential public infrastructure. Mayor Cull, as an elected representative since 2007 does not deserve our support. He has closed his eyes because he barely thinks beyond next week. A clear long term plan is a foreign language to him.
Does it matter readers that Aurora can’t even afford Madeira cake in the executive tea room?
Readers, it most certainly does.
Consider this amazing fact : your correspondent understands at the present time Aurora and Delta at this time, have not bought or ordered a single new Chinese pole because they don’t have any money to do it with. The Chinese want deposits upfront. Delta isnt good for it. Vaughan of the ODT, perhaps that could be your next question to Mr Cameron.