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Turning a blind EY

You may recall that back in October, allegations of misspending within the commercial arm of the Te Kohanga Reo National Trust came to light as a result of an exposé by Maori TV’s Native Affairs programme. Allegations included a staff member spending Kohanga Reo funds on a wedding dress, a separate Trelise Cooper dress, a 21st birthday present and a $1000 cash withdrawal from a BP station as koha for a tangi which she did not attend.

Taxpayers were told at the time that the allegations would be subject of an urgent independent audit commissioned by the Ministry of Education.

The Minister of Education and her Associate Minister hastily called a press conference last night and released the report by accounting firm EY. The Dominion Post held their front page and led with the story this morning.

Kohanga Reo probe avoids key claims

The Government is dodging questions about allegations of misspending by a company linked to Kohanga Reo after a press conference tonight where it claimed the firm had been cleared – before admitting none of the claims sparking its inquiry were investigated.

After holding on to an audit report for a week, Education Minister Hekia Parata tonight called an urgent press conference for 8pm with just over an hour’s notice to announce the Kohanga Reo National Trust had been cleared of any wrongdoing - though the report by Ernst & Young raised questions about the processes surrounding a $50,000 koha payment to an unnamed recipient, and credit card controls.

But under questioning Parata and Maori Affairs Minister Pita Sharples confirmed none of the original allegations surrounding spending by the trust's commercial arm Te Pataka Ohanga were investigated. Read more.

That’s right. The Ministry commissioned EY to do a report that doesn’t cover the key allegations!

So why is the Minister telling the public that the Kohanga Reo National Trust has been cleared? You’ll need to bear with us here. The National Trust receives around $90million funding per year from the Government which is transferred to the individual kohanga reo. Each kōhanga reo then contracts a company called Te Pataka Ohanga for various services such as insurance, IT and property loans.

Te Pataka Ohanga is a subsidiary of the National Trust.

Amazingly, because it is a subsidiary, and because the taxpayer money flows through the individual kohanga reo, the Ministers are saying that Te Pataka Ohanga cannot be examined and argue that it is not public money.

In the last few hours Fairfax has picked up the Taxpayers' Union press release on that point:

Kohanga Reo audit a ‘whitewash'

Parata said it was a private organisation so outside the Government's scope - although it was later confirmed TPO ultimately received its funding through the Ministry of Education.

Jordan Williams, executive director of the Taxpayers' Union, today called the late-night press conference and "mischaracterisation" of the report "shameful" as it ignored the key allegations around the personal use of company credit cards.

"The Ernst Young review did not even look at the key allegations at Te Pataka Ohanga," he said.

"It's not vindication, it's a whitewash."

Williams asked what other publicly funded entity could avoid audit scrutiny by creating a subsidiary company.

"If this attitude was the norm, the public audit process would be meaningless," he said.

"Instead of getting to the bottom of the allegations, Hekia Parata and Dr Pita Sharples have chosen to turn a blind eye to what are serious allegations."

Labour's Nanaia Mahuta said given the seriousness of the allegations it was "inadequate" for Parata to say she had no oversight of TPO.

"The reality is that public monies are transferred from the Kohanga Reo Trust to Te Pataka Ohanga and there should be a line of sight to ensure that the money is spent properly and that there's a level of transparency and accountability for that.” Read more.

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