An investigation by New Zealand's highest watchdog has slammed the University of Auckland over its purchase of a $5 million house in one of the city's priciest suburbs for its vice chancellor to rent at a discount.
The university bought the four-bedroom Parnell house, complete with swimming pool and spa, and was renting it to its highly paid VC Dawn Freshwater.
A Checkpoint investigation revealed she was paying cut price rent - about 50 percent of market rates.
Auckland University justified the purchase and cheap rent by claiming the house would be used for fundraisers and hosting official university guests.
The Auditor-General launched an inquiry upon hearing about the Parnell property through the media.
The investigation found the university failed to provide a business case for the purchase. It also found the level of guest hosting did not justify the near 50 percent discount in rent.
The decision to buy the house was not based on objective criteria and the University of Auckland was "unable to show the expenditure was moderate and conservative," the investigation's report said.
The university also failed to recognise it was sensitive expenditure that would benefit a particular person or follow appropriate processes.
"One of the rules of sensitive expenditure is that there's a justified business purpose, and in this particular case we weren't able to see one or weren't persuaded that there was one. So in that sense no, it wasn't justified," David Lemmon from the Auditor General's office told Checkpoint.
"It's important that the university and other organisations turn their minds in each case to whether they need to spend that amount of money. The question they could ask is, could the same thing have been done for less?"
Now there is a call for Vice Chancellor Dawn Freshwater to pay the balance of months of discounted rent, and for Auckland University to publicly apologise for the botch-up.
Isabella Lenihan-Ikin is the national president of the New Zealand Union of Students Associations. She believes the university failed to read the room when it purchased what she calls the "Parnell Mansion". She applauded the Auditor-General's findings.
"Students have spoken out about this particular decision and it is really reassuring that the Office of the Auditor General agreed that this was a complete frivolous use of public and student money," Lenihan-Ikin said.
"And that they not only did not follow correct processes around sensitive expenditure, but they did not even follow their own internal processes around capital expenditure.
"There are multiple venues located on the University of Auckland property that are completely fine to either host international guests or to host events for fundraising purposes. And I think in light of all of the justifications that the university had, that is something interesting that has been brought to light by this particular report."
The revelation that Freshwater was paying only about 50 percent of market rent to live at the property was what especially stirred students up, she said.
A property like the Parnell house was estimated to cost between $2,500 and $3,000 a week in rent. University vice chancellors are paid up to $800,000 a year. The university's last vice chancellor was paid approximately $700,000.
Compared to what Auckland students with much lower incomes pay for barely insulated tenancies, it was very concerning, Lenihan-Ikin said.
She wants to see the property sold and Freshwater pay back the full market rent for the time she has lived at the house.
"It is completely, as this report has said, unjustifiable: the purchase of the house on one hand, but also the fact she was receiving a 50 percent reduction in the property's rent.
"That just really emphasises the lack of connection and the lack of realisation of what students and staff at Auckland University are paying to live in houses just so they can study or work at the institution.
"Universities are communities of staff and students, therefore it's really important that students and staff are involved in decisions like this."
In a statement the University of Auckland said it accepted the report's findings and acknowledged there were shortcomings in the purchasing process.
"We have already commenced work to rectify those issues," it said.
"We have commissioned independent advisors to undertake detailed reviews of the University's policies and processes relating to sensitive expenditure. Once completed, any changes the University makes in response to these reviews to its policies and processes will be made publicly available."
Lenahin-Ikin said the university has not been transparent in following its own processes or guidelines around sensitive expenditure, and it has not been transparent to the university community.
"The university council and the university senior leadership actually owe an apology. Ultimately they've not only breached internal processes… but also they've breached the public's trust in terms of following guidelines around public expenditure.
"If they think this is okay to purchase a $5 million mansion for their vice chancellor then they're completely out of line with the reality of being a student, the reality of being a staff member.
"They need to really earn that trust back, and that trust begins with an apology to the community.
"Although universities and other institutions may dismiss these particular decisions as being things that students don't really care about… We do have a lot of interest, and if we're actually going to be the communities of scholars that universities are known for, then it is really important that there's a diversity of representation in decisions like this.
"I think if a student had been involved in this particular decision, if a student had communicated the reality of being a student at University of Auckland, and the reality of the housing and rental conditions that students live in, then I think that the university would have made a very different decision.
"So I hope that they really take on board the fact that they cannot continue to make decisions without strong student voice."