DCHL chairman Graham Crombie rejected Ms Calvert’s allegation of “misleading” councillors during a two-and-a-half-hour discussion on the controversial $13million Delta refinancing last year. (ODT)
### ODT Online: Thu, 2 Feb 2017
Allegation councillors were misled
By Simon Hartley
A complaint filed to the auditor-general by former Dunedin city councillor Hilary Calvert claims “misleading” information was presented to councillors over the contentious Yaldhurst property development in Christchurch. Council-owned Delta became enmeshed in Yaldhurst when it made incremental loans to the initial developer for its infrastructure work, to the tune of more than $13 million from 2009-13. Ms Calvert, a Dunedin lawyer, sent a copy of her complaint to the Otago Daily Times yesterday.
Ms Calvert said in the August meeting DCHL recommended to all councillors they accept the proposal to refinance Delta’s debt, with a new loan agreement with Infinity Group. However, Ms Calvert claims it was not a loan agreement directly with Infinity Group, a successful multimillion-dollar Wanaka company, but a new “shell company”, Yaldhurst Infinity Ltd. Ms Calvert contends it was “misleading” of DCHL to provide details of Infinity Group and its proven track record, in order to have the loan approved to Yaldhurst Infinity Ltd, “which would never have been worthy of lending $13.4 million to”.
A March 2014 auditor-general inquiry into Delta over Luggate and Jacks Point was highly critical, noting the use of “artificial business structures to avoid public accountability” and a “lack of strategic and performance monitoring” of investments, among other findings. (ODT)
Note: Hilary Calvert is not complaining about the Council meeting held on Monday, 1 August 2016. Her complaint is with the reports received in that meeting pertaining to the decision sought from Council by Dunedin City Holdings Ltd (DCHL).
Date: Thu, 2 Feb 2017 11:46:31 +1300
From: Hilary Calvert
To: Elizabeth Kerr
Media release below.
Other papers attached
Dunedin City Council companies facing new accusation of misleading conduct
Hilary Calvert, a former Dunedin City Councillor, has today forwarded a complaint to the Auditor General’s office concerning the wrong information provided by DCHL surrounding the loan of $13 million made by Delta Utility Services Ltd, to a company which purchased the failed Christchurch Yaldhurst development.
Ms Calvert complains that the information provided to the Dunedin City Council to encourage it to approve the loan included financial statements and benefits including that the proposed borrower ‘has an excellent track record’ and ‘already has a strong presence in Christchurch…’ whereas in reality the company which was to borrow the money turned out to be a newly formed company, likely formed with the specific intention of avoiding having the company with the ‘track record’ standing behind the debt.
‘There is something very wrong if the Audit Office were to think it OK for a Council owned company to get a Council to agree to a $13 million loan using the details of a reputable trading company in place of those of the insubstantial shell company which was actually borrowing the money.’ said Ms Calvert.
If such statements were in a prospectus, which is after all an invitation to the public to give over their money, there could well be implications of prison being bandied about. And Council money is public money, even if this report was not governed by the rules surrounding issuing a prospectus.
It was only by chance the Council meeting picked up from an aside that the loan would be to a new unproven company with no obvious assets.
When asked why the company described in the papers was not borrowing the money and doing the development themselves, The DCC was told that it was good practice to set up a different company. *
It may be good practice for a borrower to try it on, but it would not be good practice for a lender to accept. Any bank would demand a guarantee from the parent company, something which DCHL says is not in place with this loan.
To add insult to injury, DCHL is refusing to provide details of the loan under Local Government Official Information and Meetings Act so we still cannot know what deal has been actually made using Dunedin Ratepayers money.
The Audit Office is responsible for ensuring that public entities carry out their business with probity and financial prudence.
‘It is time to call enough for Council companies treating Council like mushrooms, kept in the dark and fed manure.” said Ms Calvert.
*In fact a similar manoeuvre happened with the same company, Infinity Investment Group Holdings Ltd, concerning the Pegasus development, where some $80 million was lost without IIGHL having to stand behind the company formed there either.
█ For more, enter the terms *dchl*, *crombie*, *grady*, *delta*, *infinity*, *yaldhurst*, *noble* or *epic fraud* in the search box at right.
Posted by Elizabeth Kerr
This post is offered in the public interest.