21 Sep 2020

Laura Fergusson Trust: Questions raised over payments and board tenures

7:31 pm on 21 September 2020

The board of a struggling charitable trust, set up to help disabled people, spent $670,000 of public money and donations on consultants - including paying its own chairman close to $100,000 for writing reports.

Laura Fergusson Rehabilitation's Greenlane centre in Auckland.

Laura Fergusson Rehabilitation's Greenlane centre in Auckland. Photo: RNZ

Details of what the money was spent on have never been made public.

Laura Fergusson Trust told Checkpoint in January it was closing its respite and rehabilitation facilities, because it was not financially sustainable to continue. Its specialised gym and pool on the Auckland site has already closed and core services now cease to exist.

Denis Lane, a retired forensic accountant who, until the first lockdown, regularly used the pool at the Laura Fergusson Trust on Auckland's Great South Road, has been unable to find anywhere suitable since the pool's closure.

Living in a nearby retirement village, he took advantage of its public sessions which helped his fitness and overall health. The long sloping ramp which was suitable for water wheelchairs, meant it was possible to walk into the pool. The sessions were supervised by a physio who could watch their patients' progress through a submerged window and he had his own programme to work towards.

"The MS Society [National Multiple Sclerosis Society] therapeutics is at Epsom Girls Grammar, but that was an Olympic sized pool and your feet don't touch the bottom and the [group] exercises you can do aren't appropriate.

"So [the LFT pool] was exercise specific, very useful and possibly irreplaceable in the Auckland scene."

Curious about the trust's claims about its dire financial position, he examined their most recent financial statements, which showed a million-dollar loss in 2019.

However, this included a number of one-off items such as consultancy fees for business advice and a payment to the board chairman, Chris O'Brien.

"It amounts to $575,000, with about $95,000 paid to Chris O'Brien and also what's described as 'impairment of goodwill' of $161,000 which is essentially just a book entry, but if you take those off, the loss rather reduces," he said.

It reduces the trust's operating losses to about $170,000, less than the $260,000 deficit the year before.

Denis Lane, a retired forensic accountant who, until the first lockdown, regularly used the pool at the Laura Fergusson Trust on Auckland's Great South Road.

Denis Lane, a retired forensic accountant who, until the first lockdown, regularly used the pool at the Laura Fergusson Trust on Auckland's Great South Road. Photo: RNZ / Simon Rogers

Lane said the consultants' reports should be made public, not only because of the amount of money it cost, but also because it appeared to be instrumental in the board's decision to close the operation.

"Whatever they spent money on consulting, it needed really a bit more fresh air to say what did they do it for, what benefit did they get, and essentially almost why did they feel it necessary? It's almost as if you have a predetermined outcome that you're trying to achieve," he said.

Then there was the $94,000 paid to O'Brien for reports he prepared. Again, Lane would like some more details.

"Those nary got a mention in the annual financial statements in the conflict of interest section, no detail as to what he did to justify that," Lane said.

"It's a bit unusual, I don't know what his skill and experience is but it's a fairly substantial sum of money to pay for a report. And a lot depends on what he sees as his hourly charge out rate."

Victoria Carter, a professional director who sits on the boards of the New Zealand Transport Agency, Thoroughbred Racing and the Auckland Regional Amenities Funding Board, said to pay a board member of a charity, especially a chairperson, consultancy fees was highly unusual and she would expect more detailed notes explaining why he was paid and why his services were required.

No caption.

Photo: Vinay Ranchhod

But other aspects of the board also trouble her - including the length of time board members have served. Collectively, the seven current board members have served for a total of 96 years.

O'Brien and deputy Dr Simon Barclay, who have served 20 and 13 years respectively, are members of the New Zealand Institute of Directors.

"The Institute of Directors recommends that directors' terms [last] up to six to nine years, and the reason for this is that the longer people serve the less objective, agile, effective and enthusiastic they can become. It's not unusual for directors to serve a term of three years and then be considered for one more term, or two," Carter said.

She's also concerned at its failure to inject new blood. Last year for example, Allan Hooker, who served on the board in 2005 for 11 years, was reappointed.

Victoria Carter, a professional director who sits on the boards of the New Zealand Transport Agency, Thoroughbred Racing and the Auckland Regional Amenities Funding Board.

Victoria Carter. Photo: Supplied

Carter could not find a copy of the board's rotation policy on their website but in the first instance, she said, they should be asking their members, who as an incorporated society, the board is accountable to.

She thinks they should consider the possibility of having a disabled person on the board too.

"All good boards do succession planning annually, but they would be addressing the current and future skills that the board needs that are going to help fulfil the purpose and strategy of Laura Fergusson," she said.

The Laura Fergusson Trust was set up in the 1960s to give young disabled adults independence and stop them being put into rest homes and psychiatric institutions because there was nowhere else for them to go.

Sophia Malthus was left paralysed from her shoulders down after falling from a horse in 2016 at the age of 19.

After spending three months in the spinal ward, she went to Laura Fergusson while her house was made wheelchair friendly.

She describes her nine months there as invaluable, with physios, occupational therapists, doctors and accessible facilities to help her integrate back into the community.

"I would have multiple appointments every day both in Laura Fergusson and out in the community and then, in my free time, me and the other young people there would go and hang out in the gym. So it was really good for our physical health. It's [Laura Fergusson Trust] full of really good resources and it's got things like a games room and there's just a lot of access to stuff to keep you occupied," she said.

She said the other option - a resthome, or private hospital - which is full of death and dying, was no place for someone coming to terms with the challenges of living with a disability.

"The idea of putting a young person that's newly paralysed, like for me I'm 87 percent impaired so that's a huge thing to be going through in itself. And then to put me into a private hospital where there are old people dying, that's just pushing it even further."

Denis Lane admits the current facilities are a bit tired, but he said given the benefits Laura Fergusson has delivered for the disabled people of Auckland, more needed to be done to raise funds to upgrade the facilities.

He worried what would happen if the site, which was worth an estimated $40 million, was sold.

"Shutting it and selling the property, getting a sum of money, is not remotely a positive thing. I mean what do you do with it? Money in today's context earns very little, term deposits get just over 1 percent, investing in shares is a high risk activity now. I don't know what they intend to do with it, but if they sell that property it's irreversibly lost."

Neither the Laura Fergusson Trust nor the Ministry of Health responded to RNZ's request for comment.

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