ORC : Official complaints show integrity

### ODT Online Mon, 15 Aug 2016
Two complaints laid against ORC
By Simon Hartley
Complaints against the Otago Regional Council have been laid by Cr Gerry Eckhoff with the Ombudsman and also the Office of the Auditor-general over exclusion of the public from a recent meeting. A decision was publicly released by the regional council late on Friday, from an in-committee, meaning non-public, non-media meeting on Wednesday, which the ORC yesterday defended on the basis the decision could be appealed.

The regional councillors voted in favour of accepting commissioners’ recommendation that a minimum water flow be set for the Lindis River catchment in Central Otago.

Mr Eckhoff released a statement yesterday outlining his complaints, and in an interview said not having the issue aired in public revealed a “grossly inappropriate process”. […] Council staff made the recommendation to hear the Lindis matter in public exclusion after seeking legal advice on matters where a decision by the council is open to an appeal in a court or tribunal, [ORC chief executive Peter Bodeker] said.
Read more

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█ ORC : Combined Council Agenda 10 August – Public.pdf

Go to PART D – EXCLUSION OF PUBLIC
See Item 14 Recommendations of the Hearing Committee on the Proposed Plan Change 5A (Lindis: Integrated water management) to the Regional Plan: Water for Otago.
In relation to item 14, this resolution is made in reliance of section 48(1)(d) of the Local Government Official Information and Meetings Act 1987.

█ Otago Regional Council http://www.orc.govt.nz/

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Posted by Elizabeth Kerr

Election Year. This post is offered in the public interest.

South Dunedin Action Group: Notes of meeting with DCC (3 May 2016)

Received.
Friday, 6 May 2016 6:02 p.m.

From: Clare Curran [Dunedin South MP]
Subject: Notes from the Meeting with DCC on 3 May
Date: Fri, 6 May 2016 00:31:05 +0000
To:

Dear everyone
Further to my last email here is the notes taken by office from the meeting with the Mayor and senior Council management on 3 May.
This is to keep you informed and for transparency purposes.

A new meeting date will be set up soon and I will keep you all informed

Kind regards

Clare Curran

[begins]

Notes from meeting 3 May 2016
South Dunedin Action Group (SDAG) and mayor + senior management

Mayor Cull
– acknowledged that there was collective concern, that they were pleased to meet with the group and that the meeting provided the best place to provide clarifications
– Acknowledged that the process had been lengthy and frustrating, and “sloppy”
– Council was now very sceptical about evidence relating to the flood and had been let down. He added that they would not make any changes to anything without evidence.
– If the event occurred again even with the proper maintenance there would have been severe flooding
– Determined to make the system we have work the best that it can
– Agreed need another mechanism other than the ODT to communicate with the community
– Will consider the discussion and come back with a proposal for the next meeting with a smaller group

Laura McElhone. Group Manager Water and Waste
– All mudtanks had been cleaned in South Dunedin (marked with green spray)
– Screen has been redesigned at pumping station, work about to go to tender, installation expected July/August
– Screen currently cleaned weekly by contract with photograph for proof
– Proposed screen modifications would see a 4 part screen to allow for safer and easier cleaning – could not confirm bar spacing
– Approx. 100 manholes had been lifted (Oct/Nov 2015) to identify any siltation – none identified as a problem – map can be provided of manholes checked – this exercise will be repeated in Oct/Nov 2016
– Confirmed that with the work carried out or in progress expected reduction in level of water would be about 200mm – however difficult to predict because too many variable to undertake modelling
– On issue of foul sewage infiltration confirmed that work being undertaken in Kaikorai Valley was to reduce the pressure on the system before it came through to Caversham
– On the issue of diverting foul sewage to Green Island treatment works stated that it was only able to handle a certain amount as it had been set up for a different type of sewage
– With regard to pumping out to sea, confirmed that they now know who to contact at the ORC and will maintain valves to enable this to happen if necessary
– Advised Musselburgh pumping capacity cannot run at maximum [this is disputed by Darrel]
– Forecast received on 2 June was for 1/3 less rain – only after midday on 3 June did they receive prediction on the size of the event
– Definitely had contractors and staff monitoring and out in South Dunedin, but did not have enough people to cover the scale of event
– Door-knocking by DCC did not record the number of flooded houses [DCC has not been back to check]
– 1968 flood had two peaks so had time to recover [disputed by Darrel]
– Too many variables to accurately measure topographical data
– Understand need to reassure and quantify but have to be careful not to give false impression
– Advised that 4/5 engineers employed in planning and 6/7 at the delivery end – acknowledged the identified lack of a storm water specialist – currently under recruitment

Ruth Stokes. Infrastructure and Networks General Manager
– Contractors have been asked to verify status of periphery areas
– Need to build resilience in the community – have recognised need to contact secondary schools and community groups and extend beyond the ‘What’s the plan Stan” initiative

Sue Bidrose. Chief Executive
– Unable to provide a figure on the number of roads closed by DCC as the water washed the cones away.
– Civil defence, Fire and Police all advised DCC that only 20-30 houses had been flooded – suggested that volunteers sandbagging were not part of the information loop and therefore message did not get through to emergency services

Kate Wilson. Councillor
– Have been advocating for a rain radar for a number of years on the Taieri

David B-P. Councillor
– Not just South Dunedin affected but other areas also, we need answers to give the community reassurance that the system is operating

[ends]

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

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Posted by Elizabeth Kerr

DCC meeting and apology NOT Enough— #SouthDunedinFlood

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

Received today.

From: Hilary Calvert
To: Dave Cull
Cc: Golds [Godfrey Dodd], All Elected Members, Vaughan Elder [ODT]
Subject: Re: Flooding

Thanks for copying us in.

May we know when you requested that the mudtanks were cleaned thoroughly?

I had thought that it was an initiative from Ruth Stokes, as part of the looking into and reporting back on the flood.

I am also interested in your “fact” that the stormwater system is not capable even at optimal condition and performance……. Do you mean that it was not then, or that it would not be even if we made adjustments and sorted out the mudtanks and fixed the screen/pump and made changes which we have signalled to the general stormwater system which flows through South Dunedin?

If council modelling showed the extent of the flooding would be precisely as it was in the event of that magnitude, what relevance had the problems with the screen/pump and the mudtanks? I guess all the problems in South Dunedin during the flood were localised problems and many of them as a result of water lying about, so did our modelling show that as well?

I understood that there was still more work to be done to understand what we could best do particularly about the interconnection between the water from various sources and what we could afford of the options available.

Do you see the governance part of the Council completely blameless in this process?
Since you have apparently arranged for the mudtanks to be cleared, surely you/we could have done something sooner.

Do we have a role at all in your view, apart from advising people they are wrong when it turns out we may have incomplete information?

As seems true for all of the information surrounding this horrible flood, the more information we receive the more questions we have.

Kind regards,

Hilary

_______________________________

On 26/04/2016, at 5:30 AM, Dave Cull wrote:

Dear Mr Dodd,
Thank you for your email. I am puzzled by the apparent assertion that I have blamed the 2015 June flooding on Climate Change. While that may be the root cause I don’t recall saying that. The cause of the flooding, as has finally been comprehensively reported (for a meeting today) was the fact that the stormwater system in South Dunedin is not capable, even at optimum condition and performance, of coping with the amount of rain that fell over that period. That is a simple calculation given the capacity of the system in both volume and pumping terms, and the severity of the event. The mudbank maintenance failure was reprehensible from both a contractor and staff oversight perspective, especially as exactly the same issue had been raised some four years ago and assurances given that it would not happen again. The fact that some mudbanks were not up to scratch may have caused some localised problems and perhaps prolonged the water lying, but they did not cause the extent of the flooding. That was exactly as Council’s modelling showed it would be in an event of that magnitude.
Six years ago Council received reports stating (among other conclusions) two things. First that more frequent and severe rain events were likely. Second that the stormwater system in South Dunedin was not capable of handling those. So flooding was very likely. Last year the Parliamentary Commissioner for the Environment issued a report showing that rising ground water, pushed up by sea level rise will increasingly afflict South Dunedin.
It’s most important to recognise that while stormwater and groundwater can each affect the other, they are different and have different causes.
The failure was operational and managerial as Council was repeatedly assured that maintenance was up to scratch.
Council’s challenge now is to address both stormwater and groundwater issues. We have already, at my request, ensured that the stormwater system is in the best shape possible as winter approaches, by having all the mudbanks cleaned properly. Additionally the screen at the Portobello Rd pumping station, which was blocked by debris carried by the overwhelming amount of water, will be replaced by July.
Council will consider that report which has taken such a frustratingly long time to get to us, and determine the next necessary steps.
At your request I have copied this to all elected members.

Dave Cull

_______________________________

From: Golds [Godfrey Dodd]
Sent: Monday, April 25, 2016 7:07 PM
To: mayor @dcc.govt.nz
Subject: FW: Flooding

Dear Mayor
I am sending you this email in that it may make you understand how one ratepayer views your complete failure in the flooding in South Dunedin
WE all know that climate warming is a fact but your glib PR spin and articles in the paper does nothing for your credibility and your lack apology shows that you and the council do not except responsibility for this lack of governance
It is sad that only one of the council appears to have enough bottle to ask you to do in an old fashion way the decent thing
My wish is that you pass this email as part of an agenda item a the next council meeting on how one ratepayer views your lack of understanding in the way a Mayor should carry out his role
I would interested in your reply

Regards
Godfrey Dodd

_______________________________

From: Golds [Godfrey Dodd]
Sent: Friday, April 22, 2016 10:00 AM
To: Andrew Whiley [DCC]
Subject: Flooding

Hi Andrew
It is with disappointment reading the failure of governance by the council I was a chairman in those days that was the title of a high school board If the school had a problem which effected the community you had to stand up and take the blame
I do not expect the council elected members to clean mud tanks but when there is failure of this size then the expectation of the community that something is seriously wrong with the governance of the council The glib excuses as regards rise in sea level is the catch cry of the council which you as a member are part of
In my view the council members should of put on gumboots and gone out with the CEO and inspected the mud tanks instead of waiting a year for a report It saddens me to find that people in South Dunedin were not accorded this Instead we had articles written that showed how out of touch the council members were These articles were part of the green PR spin which now blights any decision that this particular council makes All that was needed was clean mud tanks and clear governance by the members of the council not excuses I hope that this is a lesson that you as a council member takes on board when making decisions in the future
Kindest Regards

Godfrey Dodd

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ODT 25.4.16 (letter to the editor)

Tue, 26 Apr 2016
ODT: Vandervis forcing mud-tank issue [+ Letters]
A series of emails released by Dunedin city councillor Lee Vandervis show he was raising concerns about the state of Dunedin’s mud-tanks as long ago as 2011. Cr Vandervis said he released the emails because only publicity forced the council to change its ways. “This publicity is going to make sure it really is sorted once and for all this time.” The release of the emails follows a report released by the Dunedin City Council last week into last June’s flood, which found 75% of mud-tanks in South Dunedin were not properly maintained.

Tue, 26 Apr 2016
ODT: Staff apology for mud-tank failure
Council staff were responsible for not properly overseeing mud-tank maintenance in South Dunedin, not councillors or the mayor, a senior staff member says. Council infrastructure and networks general manager Ruth Stokes started today’s council infrastructure services committee meeting by apologising on behalf of council staff for the failings identified in a report on last June’s flood. Dunedin Mayor Dave Cull and Crs David Benson-Pope and Lee Vandervis were among those who had raised mud-tank performance prior to the South Dunedin floods, and been given incorrect information by staff. “For that I would like to, on behalf of the executive, apologise,” Ms Stokes. The failure was a management failure and not governance one, she said.

Douglas Field 26.4.16 (detail)

Comment at ODT Online:

Mayor Dave Cull outraged
Submitted by JimmyJones on Tue, 26/04/2016 – 1:49pm.

Mayor Cull says he is outraged at the failure of Fulton Hogan and council staff to adequately ensure that the mudtanks were in working condition. He should also be outraged at his own poor leadership and failure to respond to developing problems. Under his leadership the city continued to build up a backlog of worn-out stormwater pipes and equipment waiting for funding to be allocated. With this lack of funding we have seen the inevitable result of a deteriorating stormwater system. The poor state of the stormwater system was the primary cause of the severity of the flooding at Kaikorai, Mosgiel and South Dunedin last year.

This under-funding of the stormwater renewals is not an accident. Every year the DCC Mayor and councillors decide and vote on this spending – and every year they vote to under-fund the stormwater renewals because they think that a new stadium and a new swimming pool and more bicycle lanes are more important than a functioning stormwater system. The Annual Plan shows that the under-funding will continue next year. Expect the deterioration to continue.

Related Post and Comments:
20.4.16 DCC Politics : Release of Infrastructure Report #SouthDunedinFlood

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

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Posted by Elizabeth Kerr

*Email image: carleton.ca – android-email-app

Delta #EpicFail —Noble Subdivision : set to music …

Text and images by Christchurch Driver [CD]
Monday, 25 April 2016 8:19 p.m.

With apologies to Helen Reddy and the composers of Delta Dawn….,

Delta boys what’s that picture you have on ….

Could it be a faded road from days gone by ?….

But did I hear you say, there’s a meeting in here today,

To take your debt to that mansion in the sky….

It’s 41 (months) and Grady still says it’s Ok, gents and ladies….

All the folks in Dunedin say he’s crazy….,

Cause he walks to Harcourts, with a suitcase in his hand,

Looking for a mysterious dark haired man….

In younger days they called it Citiworks, son….

Most profitable contractor you ever laid eyes on….

But a man of Noble degree came to their side,

Broke all promises and took them for a ride….

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

Tanya Tucker / Helen Reddy – Delta Dawn (The McClymonts Cover) https://youtu.be/2vkzhj0E-6I
Published on Jul 14, 2014
From the The McClymonts album Here’s To You & I.

Posted by Elizabeth Kerr

DCC Politics : Release of Infrastructure Report #SouthDunedinFlood

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

Photo: Paul Allen

New Report [excerpt]—

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Next meeting of the Infrastructure Services Committee will be held on Tuesday, 26 April 2016 at 1:30 pm or at the conclusion of the Planning and Regulatory Committee meeting (whichever is later) – Edinburgh Room, Municipal Chambers

PUBLIC AGENDA
1 Public Forum (page 4)
2 Apologies (4)
3 Confirmation of Agenda (4)
4 Declaration of Interest (5)
PART A REPORTS (Committee has power to decide these matters)
●● 5 South Dunedin Public Infrastructure Performance during June 2015 Flood Event Follow up (6-27)
6 Recycling Markets and Bin Contamination (28)
7 Northern Wastewater Schemes’ Options (34)
PART B REPORTS (Committee has power to recommend only on these items
8 Resolution to Stop a Portion of Peel Street, Allanton (44)
9 Road Name – Three Hills Subdivision (54)
PART A REPORTS (Committee has power to decide these matters)
10 Notification of Agenda Items for Consideration by the Chair

█ Agenda – ISC – 26/04/2016 (PDF, 6.3 MB)
The agenda and reports are located together in this file.

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Dunedin City Council – Media Release
Report on South Dunedin infrastructure performance during June 2015 flood released

This item was published on 20 Apr 2016

The report on the South Dunedin infrastructure performance during the June 2015 flood event was released today as part of the agenda for the Infrastructure and Services Committee meeting next week.

The report concludes that while a number of factors contributed, the main factor was the highest 24-hour rainfall total in Musselburgh since 1923.

General Manager Infrastructure and Networks Ruth Stokes says the report outlines the known challenges with managing the South Dunedin catchment and highlights concerns about the performance of mudtanks and the Portobello Road pumping station during the event.

“Changes in the South Dunedin catchment since the stormwater network was designed, combined with operational challenges and high ground water levels, all contributed to the effects of the extreme rainfall event that occurred in June 2015.”

Mrs Stokes says the report shows that mudtanks weren’t maintained as required. As a result, a number of steps, including a full review and retendering of road maintenance contracts have been adopted. Other measures include accurately capturing data on the status of the mudtanks, a redesign of the Portobello Pumping station screen and the development of a communications plan to inform the community of the local infrastructure challenges and how to best plan for future events.

“However, given the volume of rainfall and the system at capacity during the June event, the water would have been unable to enter the network even if all mudtanks were clear.”

She says the DCC must now look at what measures can be taken to mitigate such events in future.

The DCC will soon be engaging with the community about these issues and what the long term responses might be.

Contact Ruth Stokes, General Manager Infrastructure and Networks on 477 4000.

DCC Link

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Otago Daily Times Published on Jun 4, 2015
Raw aerial video of Dunedin Flooding
Video courtesy One News.

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

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Posted by Elizabeth Kerr

Delta #EpicFail : Strategic Reasons & Outrageous Logic

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

Received from Christchurch Driver [CD]
Tue, 19 Apr 2016 at 10:48 p.m.

Readers, tonight’s exposition is to examine the Dunedin City Council (DCC) worldview that does not contemplate a sale of Delta at less than $45M. Your correspondent says that will never happen on any rational economic basis, so the next best thing is to pretend that it would not be in the ratepayers’ best interests to sell at all, seemingly at any price.

However, annoyingly, logic and reasons must intrude at some point, and in the recent report on DCHL asset values, the DCC have a crack at pushing the Delta water uphill.

█ Agenda – Council – 11/04/2016 (PDF, 1.6 MB)
Item 22 Dunedin City Council Investments and Returns (pp 109 – 123)

Tonight, readers, we shall dwell on and allow the TWO big “strategic reasons”, the DCC propose to retain Delta, to stand in splendid isolation, while readers allow the cool chill of logic to bring these clouds of hot air back to reality.

We shall also overlay some markers over Delta’s financial figures that give support to your correspondent’s contention that Delta is at risk. (careful words needed here, readers !)

Safely camouflaged at para 55 (page 117), deep in the DCC report, the following statements appear : “If Delta were to be sold by the DCC, one likely outcome…. [it could be] purchased by a competing company in the same field. One consideration…. is the potential ‘head office’ job loss to Dunedin if Delta were to be sold to an existing company which is not locally owned.”

Stop right there, readers. The DCC say the first, most important consideration in retaining Delta is to retain the Delta ‘head office jobs’ in Dunedin. At one level we can take this to mean that the DCC are very fearful that the current occupiers of the Delta head office jobs in question would not find similar work in Dunedin. Your correspondent thinks that is a very well-founded fear. But the DCC head of economic development tells us the city is growing and it is hard to attract executive staff to the city…. it is a taxing puzzle why the authors of the report ignore their own staff…. At the next level, your correspondent is vexed at the concern shown by the DCC for the six figure inhabitants of the Delta Head Office suite. (Note, there are 70 people earning in excess of $100,000 at Delta, your correspondent guesses that the Head Office inhabitants occupy the highest echelons of those salaries). This brings a whole new meaning to the (draft) Statement of Intent requirement to be a “socially responsible …. corporate citizen”. At a higher level again, the DCC appear to say that the welfare and future of the head office positions rank ahead of the core task of providing returns to the ratepayers.

Readers, remember that DCC provide these reasons as reasons not to sell Delta even if someone paid the massive premium of 300-400% over the $15.804M shareholders equity (which is about to suffer a severe Noble induced virus).

Your correspondent is very sure these revolutionary themes of Soviet Style central planning and corporate welfarism were not intended in the Delta ‘Statement of Intent’ which is meant regulate how the company is run.

Next up as the DCC apologia for retaining Delta is the statement, “the loss of Delta from the local contracting market, particularly if through acquisition from an existing contractor, would remove an element of competition from an already limited local market”.

This is illogical. Let us count the ways:

1. If competition is “limited” then margins will be high, and demand for skilled staff intense, so any logical purchaser would leave the Delta structure alone to continue its high margin work…. but of course, if there is limited competition and Delta are not making good profits, then there is a problem…. and Delta should be sold to an entity that can generate good profits in a limited market.

2. It can be safely assumed that Delta’s local competitors Fulton Hogan, Downer, SouthRoads, Whitestone, Asplundh, Waste Management, and any of the local power contracting companies are not stupid and they would have no interest in paying the DCC $45-60M for $15.804M of equity (on a good day). If Delta expired, the limited competition just got less, and paydays all round for all left standing. Your correspondent says then that any purchaser is likely to be someone who does not have a presence in the market, and sees potential for profit in this market, allegedly with limited competition. If that were true they would leave Delta as it was, maybe even with some of its precious head office jobs, to continue their (merry and profitable ?) way. (For the time being at least).

3. The bottom line is your correspondent posits that Delta will never be sold in its current form, because its competitors know, even if DCC Treasury does not, that Banks have certain standards for lending money to companies, and an important one is the debt to equity ratio. Delta has $26.9M of debt and $15.804M of equity. That is a debt : equity ratio of 183 % which this correspondent says is far too high for a contracting company. A debt : equity of 100 % or less is usual in this sector. Another is the Liquidity (Quick) Ratio which is Current Assets / Current Liabilities. Contractors should have a minimum of 1.35 and many accountants would say 2. (What would Mr McLauchlan say ….?). Delta has $17.5M of current liabilities and just $220,000 of cash in the bank. This is one seriously undercapitalised contracting company.

Delta will no doubt say their quick ratio is fine because the accounts show $25.244M in receivables, but this includes the very non-current and very illiquid Noble debt of $13.2M. They do have $2.84M of Work In Progress (WIP) which is included under inventories. They then have proper current assets of $0.22M cash, $2.84M WIP, and $12.2M Receivables, ($25.24-13.2M) for a total of $15.08M and a quick ratio of 0.88. The bottom line is : even putting aside the elephantine $26.9M in debt, Delta have serious cash flow issues with a quick ratio of less than 1, and if they have a further problem contract, or even just a delay of a month or two getting paid on a larger contract, they are not just on a cashflow knife edge, but in serious trouble. Delta has basically no cash reserves as at June 2015. Of course, Mr Cameron did not dwell on that factoid in his report….

Readers, the quality of the excuses made in support of retaining Delta are of the same quality as the prediction of its value at $45-60M.

[ends]

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

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Posted by Elizabeth Kerr

*Image: blog.smashwords.com – AuthorUphillBattle, tweaked by whatifdunedin

Delta #EpicFail Noble Subdivision : Avanti Finance —Feeding at the Delta Trough

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

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Received from Christchurch Driver [CD]
Monday, 18 April 2016 11:03 p.m.

Readers may remember that in an earlier post, ‘Gold Band Finance – The Little Finance Company that did (Delta)’ March 2016 – your correspondent was lacking information on what transpired between Avanti Finance and Delta.

Your correspondent indulged in some dark speculations about what Delta might or might not have done. But recently your correspondent has received email information shining a light on that transaction, a welcome piece of disinfectant as Justice Brandeis would say. While we no longer see through a glass darkly on this matter, the disinfectant metaphor is apt, as yet again, Delta suffers another grievous and substantial financial wound, this time, a deliberate and self-inflicted one. It seems that in order to save or salvage something from the Noble debacle, it is first necessary to destroy the Delta financial reserves.

The conversation must have gone like this : “Dear Avanti, you have gate-crashed our game of Monopoly and you have further erred in somehow gaining a piece of the Noble subdivision that we simply must have ! Poor form, poor form indeed. Now chaps, we can do this the easy way or the hard way ! There is no way in this whole wide world we are prepared to pay you the 37 % per annum interest rate that your friends at Gold Band are charging on their part of the mortgage…. That was then, and this is now !! Take it or leave it, our offer is…. not a penny more than…. 34.50 % !!”

Yes readers, Delta in March 2015, paid Avanti $2.19M for its interest in the Noble Investments (NIL) first mortgage. Avanti had paid Gold Band $1.5M for the same interest just 16 months before in November 2013. A gain of $690,000, or 34.50 % per year. Let’s see, only 350 times the rate of inflation. Avanti made out like a bandit, but then, they are a finance company…. and Delta are, well, Delta.

Delta CEO Mr Cameron confirmed that Delta spent $3.3M “strengthening its position”. We now know how that went : $1.2M to Gold Band, $2.19M to Avanti, which all pans out, taking into account a rounding error.
What we do not know is the timing of the $3.3M, but that is not a central issue at the minute.

Readers should bear in mind that if the situation is resolved by June 2016, then the first mortgage of $1.75M lent by Gold Band around 2004, could have spawned the amazing sum of $11.8M, and at least $9.1M. Gold Band and Cup Investments (CIL) will have lent out $1.75M and received $3.1M plus $2.7M received from Avanti and Delta. That is a total of $5.8M. Huge. Delta have paid $3.3M for a part security and if they are charging around the same interest as the others, then their figure will be around $5.5-6M. That is, the first mortgage securities of Gold Band and Delta will consume the first $10M of the mortgagee sale. Not looking good for Delta’s core debt of $11.35M of lower ranked securities….

Your correspondent is desperate to see a Councillor ask for confirmation about this and the Gold Band and Avanti ‘premium’ they paid. Perhaps then the Otago Daily Times might sense that Delta paying $1M plus over the face value to Gold Band and Avanti for part of a first mortgage in an attempt to get a better recovery on their lower ranked securities is News, and not in a good way. Heaven knows they could do with some – Building Consent Delays on the front page – Good Lord what next ! more cat pictures ?
The Wash ?

Your correspondent can’t wait to read the emails around that board decision…. when the Auditor-General releases them. Will there be another email from a Delta Director stating in effect “if the subcommittee agrees then I agree with them?” (As there was for the ill-fated decision to proceed with Luggate).

Next we shall look at the “Strategic” reasons the DCC put forward as compelling reasons for retaining Delta in its report…. Irony and comedy abound….

[ends]

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

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Posted by Elizabeth Kerr

*Image: alliedpress.co.nz – ODT 18.4.16 front page sml

Delta #EpicFail : What is Delta Worth ? $10.5M or $52.5M ? (Murray & Co)

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

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Received from Christchurch Driver [CD]
Sun, 17 Apr 2016 at 11:41 p.m.

Your correspondent was ruminating about the DCC over a cup of Choysa last week, and was in need of some light relief, so he had a quick read of the latest DCC “report” – (I use the term in the loosest possible sense) about the efficacy of its DCHL assets, including of course, Delta. Your correspondent urges readers with a taste for comedy and irony to read it. It will not disappoint.

█ Agenda – Council – 11/04/2016 (PDF, 1.6 MB)
Item 22 Dunedin City Council Investments and Returns (pp 109 – 123)

The report starts by explaining why a holding company structure was set up in 1994. It was to “operate commercially”, the major benefit of which is helpfully explained as the interest can be tax deductible under a company structure whereas as a DCC entity it cannot. Let’s just think about this in light of the recent fuss about offshore trusts and tax planning : Accountants call it tax efficient, or tax minimisation. Some, including the Government might consider it a form of tax avoidance, particularly when the Owner of those companies constantly has its hand out to central government begging poverty, seeking handouts for capital projects. ($15M for the Stadium, $5M for Otago Settlers Museum, etc).

The humour starts when the report nonchalantly notes that Delta is valued using the current ($13.8M) asset valuation for the elderly Noble debt. In its words there is no allowance for any “additional impairment” – spot the careful euphemism, or excitingly, “any increase in value” : Yes readers, they actually wrote that. There is a useful biblical precedent to this statement in Luke 6:39. Readers’ homework is to look this up….

Delta is valued at “$45-60M”, but this clearly alarmed at least one of the DCHL Directors, Mr Keith Cooper, who as CEO of Silver Fern Farms has recent extensive experience trying to merge or flog off basket (brisket?!) cases to foreigners. Mr Cooper hurriedly said that “a lot of preparation” would be needed to get Delta ready for sale at anywhere near that figure. Your correspondent thinks that preparation would actually be a very good idea.

Getting Delta “prepared for sale” would require some clarity around the costs and revenues of each of its business activities, and each of its major contracts, not just aggregating everything as per the current annual reports.

However, your correspondent believes that level of detail won’t ever be revealed, for a reason which readers should be aware, and that is your correspondent has been advised by former Delta staff that Delta is propped up by its sweetheart contracts with Aurora, and they are the reason that Delta survives and makes a profit. Most of its other activities are awash in a sea of red ink.

Of course, if this is not true, then some detailed information can be released to show that your correspondent is barking up the wrong tree here. Now, is that likely to happen ?

Naturally, Christchurch-based merchant bankers Murray & Co did not provide detail about how the $45-60M valuation figure was arrived at.

What we know from previous Delta posts (Some Forensics, 30.1.16) is that Delta has shareholders’ equity of $15.804M. This is the difference between the alleged $59.705M in assets and the staggering $43.901M in liabilities, which includes $26.49M in term debt. The key factoid : average Delta net profit over the 5 year period 2011-2015 was $2.636M. It is not forecast to pay a dividend for the next three years. Remember, this includes the proceeds from the sweetheart Aurora contracts which are unlikely to be so generous if owned by a private non DCC entity. In 2015 Delta completed $35.4M, fully one third their turnover, on Aurora work.

Now, your correspondent has had a bit to do with valuing companies for sale. A contracting company such as this would sell for an average P/E (Price Earnings ratio) of between 3-5, over a 3-5 year period. With the 5 year $2.636M average net profit, and using a P/E of 4, that gives a value of $10.54M. That is a long, long way from $52.5M, the value DCC and Murray & Co say it is worth.

There is a case to be made that net profit before impairments should be used, but this will not get to anywhere near the $52.5M. On that basis the 5 year net profit would be $4.59M, which at a P/E of 4 gives a nominal value of $18.38M. Your correspondent says this is too much, no one is going to pay many millions over and above net asset backing for goodwill for an “impaired” contracting company.

Readers, who is right ? A tea drinking blogger, with an interest in the facts, or Ms Bidrose and Mr McKenzie, signatories to the report, assisted by Murray & Co ?

Your correspondent can hear the readers’ lament already – CD is a numbskull ! –what about the $15.804M in equity –it has to be worth at least that much !!

Sadly readers, as outlined in the earlier forensics post, it is my prediction that the $15.804M equity will be written down to $5-8M and quite likely less, when the Noble Debacle is finally dissolved, and the actual loss known.

The Owner of Delta is going to have to pump millions in to recapitalise Delta, otherwise it is a dead company walking – towards extinction.

Your correspondent says it is a feat of extreme positive thinking to get to a value of $52.5M, the figure used in the report. Edward de Bono would be proud. Murray & Co probably bend spoons as a warm up exercise.

This correspondent is incredulous that this figure saw the light of day. Your correspondent says it is completely unsupported by the facts.

[ends]

Tue, 12 Apr 2016
ODT: Valuations raise asset-sale questions
A report tabled at yesterday’s Dunedin City Council meeting has revealed the extent of the city’s assets for the first time. The report, which revealed the $417.9million value of council-owned companies, raised some questions during the meeting about the possibility of asset sales.

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

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Posted by Elizabeth Kerr

Stuff: Dunedin council CEO won’t resign

Latest at Southland Times by Wilma McCorkindale:
03/09/2014 at 17:03

Dr Sue Bidrose said she would not follow two of her general managers out the door in the wake of the $1.5 million alleged fraud investigation.

█ http://www.stuff.co.nz/southland-times/10456244/Dunedin-council-CEO-won-t-resign

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We all know it was never a question.

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Posted by Elizabeth Kerr

DCC Fraud: Further official information in reply to Cr Vandervis

Following on from the previous post.
DCC has established an Investigation Steering Group (membership unknown).

—

Received from Cr Lee Vandervis
Mon, 1 Sep 2014 at 9:51 p.m.

[begins]

—— Forwarded Message
From: Lee Vandervis
Sent: Wednesday, 27 August 2014 11:09 a.m.
To: Sandy Graham [DCC]
Subject: Re: 8 x LGOIMA requests

Hi Sandy,

Thank you for responding so rapidly on the 8 questions.

To clarify, have the DCC asked for the SFO to investigate the Citifleet frauds and when, or has the SFO only been briefed indirectly by Deloittes as in answer 7?

Also, are your responses public or confidential?

Cheers,
Lee

——————————

From: Sandy Graham [DCC]
Date: Mon, 1 Sep 2014 11:08:40 +1200
To: Lee Vandervis
Subject: RE: 8 x LGOIMA requests

Dear Lee

I have followed up your question of clarification about the SFO and can provide the following response:
Under the circumstances of a suspected fraud (as per the Citifleet situation at the beginning of the investigation), the normal course of events is that the SFO is informed of issues when they arise. Deloitte did this via a phone-call to the SFO on 12 June 2014, after a discussion with DCC staff at a meeting of the Investigation Steering Group. The steering group were fully aware of the fact that Deloitte was speaking with the SFO and were informed of the outcome of the call. The call to the SFO was us asking the SFO to consider an investigation.

The discussion on 12 June 2014 (which was with a case officer and with Nick Paterson, the GM Fraud and Corruption) summarised the facts and circumstances of the Citifleet issues and sought the view of the SFO.
It is then the SFO’s decision as to whether they commence their own investigation. This is based on the criteria set out on their website (copied below)

● There are multiple victims (usually investors) of the suspected fraud

● The sum of money lost exceeds $2,000,000

● The alleged criminal transactions have significant legal or financial complexity beyond the resources of most other law enforcement agencies.

In the case of bribery or corruption matters, we focus on crimes involving public officials, which could undermine public confidence in the administration of laws

Based primarily on the fact that the main suspect was deceased and that the actions appeared to be those of one corrupt individual rather than fitting within the definition of bribery and corruption, the GM Fraud and Corruption decided that the best course of action was for Deloitte to complete its investigation and provide a copy of the report at the conclusion of its work. During the investigation and with permission from DCC, Deloitte provided an update on the investigation to SFO on 07 July 2014 via letter. A copy of the full report was provided on 21 August 2014. We have heard nothing back from the SFO to date.

As to confidentiality, these OIA replies are all able to be made public and as such they will be published on the website and I will be providing a copy of the information to all Councillors.

Regards
Sandy [Group Manager Corporate Services, DCC]
—— End of Forwarded Message

[ends]

Note: The auditors that Dunedin City Council has contracted to investigate fraud carry the name Deloitte New Zealand, or simply Deloitte. Link

—

Related Posts and Comments:
30.8.14 DCC Fraud: Cr Vandervis states urgent need for facts…
28.8.14 DCC: Tony Avery resigns
27.8.14 DCC whitewash on serious fraud, steals democracy from citizens
26.8.14 DCC: Forensics for kids
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

DCC Fraud: Cr Vandervis states urgent need for facts and the record to be made public

The following correspondence is reproduced in the public interest.

—

Received from Lee Vandervis
Sat, 30 Aug 2014 at 11:30 a.m.

Message: You may be interested in the following email trail, which I believe highlights a serious impediment to the cleansing process which is taking far too long at the DCC.
I am happy for you to publish.
Regards,
Cr. Lee Vandervis

[begins]

—— Forwarded Message
From: Lee Vandervis
Date: Fri, 29 Aug 2014 21:36:35 +1200
To: Dave Cull
Cc: Sue Bidrose, Sandy Graham, Andrew Noone, Andrew Whiley, Chris Staynes, Doug Hall, Hilary Calvert, John Bezett, Jinty MacTavish, Kate Wilson, Mayor Cull, Mike Lord, Neville Peat, Richard Thomson, David Benson-Pope, Aaron Hawkins
Conversation: Recent events
Subject: Re: Recent events

Dear Mayor Cull.

Denial is not just a large river in Egypt.
You confirm the urgent need for facts and the record to be made public.

Regards,
Cr. Vandervis

——————————

On 29/08/14 2:41 PM, “Dave Cull” wrote:

Lee,
I do not believe that many of your claims below are borne out by the record or the facts and stand by my comments.

Dave

Sent from my iPad

——————————

[conversion code deleted from body text, punctuation restored -Eds]

On 29/08/2014, at 11:16 AM, “Lee Vandervis” wrote:

Dear Mayor Cull,

I believe that you have been long aware of my efforts to have Mr Bachop’s and other DCC departments investigated for the kinds of inappropriateness currently evident in Citifleet.
In particular you now know having read the Deloitte report, [and I believe have long known] that I have been calling for and instigated my own investigations into Citifleet vehicle disposals and contracting arrangements since at least 2011. I have been responding politically, then and since, to many business and individual requests and questions from, for example Turner’s Auctions, regarding Citifleet. Answers to many of my questions have been denied or not forthcoming, and the public right to know has been consequently frustrated. Your public claim that CEO Orders began the current investigative and restructuring process [by starting with DCHL?!] does not align with information I have, or with information and requests for investigation that I made to CEO Orders many years ago.

My understanding is that the Police were not moved to investigate Citifleet when contacted by the DCC over 3 months ago, even when the evidence was so tragically overwhelming that Deloittes were contracted by CEO Bidrose [costing us $200,000] to investigate. I am not convinced that Police requests for a further unspecified number of months of ‘no public comment’ is in the public interest, and my discussion with the Crown Solicitor was also unconvincing on this point.
You say below that ‘the investigation is not a process which you as a Councillor (or I) in our governance roles have a right to’, yet you have the right and have read the Deloitte Citifleet Investigation Report and made numerous public comments, and I have been denied seeing it even on a ‘grey papers’ basis and am being muzzled. Your ‘operational only’ claim is generally questionable and in this case fails on all counts.
We will never know all the facts, especially if the withholding of the Deloitte report and more public muzzling continues.
In one of your media statements you say that Council have agreed not to comment until the Police have completed their belated investigation, but this is not true. Councillors have not been given the opportunity to even discuss a further number of months of no comment on Citifleet, leave alone agreed not to comment. I have certainly not agreed and do not agree.

Thank you for acknowledging my long standing demands that DCC ‘heads should roll’. My long political experience is that timely public disclosure will be necessary to ensure that the appropriate heads are dispatched, and that an embedded DCC culture of self-entitlement across many departments is permanently erased.

Regards,
Cr. Vandervis

——————————

On 28/08/14 5:30 PM, “Dave Cull” wrote:

Lee,
The investigation that the CEO has contracted Deloittes to conduct into Citifleet is an operational matter involving, among other things, employment and potentially criminal issues. From the outset the Police, Serious Fraud Office, and Dept of Internal Affairs have been kept informed.

The investigation and subsequent internal reviews were instigated within DCC.
However the investigation is not a process which you as a Councillor (or I) in our governance roles have a right to, or responsibility for, interfering in or giving direction on, except as part of a whole of Council directive.

The investigation included the question of whether the problems uncovered at Citifleet had been the subject of previous allegations or questions, and if so, whether those had been responded to appropriately by management, including CEOs. Deloittes will report back on that.

The request not to release the report and the consequential request not to comment came not from the CEO (or me) but from Police and the Crown Prosecutor. Indeed both the CEO and I feel frustrated and disappointed as you do, that the report, which was completed only a week or so ago, must now sit under wraps for a further period.

However it is important that nothing jeopardises the ability of the CEO and police to hold people to account. You often demand that ‘heads should roll’
Your claims and demands, without knowledge of the investigation findings, could do just that: put the aims of the investigation to hold people accountable at risk.

I am not suggesting Councillors do not have the right to ask questions or make requests. What we do not have a right to do is step outside our governance roles, interfere with legitimate operational matters particularly without knowing all the facts, and unilaterally jeopardize Council and ratepayer interests. If we do we should be fully held to account for that.

Dave

Dave Cull
Mayor of Dunedin
—— End of Forwarded Message

[ends]

Note: The auditors that Dunedin City Council has contracted to investigate fraud carry the name Deloitte New Zealand, or simply Deloitte. Link

—

Related Post and Comments:
28.8.14 DCC: Tony Avery resigns
27.8.14 DCC whitewash on serious fraud, steals democracy from citizens
26.8.14 DCC: Forensics for kids
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

—

Posted by Elizabeth Kerr

*Images: leevandervis.wordpress.com