Martin Legge: DIA audit criticism #pokierorts #coverup

Comment received from Martin Legge
Sunday, 18 November 2012 5:41 p.m.

In 2007, the National Party criticised the Labour Government following a damning report by the Office of the Auditor General into DIA’s regulation of the pokie industry. The boot has been on the other foot for four years, and yet do we hear calls from anyone in the Labour Party, particularly in Dunedin?

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Press Release [2007]
Auditor-General slams Internal Affairs over gaming says National Party MP

Internal Affairs Minister Rick Barker must act now to address the criticisms of his department over its failure to effectively control the operation of non-casino gaming machines, says National Party Internal Affairs spokeswoman Sandra Goudie.

The Controller and Auditor-General, Kevin Brady, today released his report Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines.

The report shows the department’s policies and procedures do not comply with the Gambling Act 2003 and includes 17 recommendations for change.

“The department’s own ‘comprehensive licensing manual’ outlines policies and procedures that do not comply with the Act and shows licensing staff were issuing and renewing licenses without delegated authority.

“The report also found that the department’s audit checklist and manual were not consistent with the Act, and information was missing from the department’s risk profile rating of operators.

“This report shows a department clearly out of touch with its key role and clearly being ignored by the Minister.

“How could the Minister have let his department get into such a state where any old staff member can approve a licence?

“Its [sic] no wonder eyebrows have been raised over the department’s inability to get convictions of operators in breach of the Act.

“It is time Mr Barker gave his department some much needed ministerial direction.”

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Audit Report from Kevin Brady
14 February 2007

Foreword
Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines.

I felt it timely to review the effectiveness of controls on non-casino gaming machines because of the large amount of money placed in the machines (estimated by the Department of Internal Affairs at more than $8,500 million annually), the potential for the machines to cause harm in the form of problem gambling, the amount of funds from the machines going to clubs and the wider community, and a relatively new legislative framework covering gambling.

The Department of Internal Affairs administers controls on non-casino gaming machines. My review focused on three main areas of controls. These were the controls on licensing of non-casino gaming machine operators and venues, on operator and venue costs, and on the distribution and application of funds to the community including through grants.

I found that the Department of Internal Affairs has extensive policies and procedures for licensing and auditing of venues and operators, and a risk-based approach to compliance. However, there were areas of its policies, procedures, and practice that did not meet all of the requirements of the Gambling Act 2003. These included its procedure for renewing licences and for auditing. I also found that its licensing staff were issuing and renewing licences without the necessary delegated authority. The Department has committed to rectifying this issue, and had largely done so at the time this report was being finalised.

While the Department of Internal Affairs has committed to comprehensively monitoring the outcomes being achieved in the non-casino gaming machine industry, it is not yet doing this in a systematic or comprehensive manner. This limits the Department’s ability to demonstrate the results of its work and refine the way it works to achieve better outcomes.

I thank staff in the Department of Internal Affairs for their assistance, responsiveness, and co-operation during the audit. I also thank people in the industry who generously gave their time and views during the audit.

The Department has been very engaged in, and supportive of, the audit process. Its commitment to implementing the audit findings to make improvements is pleasing.

K B Brady
Controller and Auditor-General

[ends]

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Recent Posts:
13.11.12 Martin Legge replies to Sunday Star-Times story #DIA #coverup
11.11.12 Department of Internal Affairs #pokierorts #coverup #TTCF

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Posted by Elizabeth Kerr

Martin Legge replies to Sunday Star-Times story #DIA #coverup

### Sunday Star-Times Sun, 11 Nov 2012
Pokie man stopped from rort inquiries
By Steve Kilgallon
A senior Internal Affairs investigator says he was prevented from probing pokie rorts by his own department because it did not have the confidence to prosecute major crimes. Dave Bermingham, an investigator and analyst who left the department in August, said Internal Affairs was incompetent and should be stripped of its role investigating gaming machine fraud. {continues}
*No weblink available. Full text reproduced at post.

Comment received from Martin Legge
Tuesday, 13 November 2012 11:37 a.m.

Tony Molloy QC had this to say about a Government Regulator after his enquiry into the collapse of the finance industry:

“The destruction of billions of dollars of ma and pa retail wealth, through finance company meltdowns was the inevitable consequences of at least three decades of unreadiness, unwillingness and inability of regulators, enforcers, courts, lawyers and accountants to fulfil their roles with integrity.”

The Commission of Enquiry into The Pike River Disaster had this to say about another Government Regulator, the Department of Labour:

“DOL’s compliance strategy did not require an assessment of Pike’s safety and operational information. The inspectors did not have a system, training or time to do so. When, at the hearings, they were shown examples of safety information obtained by the commission from Pike’s records, the inspectors were visibly dismayed. This was not a case of individual fault, but of departmental failure to resource, manage and adequately support a diminished mining inspectorate.

DOL’s main public accountability documents, the statements of intent and annual reports to Parliament, did not reveal any concern about DOL’s ability to administer the health and safety legislation. The statements of intent and the annual reports contained many high-level statements on outcomes and outputs but it was impossible to gain much insight into the performance of the mining inspectorate, or the health and safety inspectors as a whole. Measures used, such as the raw numbers of investigations carried out by the health and safety inspectorate, were not informative.

The gap between the high-level statements in those documents and the reality on the ground was remarkable.”

Maarten Quivooy was the NZ Safety Manager at the DOL over this period but left DOL to become DIA’s head of Gambling Compliance. When the Sunday Star-Times put the allegations of cover ups and closing down of investigations within the pokie industry which he now oversees he had this to say:

“They do their investigation work to the best of their ability and from their perspective it can seem like it goes into a black hole but it has had active and thorough scrutiny by senior management.”

His comments suggest that the “remarkable gap” between high level statements and reality is now opening up within DIA !!!

To comfort the public and Politicians, Quivooy is quick to claim their investigation into TTCF was reviewed by Office of the Auditor General. What he doesn’t tell the public is that in July 2009, over the same period that Bermingham and DIA investigators were conducting their investigations into TTCF, Audit NZ was conducting its own independent and statutory audit of TTCF, as a public entity. That audit also found serious issues involving expenditure but neither Audit NZ or its parent body (OAG) took action or followed up on the findings at the time. DIA and OAG only bounced into life when I appeared as a “whistleblower” in October 2010.

OAG have never given me a satisfactory explanation as to why they didn’t immediately act or follow up to protect millions of dollars of public money but their own failure to act might explain why OAG have been so willing to endorse the DIA investigation that I have labelled a whitewash and Bermingham recently describes as a cover up.

A case of two well- resourced government regulators sticking together to avoid embarrassment.

[ends]

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Posted by Elizabeth Kerr

Department of Internal Affairs #pokierorts #coverup #TTCF

● The Trusts Charitable Foundation (TTCF Inc) ● The Trusts Community Foundation Ltd (TTCF Ltd) ● Otago Rugby Football Union (ORFU) ● Professional Rugby ● Centre of Excellence for Amateur Sport ● Harness Racing ● Department of Internal Affairs (DIA) ● Gambling Commission ● Pokies ● Rorts ● Organised Crime ● Serious Fraud ● Political Interference

*Weblink not available at stuff.co.nz
The following text in the print edition of today’s Sunday Star-Times (page A6) has been scanned, in the public interest. This post will be updated when a link appears.

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### Sunday Star-Times Sun, 11 Nov 2012
Pokie man stopped from rort inquiries
By Steve Kilgallon
A senior Internal Affairs investigator says he was prevented from probing pokie rorts by his own department because it did not have the confidence to prosecute major crimes.
Dave Bermingham, an investigator and analyst who left the department in August, said Internal Affairs was incompetent and should be stripped of its role investigating gaming machine fraud.
Bermingham’s claims will be discussed in Parliament, with the Greens’ Internal Affairs spokeswoman Denise Roche prepared to table questions about the department’s behaviour. “They had no appetite for the [gaming] industry and they don’t understand it,” said Bermingham, a former fraud squad policeman.
“There are very clever people committing frauds… and a government agency which takes little or no action and wants to treat it as regulation and compliance. When investigators identified serious breaches of the Gaming Act, they were unsupported and stifled and their investigations [were] watered down, or just, over time, vanished.”
Bermingham said pokie scams revealed in the Star-Times over the past five years were just the “tip of the iceberg: some pokie trusts have been allowed to get away with blatant theft and dishonesty”.
For two years from 2008, Bermingham compiled several investigation reports into a controversial pokie trust, The Trusts Charitable Foundation (TTCF), and recommended serious sanctions, and even criminal action, be taken.
The case was later taken off him, and either no action taken or minor penalties issued.
When the case was reopened this year following Star-Times stories, Bermingham wasn’t asked for help. Instead, he says: “A senior manager here made a statement to me that he had been told to make the thing go away.
“I suspected it was a semi-flippant comment, but as it transpires, that’s what they have done. I was the person who knew the most information about the whole thing, but they deliberately never talked to me about it.”
Former TTCF contractor Martin Legge, who first brought the TTCF story to light, said Bermingham’s revelations were “further proof that the investigation into The Trusts Community Foundation was a cover-up. Internal Affairs are being dictated to by pokie trusts and protecting their interests above those of the community.”
After he filed his “damning” reports into TTCF, Bermingham said he was flown almost daily to Wellington to discuss them. Then suddenly he was shut out. “I accept you can’t always lay charges, but there are other avenues that can be taken. But the appetite was not there to act.”
Bermingham said he became increasingly frustrated and accepted redundancy in a reshuffle.
“The department has some very clever people who know how to follow the money, and they get stopped and everyone becomes deflated and stops looking.”
He said constant lobbying by politicians in specific cases had also made DIA gun-shy. Questions asked of the department by Revenue Minister Peter Dunne around the TTCF case had helped kill it, he said. “The mere questioning seemed to cause the department to go gun-shy and shut things down. Management fear for their careers; they would rather take no action, make no decision so they are not criticised.”
Just before leaving Internal Affairs, Bermingham conducted a detailed study of where TTCF gave grants, and discovered a huge flow of money from North Island poker machines into South Island racing clubs, but was told not to progress to the next stage.
Internal Affairs boss Maarten Quivooy denied managers had been told to shut down the TTCF inquiry.
He said decisions not to prosecute were rigorously tested with Crown Law while the TTCF inquiry had been examined by the auditor-general.
But he said he understood Bermingham’s frustrations.
“If you look from the perspective of a frontline inspector, that can sometimes be their experience,” Quivooy said. “They do their investigation work to the best of their ability and, from their perspective, it can look like it has gone into a black hole. But it has had active and thorough scrutiny and consideration by senior management.
“We can do better how we communicate that to staff and how we provide feedback.”
Graeme Ramsey, chief executive of the Problem Gambling Foundation, said despite a long history of rorts, there had yet to be a prosecution of a gaming trust trustee.

Who is Maarten Quivooy? See comment.

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Sunday Star-Times:
29.4.12 Steve Kilgallon Case closed without call to whistleblower
22.4.12 Steve Kilgallon The inside man

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Related Posts:
26.10.12 Department of Internal Affairs (DIA) – CULPABLE #pokierorts
24.10.12 Bad press for ORFU -NZ Herald
3.10.12 DScene: Russell Garbutt seeks DIA file to Crown Law #PokieRorts
1.10.12 Apology requested from ORFU [email]
15.9.12 Martin Legge responds to NZ Herald news
27.8.12 DIA’s political cover-up of TTCF and ORFU rorts
22.8.12 Martin Legge releases emails to Dunedin community #ORFU
15.8.12 Keeping ORFU sweet [email]
12.8.12 DIA reshuffle: new investigation teams, money laundering, criticism
28.7.12 Pokie fraud: ODT fails to notice own backyard
25.7.12 Martin Legge backgrounds TTCF (pokie trust) and Portage and Waitakere Licensing Trusts #DIA
24.7.12 Mention in NZ Herald dispatches: TTCF and friends ORFU
15.7.12 Martin Legge responds to media stories on Murray Acklin, TTCF and DIA
26.6.12 Department of Internal Affairs, ORFU, Centre of Excellence for Amateur Sport, and TTCF
22.6.12 Connections: ORFU and local harness racing
22.6.12 ORFU board responsibility for black-tie dinner bill [emails]
5.6.12 The Gambling (Gambling Harm Reduction) Amendment Bill
4.6.12 Questions: ORFU and the Centre of Excellence for Amateur Sport
26.5.12 DIA media release
23.5.12 NZRU-appointed change manager talks
29.4.12 Department of Internal Affairs, the gambling authority
22.4.12 DIA, OAG, TTCF and Otago Rugby swim below the line

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Posted by Elizabeth Kerr

Department of Internal Affairs (DIA) – CULPABLE #pokierorts

● The Trusts Charitable Foundation (TTCF Inc) ● The Trusts Community Foundation Ltd (TTCF Ltd) ● Otago Rugby Football Union (ORFU) ● Professional Rugby ● Centre of Excellence for Amateur Sport ● Harness Racing ● Department of Internal Affairs (DIA) ● Gambling Commission ● Pokies ● Rorts ● Organised Crime ● Serious Fraud ● Political Interference

### ODT Online Fri, 26 Oct 2012
Trust audit labelled ‘a white wash’
By Hamish McNeilly
[Whistleblower Martin Legge] says an Internal Affairs audit is a “whitewash” after it failed to act on his material involving the Otago Rugby Football Union, South Auckland bars and a pokie trust.[…]An audit of The Trusts Community Foundation Ltd (TTCFL) was released last week under the Official Information Act. Earlier this year, the ODT reported the union had bought three Auckland-based bars and entered a relationship with the pokies trust, then called The Trusts Charitable Foundation (TTCF).

“At each change of ownership, it was looked at, and there was no evidence of illegality, and we had no reason to not approve the changes,” the [DIA] audit noted.

Mr Legge alleges that relationship – concerning the ownership of the South Auckland bars known as the “Jokers Group” – resulted in the union receiving more than $6 million in pokie grants from the trust between 2005 and 2011.
The Internal Affairs audit, which covers the period April 1, 2010, to January 31 this year, noted “the Department has undertaken a number of separate investigations into ‘Jokers Group’ and its ownership company over the years”.

ORFU general manager Richard Kinley said he could not comment because the audit concerned an earlier administration, and he had not read the released audit.

The audit also examined three Jokers Group grants given to the ORFU from the trust totalling $379,767 in approved payments. They were found to be compliant.
Read more

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Posted by Elizabeth Kerr

Bad press for ORFU –NZ Herald

● The Trusts Charitable Foundation (TTCF Inc) ● The Trusts Community Foundation Ltd (TTCF Ltd) ● Otago Rugby Football Union (ORFU) ● Professional Rugby ● Centre of Excellence for Amateur Sport ● Harness Racing ● Department of Internal Affairs (DIA) ● Gambling Commission ● Pokies ● Rorts ● Organised Crime ● Serious Fraud ● Political Interference

### nzherald.co.nz 5:30 AM Wednesday Oct 24, 2012
Opinion
We’re relying on money poured through pokies
By Brian Rudman
The latest Pub Charity advertisement, promoting the $20,186,931 distributed to good causes over the past six months, has a certain similarity to the advertising blitzkrieg being conducted by the cigarette industry. Both try to distract us from the distinctly unpleasant underbellies of their respective industries.[…]Pub Charity chief executive Martin Cheer, in last Sunday’s advertisement[…]claimed that “charitable donations” that are “critical for causes from air rescue to opera” will be in jeopardy. He said Auckland Council was about to feed community groups and charitable organisations “a super size pile of bull about the future of charitable gaming machines in their territory” and that staff were using incorrect and misleading statistics to persuade community boards that “gaming machine funding is not that important or effective”. Mr Cheer’s comments are just a rehash of an earlier statement he issued in May, but they did draw my attention once more to where Pub Charities funds come from.

Two years ago, the former chief executive of the Community Gaming Association, Francis Wever, wrote to the Minister of Internal Affairs claiming that corrupt behaviour in his own industry was “all-pervasive and pernicious” with “endemic non-compliance”.

This year we read of how the Otago Rugby Union bought three South Auckland pubs then siphoned $5 million in pokie profits out of the areas – mainly Manurewa – to help prop up the failing Dunedin sporting body. What’s protecting the pokie industry from reform is that it props up respectable New Zealand.
Read more

● Brian Rudman is a Herald columnist looking at Auckland and national issues.

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Posted by Elizabeth Kerr

DScene: Russell Garbutt seeks DIA file to Crown Law #pokierorts

● The Trusts Charitable Foundation (TTCF Inc) ● The Trusts Community Foundation Ltd (TTCF Ltd) ● Otago Rugby Football Union (ORFU) ● Professional Rugby ● Centre of Excellence for Amateur Sport ● Harness Racing ● Department of Internal Affairs (DIA) ● Gambling Commission ● Pokies ● Rorts ● Organised Crime ● Serious Fraud ● Political Interference

### DScene 3 Oct 2012 (page 3)
DIA says no wrongdoing
By Wilma McCorkindale
Dunedin man Russell Garbutt questions the Department of Internal Affairs (DIA) investigations into alleged pokie rorts involving Otago sporting organisations. Garbutt, a former chairman of Sport Otago, said the DIA told him at a meeting in Wellington earlier this year it had a major investigation under way into an alleged series of complicated transactions allegedly directing pokie funds through an organisation called the Centre of Excellence for Amateur Sport.

“It is abundantly clear, in my view, the Centre of Excellence was operating for the ORFU,” Garbutt said.

Related pokie grants were administered by The Trusts Charitable Foundation. It has since been revealed the [Centre of Excellence] was applying for grants [funded] by pokies at certain Auckland bars on behalf of the Otago Rugby Football Union. It was also revealed the ORFU had interests in the bars.

“If the DIA is going to prosecute, it has to go to Crown Law. Crown Law is saying there’s insufficient evidence to prosecute. I’m saying let’s see the evidence, let’s see the file they produced to Crown Law, and see if [the DIA] produced all of the evidence that was supplied to them. What is the basis by which Crown Law says there is insufficient evidence?”
{continues} #bookmark

Register to read DScene online at
http://fairfaxmedia.newspaperdirect.com/

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Posted by Elizabeth Kerr