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Source: Close Up
The Department of Internal Affairs has released a damning report into the Lion Foundation, slamming the country's biggest gaming society for "immoral" spending habits.
The foundation, the largest distributor of pokie money to charities in the country, receives profit from the pokie machines, and is required by law to distribute a third of it back to the community in the form of grants.
However, an audit from April 2008 to March last year has revealed excessive spending on entertainment, branding and venue enhancing, which Internal Affairs says is in breach of the Gambling Act.
The foundation's expenses during the time period included more than $27,303 on branding, $46,491 on interior design company Wingate & Farquhar and $14,500 on gold season passes to the Warriors.
A further $11,350 went on four tables to a Warriors match and $27,300 on a function at Ellerslie Racecourse.
The culture of excess has seen Graeme Ramsey of the Problem Gambling Foundation blast the organisation for its lack of ethics.
"Lion Foundation say 'here for good', that's their motto, but when you read this report you ask yourself whose good? Because it's not necessarily the communities' good.
"If it's not illegal, I think it's certainly immoral", he says.
Department of Internal Affairs spokesman Mike Hill says the foundation has failed in its community purpose.
"They've got an obligation under the act to maximise the return to the community and in this case they haven't.
"Societies cannot act commercially and they cannot spend money in the way they have been. The money must go back to the community in accordance with the act," he says.
However, Lion Foundation chief executive Phil Holden says the organisation exists within a commercial culture, and that its actions are ultimately beneficial.
"We have to have a relationship with the people who run these hotels. Without them, there's no money to give back to the community.
"Our focus is returning money to the community but we operate in a commercial environment," he says.
The report also criticises the Lion Foundation's spending on the venues themselves, after $56,818 was used to upgrade parts of the Valentines restaurant in Glenfield.
In addition, upgrades on six venues were identified, with costs totalling $158,980. $50,915 spent on public relations was also deemed unnecessary.
Charities turned down
According to the Lion Foundation's website, around 500 charities were declined funding during the audit period.
Ramsey says less money going in to the pokies has left charities locked in competition, with some being left out in the cold.
"The number of pokie machines in New Zealand has been coming down and the amount of money that is being lost on pokie machines has been coming down, and that's creating more pressure on trusts because they're competing more for the venues that generate them.
"This sector is rife with rorts and bad practise and there's a turf war going on", he says.
Among the charities to lose out during the audit period were Habitat for Humanity, the Auckland branch of the Child Cancer Foundation and Auckland City Mission.
Habitat for Humanity, a not-for-profit organisation helping to house our most needy, had requested $20,000 to keep building homes.
Auckland City Mission, who supply food, beds, health services and support to the most marginalised asked for $45,000.
The Child Cancer Foundation wanted $30,000 and the Auckland branch of the Cystic Fibrosis Association wanted just $1000.
Close Up approached a number of those charities on the subject and, while front-line staff and volunteers expressed frustration at the situation, their board members banned them from talking.
Questions of integrity
Phil Holden now says the organisation is responding to the feedback outlined in the report, and will change its actions accordingly.
"The department has made it clear in their audit report that we can do it better, that we need to put more effort in and work harder, so we're going to take that on board and we will do it.
"The rules of engagement have been made clear, and we will operate within them," he says.
However, one of the heaviest penalties the foundation may have to pay is the loss of its integrity in the public eye.
Ramsey says in spite of the good it has done, this stains their reputation.
"I think the Lion Foundation has a lot that they can be proud of, but frankly if you are a charity you must operate appropriately and you can't have this many snouts in the trough, this enormous trough of public money, and have integrity."
Hill agrees, saying "this type of behaviour's not acceptable - there are reputational issues and there must be reputational issues too for individuals involved."
The Trusts Charitable Foundation and The Southern Trust have also been heavily criticised by Internal Affairs, and have already had their licences suspended.
According to Hill "it's widespread behaviour that we're trying to eradicate across the sector."
Internal Affairs Minister Nathan Guy says he is "very disappointed" with the trusts' behaviour, and that he is working to eliminate the unnecessary spending.
"My focus with my officials...is to stamp out these rorts, is to maximise the money going through for community purposes and to try and reduce these costs."
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