19 Mar 2014

Kohanga mis-spending claim referred to SFO

10:40 pm on 19 March 2014

The Education Minister has referred what she describes as unsubstantiated allegations of mis-spending by the commercial arm of the Kohanga Reo Trust Board to the Serious Fraud Office.

On Tuesday night, Hekia Parata said an independent audit had found no misuse of public funds by the trust. She said spending by its commercial arm, Te Pataka Ohanga, was not considered to be public money, so the review didn't cover the operation.

Hekia Parata with Pita Sharples, left, at Parliament on Wednesday.

Hekia Parata with Pita Sharples, left, at Parliament on Wednesday. Photo: RNZ / Chris Bramwell

The review was set up after allegations that Te Pataka Ohanga's general manager, Lynda Tawhiwhirangi, mis-used business credit cards to pay for dresses, fuel and accommodation. She was suspended in October last year after the allegations surfaced.

Ms Parata said on Wednesday afternoon that further allegations have been made, but would not confirm whether they relate to the same staff as in the original allegations, nor the sum of money involved.

The minister said the fresh allegations have been made to both her and Maori Affairs Minister Pita Sharples in the past 12 hours and have been presented by a range of people.

Ms Parata said the Government has no legal authority over the commercial operation, as it is not publicly funded.

"Nevertheless, public confidence needs to be restored, these allegations need to be put to rest, and we have, therefore, referred these matters to the Serious Fraud Office who do have powers to investigate that we don't have."

Prime Minister John Key said Ms Parata has done the right thing by refrerring the matter to the SFO. Speaking from China on Wednesday, Mr Key said she is taking the situation seriously, and rightly so, as the spending of taxpayer money is important to every New Zealander.

Derek Fox, a spokesperson for the Kohanga Reo Trust Board, said the directors of Te Pataka Ohanga will cooperate with the SFO inquiry.

Mr Fox said that kohanga whanau should be happy that the trust has been cleared. He said it's important to remember that Te Pataka Ohanga is not overseen by the Government, as it is a private entity, and the trust is also working on internal matters relating to the commercial arm.

A letter from Hekia Parata and Maori Affairs Minister Pita Sharples to the Kohanga Reo Trust Board says they were contacted recently by one of its trustees who had concerns about Te Patanga Ohanga and the board. The letter says the decision to refer allegations to the SFO was made after that, and because it appears the board had not moved to either deal with the allegations or quell public concern.

SFO criteria

The SFO has several criteria for taking on an investigation, rather than the police.

  • A $2 million threshold of the money involved.
  • That the alleged criminal transactions have significant legal or financial complexity beyond the resources of most other law enforcement agencies.
  • What the SFO defines as corruption: "Behaviour on the part of officials in the public or private sector in which they improperly and unlawfully enrich themselves or those close to them, or induce others to do so, by misusing the position in which they are placed".

Internal Affairs probe

The Department of Internal Affairs (DIA) confirmed on Wednesday that its charities services division is investigating the Kohanga Reo National Trust. Charities Services, formerly the Charities Commission, is the DIA body responsible for the registration of charitable entities.

The department would not comment on the exact nature of its investigation, but Education Minister Hekia Parata said she understands it relates to Te Pataka Ohanga, and the trust itself is taking steps to discipline the commercial arm.

The report of an Ernst & Young review, released on Tuesday, found no misuse of public funds by the Kohanga Reo National Trust. It concluded that tighter rules are needed regarding credit cards, payroll systems and koha payments, but it did not cover the financial dealings of Te Pataka Ohanga as such.

The Kohanga Reo National Trust board plans to talk publicly about the Ernst & Young review, but said it wants to discuss the findings with its supporters first.

The Mataatua Tauranga-Moana kohanga branch, which has in the past challenged management decisions by the trust, said it is pleased by news of the Charities Services' review and is planning a hui to discuss how to move forward.

MPs don't buy argument

New Zealand First leader Winston Peters said on Wednesday it is simply not good enough that the Ernst & Young review did not look into the financial dealings of commercial arm Te Pataka Ohanga because Hekia Parata said it is not publicly-funded.

Winston Peters.

Winston Peters. Photo: RNZ / Diego Opatowski

"This is an extraordinary statement to be made by a minister who should know better. After all, she's a Minister of Education and in every sense it's taxpayers' money, but the Ernst & Young investigation was an investigation you're having when you're not having an investigation and the report goes nowhere."

Mr Peters said this would be of no comfort to the parents and whanau of children at kohanga reo concerned about the original allegations.

Labour Party leader David Cunliffe said he doesn't buy the argument either and believed Ms Parata should be sacked as a minister for the way she has handled the whole situation.

"This is a minister in serious, serious trouble. Last night she called a late-night press conference and assured the New Zealand people that no public money had been mis-spent. Today, she's referred the matter to the Serious Fraud Office, it has a high threshold."