DCC: Forensics for kids

Fairfax Media has obtained Audit NZ letters of management to the DCC from 2005 to 2012, released under the Local Government Official Information and Meetings Act. The letters show that in the years 2007-2010 auditors consistently urged the DCC to tighten up its risk-management policies and processes.

Audit NZ expressed concern over what it indicated could be inadequate controls over several internal processes, including verifying signatures of those authorised to sign invoices and purchase orders, independent review of creditor files, and controls of sensitive areas such as sale of council assets to staff. (Fairfax)

### stuff.co.nz Last updated 08:17 26/08/2014
Dunedin council officers ‘not kids’
By Wilma McCorkindale
The Dunedin City Council (DCC) appears to have ignored calls by Audit New Zealand to improve its risk and fraud processes, saying its officers were “supposedly people with integrity … not kids”.

The DCC revealed in June it was investigating a suspected major fraud within its Citifleet unit. The fraud was suspected to have been carried out over a decade. Citifleet team leader Brent Bachop died suddenly in May. His death has been referred to the coroner. Council chief executive Dr Sue Bidrose said the alleged fraud of $1.5 million included alleged illegal transactions resulting in the loss of profits from the sale of 123 council fleet vehicles. The findings have been passed to the Dunedin police for further investigation.

Fairfax Media has obtained Audit NZ letters of management to the DCC from 2005 to 2012, released under the Local Government Official Information and Meetings Act. The letters show that in the years 2007-2010 auditors consistently urged the DCC to tighten up its risk-management policies and processes. It appears Audit NZ was compelled to repeat similar advice over the period and noted the DCC met only minimum requirements.

Council managers’ response to the Audit NZ findings in 2010 was to say the council had considered creating an audit and risk committee but concluded its finance and strategy committee adequately performed the role. In December 2010 Audit NZ raised the issue of reviews of areas “susceptible to fraud”, but management commented that specific audits in the “most sensitive areas” had found “no transactions of concern or deficiencies in controls”.
Read more

Five council staff were involved in “employment processes”, with some facing the prospect of losing their jobs, the ODT understands.

[Irony] Local Government New Zealand president Lawrence Yule yesterday told the ODT the “mind-boggling” alleged fraud was the biggest involving a local authority he could recall.

### ODT Online Tue, 26 Aug 2014
Council overlooked audit advice
By Chris Morris
Dunedin Mayor Dave Cull concedes a chance to detect the alleged $1.5 million Citifleet fraud may have been missed, after the council twice overlooked advice from Audit New Zealand. The revelation came in Audit New Zealand’s annual reports to the council, obtained by the Otago Daily Times, which highlighted gaps in council processes dating back to 2003. […] The findings have triggered finger-pointing between past and present council staff, councillors and Audit NZ, but council chief executive Dr Sue Bidrose said responsibility for failing to detect the alleged fraud rested with the council.
Read more

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Related Posts and Comments:
23.8.14 DCC public finance forum 12.8.14 (ten slides)
6.8.14 DCC tightens policy + Auditor-General’s facetious comments
3.7.14 Stuff: Alleged vehicle fraud at DCC
1.7.14 DCC: Far-reaching fraud investigation Citifleet
3.6.14 DCC unit under investigation
2.5.14 DCC $tar-ship enterprise
28.4.14 DCC loses City Property manager in restructuring
7.2.12 DCC ‘money go round’ embedded

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Posted by Elizabeth Kerr

*Images (tweaked by whatifdunedin): tmba.tv – Tim McGarvey: 3D forensic animation (TMBA Inc. Animation Studio, New York City); scottthornbury.wordpress.com – F is for forensics (illustration by Quentin Blake, from Broughton, G. (1968) Success With English. Harmondsworth: Penguin)

DCC public finance forum 12.8.14 (ten slides)

The ten powerslides presented by DCC group chief financial officer Grant McKenzie, as discussed at the public finance forum held earlier this month are available for download (see PDF below).

Figures might be, but the forum was advertised….

Public notices advertising the forum and the warm invitation extended by Cr Richard Thomson, chair of the Finance Committee, were unfortunately met with low attendance on the night. Few of the well-known vocal commentators on DCC’s financial position, or indeed, leaders of the Otago Chamber of Commerce, bothered to show. Those individuals lose a measure of credibility. Where were all the beleaguered ratepayers and residents? The local ‘interested’ accountants, economists, board directors, investors, and successful business people? Their apologies? Has everybody drowned with rising sea levels or been knocked from their bikes on the one-way? Blame Dave Cull.

Rob Hamlin and ‘JimmyJones’ did make the effort to be there, solidly plying their observations and questions in debate. Other members of the public also engaged. We didn’t hear the names of people who forwarded questions prior to the meeting, or what their questions were. Notwithstanding, the slides are the Council’s attempt to respond to issues commonly raised, in summary.

The first public finance forum was held on 27 November 2013. The second on 12 August was an opportunity to hear Grant McKenzie who arrived at the Council in January. He proves to be approachable, mild-humoured and self-effacing. Grant explores the expanded GCFO role ably supported by senior finance staff; his already onerous duties include the overlay of current fraud investigations, new systems for accountability and risk management, as well as the stadium review (due in September).

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[click slides to enlarge – scanned from forum handout]

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█ DCC Finance Forum (powerslides 1-10) (PDF, 18.6 MB)

For more information on DCC, enter the terms *finance*, *dcc*, *dchl*, *delta*, *cst* *dvml* or *stadium* in the search box at right.

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Other Reading – link supplied by Calvin Oaten
Sat, 23 Aug 2014 at 12:08 p.m.

An interconnected world was meant to reduce inequality – but that doesn’t seem to be happening.

### blogs.telegraph.co.uk August 22, 2014 13:18
Finance
Nobel gurus fear globalisation is going horribly wrong (technical)
By Ambrose Evans-Pritchard
David Ricardo’s Theory of Comparative Advantage has broken down after 200 years, or so I learned at the Lindau forum of Nobel laureates in Bavaria. The theory published in 1817 has been a guiding principle of free trade, taken as a given by every student of economics in the modern era. It has served us well, but just as Newton’s theories ran into limits and were overtaken by Einstein’s relativity, comparative advantage no longer explains the world. Under Ricardo’s model, inequality was supposed to narrow within countries as globalisation accelerated exponentially in the Nineties. Instead it is getting wider. The Gini coefficient measuring the spread between rich and poor is narrowing between countries, but is widening almost everywhere within countries, leading to a corrosive concentration….
Read more

● Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.

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Posted by Elizabeth Kerr

*Images: (from the top) Facebook – yahoofinance (advert); goodcars.co.nz – Finance your next car (advert); nzvf.co.nz – New Zealand Vehicle Finance (advert)

ELECTION NEWS: Stadium councillors getting the message!

NOT STANDING —Bill Acklin (link)

STANDING —Paul Hudson [updated 16.8.13]

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Related Posts and Comments:
3.8.13 Nominations, TWO WEEKS to go !!! [counting down]
8.6.13 DCC electoral candidates 2013 [updating]
22.5.13 Dunedin mayoralty and the Q-town heavies [updating]

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Posted by Elizabeth Kerr

Russell Garbutt met with Cr Bill Acklin

The following was received from Russell Garbutt this evening, he says:

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Bloggers have been asking how the meeting went with Cr Bill Acklin and it is more than time that I responded.

The meeting was non-confrontational in my view and went over a number of issues. Cr Acklin was anxious to set out the process that was followed in relation to the black penis edifice in the Octagon and essentially outlined the process that was revealed a day later in the ODT. Why a committee has been set up that can outvote elected representatives is an unanswered question. I think it fair to say that the impression I have gained outside this meeting is that it’s clear that Ngai Tahu have had more than a significant amount of say into what the DCC contribution [might be] for what they see is a Ngai Tahu presence at the RWC. Ngai Tahu seems to have made it clear that there would be a downside if the DCC didn’t decide to contribute. None of this came from Cr Acklin, but then again this feeling was not able to be refuted. I sense that this is what the ODT were also saying in their piece. Something just doesn’t smell right with this deal.

The main issue I felt was that Cr Acklin believes that the “private funding” for the stadium has all gone to construction. He has said to me that he will check on my position that the money raised by the sale of product etc will be put into revenue and only after a real profit has been met will anything go into construction. Needless to say, I think it extraordinary that anyone involved in this process has not ensured that what has been presented by staff and the CST was not independently checked out. Cr Acklin’s position was in essence, that the DCC in total was in hock to about $700 million but only about $100 million was due to the stadium. Fair to say that there is a wide gap between what I think is the total stadium debt and what Cr Acklin believes it to be.

I think it fair to say that while I saw that there was huge financial risk if the Highlanders franchise was altered then the City would suffer because purchasers of product at the stadium would not choose to pick up instalments in arrears and hence revenue would be affected in a major way, that Cr Acklin didn’t see this as particularly worrying.

I asked if Cr Acklin would support an independent financial enquiry into the DCC along the lines of the Larsen report. I thought it intriguing that Cr Acklin believed that Larsen was working to a brief and that he was opposed to that. I’m not sure from our conversation whether Cr Acklin didn’t believe that the Board of DCHL had been compromised by conflicts or not, or whether he accepted the main findings of the Larsen report. I still don’t know if Cr Acklin would support an independent enquiry into the DCC finances and what is more concerning is why anyone wouldn’t support that initiative.

I think it also fair to say that some of the comments made on blogs were not surprising to either of us. It is accepted that a person that puts their name up for election does not have to meet any requirements of competence in governance and some that are elected are not qualified to meet the requirements of the job. It is also accepted that some Councillors have personal failings.

Overall, I was impressed that Cr Acklin offered to meet and spent 90 minutes in talking over a range of issues. However, I was not convinced at the end of the meeting that the processes followed and the reasoning followed by Cr Acklin in relation to the stadium could bear any stringent examination. It may be that Cr Acklin would have supported the stadium project no matter what the cost would be, and certainly I never gained the impression at any stage that he would have voted against the proposal.

Quite happy to hear from Cr Acklin of any corrections or other impressions from our meeting which I emphasise again was cordial, constructive and non-confrontational.

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Posted by Elizabeth Kerr