AKL304Updates

Chapman Tripp Payments Update #1

26 May 2016

The signals from the Mayor ("this is an operational matter, not a political one") and from the Chief Financial Officer of RLC ("there is nothing further we can do") suggest we may have arrived at an impasse in this affair, but that is far from being the case.

RLC Chief Executive Geoff Williams and Mayor Steve Chadwick have written to me asserting that we are "now dealing with a very different organisation from the one in place when this matter first arose" and cite "a wide range of reforms aimed at ensuring a robust and transparent financial environment". Yet they still decline to answer pertinent questions relating to that matter.

We know about the political undertones and implications of the original litigation and we know of the contempt shown for two Environment Court rulings over a period of ten years but right now we have to focus on the two crucial questions which the politicians want to keep off the table:
"Why and how was the RRAL board kept in the dark? Who drove this affair, who paid and what was their motive?".

We know that

* three of the five RRAL directors, Mike McVicker, Bill Kingi and Bob Martin, were oblivious of the fact that RRAL was spending $386,795.01 (15% of gross annual expenditure) on the failed litigation - yet all the while people at the highest level of national government knew exactly what was going on
* a third party which reimbursed RRAL for the $386,795.01 sent to Chapman Tripp, holds the key to the political ramifications of this affair. Was that third party RDC, as has been claimed? There is a body of evidence to suggest it may not have been
* the RRAL Finance Manager, Julie Rowe, is one person, though not the only one, who knows who did what and why

What is happening now?

I have filed another Local Government Information and Meetings Act request with the Rotorua Lakes Council, seeking disclosure of the third party transactions through which the RRAL was reimbursed (or rewarded) for taking on the litigation. Julie Rowe, who at present is only a convenient and almost certainly innocent scapegoat for the misdeeds of others, knows about those transactions. She can provide answers, if her employer will allow her to do so.

I am happy (to take) Ms Chadwick and Mr Williams at their word. Let them be "transparent", let them disclose the third party transactions and let them show us how and why the RRAL board was kept in the dark.

What then?

If RLC provide the information sought, it will be the last piece needed to complete the jigsaw, but given their evident reluctance to reveal the truth over the past twelve months, it is possible that they will refuse to provide answers. In that case more pressure will need to be applied not only to Mayor Steve Chadwick, but also to the government of John Key, which in back in 2009 was enjoying its first heady year in power and which knew at that time precisely what was going on here in relation to Rotorua airport and the stand we were taking.

Neither local nor central government can stop the march of truth. All they can hope for is to delay and obstruct its progress. Whether they manage to do that for another month, year or decade is up to us. We have the truth on our side, and if we fight hard enough, the argument that this whole affair is symptomatic of a host of "mistakes" and "clerical errors" by "fairly junior staff members" will be seen as the disingenuous deception that it is.

This is not a perfect world. Ordinary people do make mistakes. But it was not by "mistake" that no one informed the directors of RRAL about $386,795.01 being spent on a dodgy piece of litigation in their name and on their watch. It was not by "mistake" that RDC tried to buy my silence over this affair back in 2009. It was not by "mistake" that outsiders tried to divide and inflame the local community pitting ordinary working people against their own kind.

If this was all just past history, it would not greatly matter, but it matters a lot, because the same people are doing much the same thing right now, right here, and right across the country. To stop being manipulated and deceived by those in power, citizens have to take a stand, and the most powerful weapon that they have to fight with, the weapon against which the political establishment has no real defence, is the truth.

Steve Chadwick has suggested we approach to the Auditor-General. I personally do not agree with that advice. Since this is an issue which pits the power of government against the interests of the people, the best way forward is for people, both collectively and individually, to re-affirm their demand for straight answers to simple questions. Any specific suggestions on the next step to be taken from here would be most welcome.

In the meanwhile you can help by taking a few minutes of time to send an email to:

Steve.Chadwick@rotorualc.nz
(copy to geoff.fischer@veri.co.nz if possible)
along the following lines, or otherwise as you see fit

Subject: Endorsement of LGOIA request

"I endorse the LGOIA request for evidence of the transactions by which RRAL sought and received payment from the third party entity which covered the cost of the ENV-2009-AKL-304 litigation by Rotorua Regional Airport Ltd"

Please also feel free to also involve other contacts, friends or associates in this on-going campaign.

Naku noa
Geoff Fischer

628 Te Ngae Road
Owhata
Rotorua 3010

Chapman Tripp Payments Update #2

4 June 2016

In this update:

*    "At a high level an error was made"
*    McVicker, Martin and Kingi stand their ground
*    Why the Chapman Tripp invoices were fudged.
*    SteamNMud under pressure?
*    Mayor attempts to block further enquiry

"At a high level an error was made"

Rotorua Lakes Council Chief Executive Geoff Williams has now admitted that "At a high level, an error was made" in the airport litigation scandal but then went on to say "nothing further is to be gained through continued examination of the circumstances...". This is the closest Council has come to admitting that there was wrong-doing in 2009, but it will not reveal who made the "error" or what the "error" was. Since the error was "at a high level" it would seem to exonerate the initial scapegoat (RRAL Finance Manager Julie Rowe) who Mr Colle has told us is "a fairly junior staff member". Yet Council still will not do what is necessary to restore Julie Rowe's reputation, and it continues to protect the identity of the "high level" person who was actually responsible.

Why the Chapman Tripp invoices were fudged.

Last year Council was denying that the Chapman Tripp invoices had been "fudged". Then, when we had irrefutably proved that the invoices were fudged, the RLC Chief Financial Officer came up with a specious explanation as to why they had been fudged.   Now Cr Mike McVicker has provided the basis for a more convincing explanation.   RRAL had no money to pay the Chapman Tripp bills.   Therefore a third party which had agreed to bear the cost of the litigation had to pay RRAL before RRAL paid Chapman Tripp, which meant that Chapman Tripp had to provide RRAL with an estimated bill for the month. Chapman Tripp then structured its invoices to precisely match the estimate that had been provided to the third party.
But why didn't the third party just pay the Chapman Tripp accounts directly, in the same way RDC paid other RRAL legal bills directly?   Why go to all the trouble of producing fudged invoices and sham transactions?
The explanation is that it was important that neither RDC Councilors nor the RRAL Directors should become aware of the source of the funds or the extent of the expenditure. The "offsetting transactions" could be kept "off the balance sheet" and therefore would not be disclosed to Councilors or Directors.
In 2015 Council was saying that RDC paid Chapman Tripp. That claim became untenable when copies of the missing invoices obtained from Chapman Tripp showed that RRAL was the client, and not RDC, and RRAL accounts payable records showed payments from RRAL to Chapman Tripp. So by January 2016 Council was saying "the nine Chapman Tripp invoices were paid in full by RRAL. There were no offsetting payments from other parties". That claim, however, was not consistent with evidence from the RRAL annual accounts, and the evidence of three RRAL Directors. So the story changed to "The RDC immediately reimbursed RRAL for the Chapman Tripp payments".   When no documentary evidence could be produced to support that hypothesis, Thomas Colle came up with the new explanation that RDC had reimbursed RRAL sometime after June 2010 and that payment had been hidden in capital payments to cover the cost of the runway extension. However Colle's explanation fails to explain why the RRAL payments to Chapman Tripp did not show in the RRAL accounts for 2009-2010. Of the many explanations advanced by Council so far, McVicker's, that money was paid to RRAL in advance of the RRAL payments to Chapman Tripp, is the only one that is a reasonable fit to the evidence. But Council has yet to provide a credible answer to the question "Who funded the litigation?".
More on this in your next update.

Kingi, McVicker and Martin stand their ground.

In a letter to kaumatua Bernie Hornfeck, Rotorua Lakes Council Chief Financial Officer Thomas Colle claims that "the (RRAL)Board were aware of the (Chapman Tripp) transactions". However three out of the five board members (Bill Kingi, Mike McVicker, and Bob Martin) have insisted that they were not told of the transactions. (The fifth board member, Ray Cook, has made no comment). An email from Cr McVicker in response to Colle's letter to Bernie makes it clear that McVicker, Kingi and Martin are sticking to their account. If Colle was telling the truth he would be able to provide evidence from the minutes of RRAL board meetings. (Many of us would see Cr McVicker as an intransigent political opponent, but he is a man with a reputation for honesty, who is loath to let that reputation to be compromised by the words or actions of others who do not possess the same measure of personal integrity.)

SteamNMud under pressure?

On 10 May Council called in Phil Campbell, editor of SteamNMud, and Philip Macalister, publisher of SteamNMud, to discuss the Chapman Tripp payments affair. Next day SteamNMud carried an article under the heading "Clerical error ...". in which Thomas Colle put the blame for RRAL's incorrect 2010 annual return to the Companies Office on a "fairly junior staff member" (RRAL Finance Manager Julie Rowe) and also claimed that "nothing further" could be done to expose the money trail of the Chapman Tripp payments. The article was quickly followed by 19 public comments (all of them moderated or approved by the editor) which showed that Thomas Colle's explanation for the fudged Chapman Tripp invoices was nonsense, as was his claim that “There’s nothing further we can do.” (to follow the money trail and reveal how and why the RRAL board was kept in the dark about the Chapman Tripp payments.)
Then on or about 24 May the "Clerical error" article was closed to public comments and access to the 19 comments previously posted was blocked. This is apparently the first and only time in nearly three years of web publishing that SteamNMud has closed public comment on an article, or blocked access to comments. We are reliably informed that the decision to close comments was not made by the editor of SteamNMud, Phil Campbell, but came from "a high level".

Mayor attempts to block further enquiry

On 28 April, Mayor Chadwick put Thomas Colle in charge of damage control for the Chapman Tripp payments affair.   This was the time of the "flannel" (glib assurances) strategy, a technique in which Colle had shown himself to be quite proficient.   When the "Clerical error" article was published on 11 May it was judged a success. But then things started to come apart.   The public comments on the "Clerical error" article showed that the "flannel" from Colle had failed to convince readers of SteamNMud that everything was hunky-dory and above board, and the public discussion came dangerously close to revealing the truth at the bottom of this turbid affair.
On 13 May Chadwick rolled out the new "blanket" strategy, declaring "I now consider officers have exhausted this matter". The essence of the "blanket" strategy is to withhold any further information from the public and to shut down discussion in the media.   On 20 May Williams duly wrote "I do not see anything further to be gained through continued examination..." (of the Chapman Tripp payments affair). On 23 May Thomas Colle (still persisting with the "flannel" strategy) wrote to Bernie Hornfeck in a futile effort to put an end to questions about the role of the RRAL board.   Then on 24 May the "Clerical error" discussion was closed on SteamNMud. The "blanket" strategy signals fear and desperation. To borrow the phrase of Geoff Williams, "At a high level an error is being made...".
Our own strategy is simple: follow the Chapman Tripp money trail as far as it goes. To that end, we have submitted another LGOIA request to RLC, seeking full disclosure of the RRAL transactions relating to the Chapman Tripp payments.   Watch this space.

Chapman Tripp Payments Update #3

11June 2016

In this update:

* Mayor Chadwick's reply to Fletcher Tabuteau MP

On 6 May Fletcher Tabuteau, the New Zealand First List MP based in Rotorua, wrote to Mayor Chadwick relaying concerns about the Chapman Tripp payments affair.

On 13 May Mayor Chadwick replied to Fletcher "the payment to Chapman Trip (sic) by Rotorua District Council was under the cost to the runway extension"

However it would be strange (and improper) for the Chapman Tripp legal services payments to have been incorporated into the capital cost of the runway extension and a payment to RRAL of $386,795.01, hidden from public and Councilors in the costs of the runway extension, could only have been made under the authority of Mr Jean-Paul Gaston, the then RDC Director of Corporate Services and current RLC Director of Strategy and Partnerships. However there is no actual evidence to suggest that this was the case. The evidence already obtained indicates that RRAL, which was effectively insolvent at the time, paid Chapman Tripp with funds which had been deposited into the RRAL bank account by a third party for the specific purpose of covering the payments to Chapman Tripp.

Ms Chadwick also wrote "In recent years council staff have gone to great lengths" to look into concerns about the Chapman Tripp payments.

In 2010 Mr Walter Bateson called for an enquiry and I supported his call, but Council launched no enquiry at that time. In May 2015 I again raised concerns, so the matter has been a live issue for the past year, spanning two calendar years. We would all agree that is far too long, and it is not unreasonable to ask why it has taken so long to get to this point.

When I made the renewed approach to Council in 2015, Council claimed it was not possible to say anything about how the case (ENV 2009-AKL-304) was funded. I wrote to Council pointing out that a search of Council's Accounts Payables records should reveal any payments to Chapman Tripp. Council staffer Craig Tiriana then found a number of Chapman Tripp invoices relating to legal actions undertaken on behalf of RRAL but no invoices relating to AKL-304. Council then said that it was not possible to say anything more about who paid for AKL-304 or how much it cost.

I pointed out that Council could request copies of the invoices from Chapman Tripp. After a further delay, the invoices were produced. They showed that Chapman Tripp billed RRAL directly and not Council as in all the other RRAL cases handled by Chapman Tripp at the time. It also became apparent that the AKL-304 invoices had been "fudged". So the next questions were "Who paid the invoices?" and "Why had the invoices been "fudged"?". More weeks went by before an extract from the RRAL accounts payable records was produced which showed that RRAL had indeed paid Chapman Tripp, but no credible explanation was given for the fudging of the invoices.

This raised two further questions which were "Why were the RRAL directors ignorant of such large payments being made under their watch?" and "Why did the payments not impact the RRAL annual accounts?". The answer, as we now know, is that a third party made payments to RRAL which offset the Chapman Tripp payments and kept them hidden from the Directors of RRAL and the public.

At this point, with crucial questions still unanswered, Mayor Chadwick told Fletcher Tabuteau that "Council has spent sufficient time and resources on this matter and our investigation is now closed".

In fact Ms Chadwick is being misleading. There has NOT been a Council investigation into the Chapman Tripp payments affair. An investigation requires a clear definition of purpose, process (such as inviting evidence, interviewing persons of interest, and examining records) and personnel (responsible for conducting the investigation). None of these conditions have been met by Council in the Chapman Tripp Payments affair. All Council has done is respond, slowly and reluctantly, to our requests for information made under the Local Government Official Information and Meetings Act. If Ms Chadwick's decision that "Council has spent sufficient time and resources on this matter and our investigation is now closed" is intended to signify that Council will no longer respond to official information requests in relation to the Chapman Tripp Payments affair, then Council will be defying the law once again.

Mayor Chadwick told Fletcher "This hasn't been a simple task due to the historical nature and few current staff having been involved with this matter at the time".

Yet the path for a genuine investigation has been obvious from the beginning. Council only had to check the accounts of RRAL and RDC, seek information from Chapman Tripp and talk to the staff members involved. The people are there. Julie Rowe was the RRAL Finance Manager in 2009 and she holds the same position today. Jean-Paul Gaston was the RDC Corporate Services Director in charge of Finances in 2009, and remains on Council staff. The documents were also accessible. A proper investigation would have been completed in three weeks - if Council had a will to uncover the truth. It did not need to be dragged out over a year.

Mayor Chadwick has closed her own so-called "investigation" without having sought testimony from the person who sits at the centre of this affair, Julie Rowe, or from the Directors of RRAL at the time, one of whom (Mike McVicker) is a current Councilor. Mayor Chadwick's actions, or lack of action, make her handling of the affair seem more like a cover-up than an investigation.

But despite that Fletcher has achieved the most important object of his approach to the Mayor. Steve Chadwick has given him an implicit assurance that records relating to the Chapman Tripp Payments affair will not be destroyed or otherwise disposed. Will Council now disclose what is contained in those records? We will know the answer to that question by the end of June. And by the end of July we are expecting that the truth behind the Chapman Tripp Payments affair will be revealed.

Chapman Tripp Payments Update #4

25 June 2016

Further reports on the investigation into Rotorua Regional Airport Ltd (RRAL) AKL-304 litigation scandal

In this update:

*    Why was it necessary to keep Bill Kingi in the dark?
*    Chapman Tripp charged "only" $386,795, yet Council handed over $610,155
*    Who is telling the truth? No reply from Thomas Collé
*    Who were the "secret parties" to the affair?

Why was it necessary to keep Bill Kingi in the dark?

There were specific reasons why the RRAL Directors Bill Kingi, Mike McVicker and Bob Martin needed to be kept in the dark about the AKL-304 litigation. McVicker and Martin were Rotorua District Council (RDC) Councilors, who were on the board to represent the interests of RDC which was the sole shareholder of RRAL. Their role required them to make decisions which served the interests of the shareholders, in other words the RDC.

Bill Kingi represented the interests of the Ngati Rangiteaorere Kahikatea Trust, and the AKL-304 litigation was designed specifically to undermine the rights of those like Ngati Rangiteaorere Trust who owned established stands of trees in the vicinity of the airport. Therefore it was particularly important not to allow Bill Kingi to become aware of the nature and purposes of the litigation, which threatened the legitimate interests of the very people that he was on the board to represent. At the very least, Bill could have raised some awkward questions if he had known that RRAL was the litigant.

Chapman Tripp charged "only" $386,795, yet Council handed over $610,155

There is general agreement that RRAL, the "official" AKL-304 litigant, could not afford to pay for the legal services of Chapman Tripp in the case. So where did the money come from?

Mr Jean-Paul Gaston, on behalf of Rotorua Lakes Council has responded to our LGOIA request for further information on the "reimbursement" or "off-setting" payments made to RRAL by a third party which enabled RRAL to pay the Chapman Tripp bills.

Mr Gaston's data shows that RRAL invoiced RDC for "Legal fees reimbursed by RDC" to the amount of $610,155.52 on 30 June 2010.

Bank records show that RRAL received payment from Council for that amount on the previous day, being 29 June 2010.

Yet Chapman Tripp had been paid "only" $386,795 over the period May 2009 to February 2010.

After June 2010, Councilors had been led to believe that Chapman Tripp had charged RRAL in excess of $600,000 for AKL-304. This explains why on 30 September 2010 Cr Charles Sturt had emailed Mr Walter Bateson in reference to Geoff Fischer "This is the Man (sic) who held Rotorua to ransom and got 195,000 .... not to mention the 600K spent on legal bills". Cr Geoff Kenny also advised us last year "I asked about the costs at the time ... I think they were about $600,000".

For the past six years we have wondered where the "600k" figure came from. Now we have discovered that although RRAL paid Chapman Tripp only $386,795.01, RRAL was "reimbursed" through Council to the tune of $610,155.52.

The source of the $610,155 remains secret. Cr Martin, who was also an RRAL Director, has speculated over a number of possible sources. Cr Sturt appears to believe that former Mayor Kevin Winters knows the source. As Phil Campbell QSM reported on the SteamNMud website on 5 September 2015

"Cr Charles Sturt ...chairman of the Finance Committee in that period... said he was not party to a meeting the Mayor of the day [Kevin Winters] and former chief executive Peter Guerin and company had on the financial aspect of the airport... before the mayoralty and council election in 2010....
“At this stage after the election I was sacked … to the back bench for three years as I kept asking the embarrassing questions.
“Cr [Glenys] Searancke and I questioned where this money was coming from...”

However Kevin Winters denies knowing anything about the source of funding for AKL-304.

The Chair of the Finance Committee, Cr Sturt, also claims that he knew nothing about it. At least three out of five RRAL Directors were similarly in the dark as were all the other Councilors who have been willing to talk to us over the past year. Meanwhile over $600,000 was being moved around with no knowledge of where it came from and no proper controls over where it went.

Crs Sturt and Kenny were wrong when they claimed that $600,000 was paid in legal fees for the conduct of AKL-304, but they genuinely believed that to be the case because that is what they had been told.

Throughout 2009 the Directors of RRAL were told that Council was conducting the AKL-304 litigation while the Chair of the Council Finance Committee was told that RRAL was running the case. In fact neither RRAL nor Council was in the driving seat. That position was occupied by the party not "known or capable of being known" which was referred to in Council's draft settlement agreement of December 2009.

AKL-304 was conducted in secret because it was politically motivated. That is why RRAL directors and RDC Councilors were kept in the dark and that is why the case was funded secretly. The political "mafia" which funded AKL-304 also provided Council and RRAL with the political rationale for the litigation which was that Mr Fischer was "holding Rotorua to ransom", a theme taken up by both Cr Sturt and the Rotorua Daily Post newspaper.

The intention had been that a successful AKL-304 application for an enforcement order would serve as a legal and political precedent which would apply to iwi "holding Rotorua to ransom" over the eastern arterial route (which would have cut through the middle of Ngapuna village), Rotorua airport (which created a noise hazard for Ruamata marae and threatened the Ngati Rangiteaorere Kahikatea) and other points of conflict between Maori and "the forces of progress". Although by November 2009 the plan had back-fired in spectacular fashion, the Daily Post and Cr Sturt stuck doggedly to the "holding the city to ransom" script into 2010 and beyond.

The wash-up came at the end of June 2010 with the $610,000 payment to RRAL, but secrecy (and deception) remained in force. This payment should have been disclosed in the Related Party Transactions section of the 2010 RDC Annual Report. It was not. Neither did it show in the Annual accounts of RRAL as published in the 2010 Annual Report. In other words the Council's Annual Report was falsified in an attempt to conceal the source of funding for AKL-304.

The intended victims of AKL-304 were not holding anyone to ransom. All they did was defend their whenua against a political mafia who lied to elected Councilors, lied to the Directors of RRAL, and above all lied to the people of Rotorua.

Mayor Steve Chadwick voted for confiscation of Maori rights under the Foreshore and Seabed Act when she was a Member of Parliament. In that matter as a member of the Labour government she had little choice but to support the Crown confiscation of Maori land.

In this situation however she does have a choice. She can use her office to shelter the crooks who in 2009 set out to overturn the legitimate land rights of both Maori and Pakeha, or she can call to account the perpetrators of fraud, misrepresentation, slush funds, calculated political provocations, blatant breaches of the law, invasion and destruction of private property, media arm-twisting and gross abuse of political power. By declaring that "officers have exhausted this matter" just at the point where the full truth is beginning to emerge into the light of day Mayor Chadwick has made the wrong call. "The embarrassing questions" remain and they demand answers from Council.

Every month we get new information which contradicts what Council told us the month before. Current Chief Financial Officer Mr Thomas Collé's latest claim that the Chapman Tripp payment was incorporated in an RDC capital contribution to the runway extension work has now been exposed as false. His earlier claim that it is common practice for large law firms to fudge invoices in the manner of the Chapman Tripp AKL-304 invoices was utter nonsense. He insults our intelligence with his ludicrous claims, all designed to conceal the truth about AKL-304.

Who is telling the truth? No reply from Thomas Collé

On 4 June Bernie Hornfeck wrote to Thomas Collé

" three out of five RRAL Board members (Cr McVicker, Mr Bob Martin and Mr Bill Kingi) maintain that they were not aware of the transactions. ....To the best of my knowledge the fourth board member, Mr Ray Cook, has made no comment, which leaves only the Chair, Mr Neil Oppatt, who you say has advised you that “the board were aware.”
This is an unfortunate situation in which the word of one board member is contradicted by statements from three others. I therefore request that Council release extracts from the minutes of the relevant RRAL board meetings so as to provide independent evidence as to how this matter was communicated to the board."

So far Bernie has received no reply from Thomas Collé. Who is trying to pull the wool over our eyes? Collé? Oppatt? Or Mike McVicker, Bob Martin and Bill Kingi?

Who were the secret parties to the affair?

In 2009 Council asked me to sign an agreement that "fully and finally settles any and all claims that Mr Fischer may have, or may now or in the future may have, against the parties, (whether or not known to or capable of being known by Mr Fischer)...". Who were the parties "not known or capable of being known" who were so deeply implicated in the AKL-304 affair that they needed to seek immunity from their legal liability? They are "known or capable of being known" by Council because the RRAL Finance Manager Julie Rowe knows who "the parties" were.

Chapman Tripp Payments Update #5

Further report on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

27 June 2016

In this update:

* Rotorua Lakes Council supplies forged document in response to LGOIA request

We have now come to the conclusion that the copy of the RRAL Invoice No 16242 supplied to us in response to our latest LGOIA request is a forgery. We believe that the invoice, sent to us by Mr Jean-Paul Gaston, Rotorua Lakes Council Privacy Officer and Group Manager, Strategy and Partnerships, was forged sometime in the past 20 months, and most probably in recent weeks.

The forgery shows that Council is increasingly desperate in its efforts to cover up the Chapman Tripp Payments affair, and fears are growing for the safety of RRAL and RLC staff members who may have knowledge of, but were not actually complicit in, the fraud.

There is little doubt that Invoice No 16242 has been forged. Although the body of the Invoice refers to "Legal fees reimbursed by RDC" the "Invoice to" box contains the name "Rotorua Lakes Council". The Invoice is dated "30/06/2010". Rotorua District Council did not announce its change of name to "Rotorua Lakes Council" until 28 November 2014 - more than four years after the invoice date.

Ironically Mayor Chadwick claimed at the time of the name change "We're a very different council today than the council of past years, and a brand refresh will reflect that".

A new brand, to be sure, but our investigation so far has revealed that Ms Chadwick's "very different" council is no less corrupt than the "council of past years" and has retained its predecessor's unfortunate associations with organised crime.

Chapman Tripp Payments Update #6

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

2 July 2016

In this update:
*    Invoice 16242 kerfuffle leads to a good outcome.
*    Where did the $610,155 come from?
*    Did the $610,155 "Reimbursement" cover RRAL actions against Ngati Uenuku Kopako?
*    Who is telling the truth: Thomas Collé, Neil Oppatt, or Bob Kingi, Mike McVicker and Bob Martin?

Invoice 16242 kerfuffle leads to a good outcome.

Jean-Paul Gaston sent us what he described as a "copy of invoice 16242" to Council from RRAL for reimbursement of the Chapman Tripp payments.
After taking a belated second look at the document sent to me, I claimed that it could not be a copy, and must be a forgery.
Thomas Collé then revealed that it was neither a copy of the original document nor a forgery but an attempt to faithfully reproduce what the paper document Invoice #16242 would have looked like if it could have been found. I have accepted his explanation.
As a result of this contretemps we can now conclude that the invoice document could not be found in Council records, and may not have passed through the Council accounting system.
The absence of the paper document fits with the previous evidence that the Chapman Tripp AKL-304 invoices were absent from Council records. It also fits with the claim that Councilors and RRAL Directors were "kept in the dark" over the case, and the fact that payment was received before the invoice was raised.
Added to this, the $610,155.52 payment was not disclosed in the Related Party transactions section of the 2010 RDC Annual Report, where accounting rules require that all transactions between RRAL and Council should be recorded.
The AKL-304 paper trail disappeared, and it is difficult to believe that it disappeared by accident. Other Council financial records remain intact. As current Council CEO Mr Geoff Williams wrote on 20 May "Unfortunately the nature of the associated records has meant that it has taken some time to reconstruct the trail of financial transactions". When everything has been done in proper fashion it is an easy matter to follow a transaction trail. When it becomes necessary to "reconstruct" the trail, alarm bells should ring, and I believe that alarm bells have been ringing at Council, but the only action to ensue has been the Mayor's statement that "no more staff time" should be spent on the matter. However Mr Williams also wrote that the reconstruction of the transaction trail "has been achieved.." so we hoping for a prompt response to our latest LGOIA request for Council to reveal the source of the $610,155.

Where did the $610,155 come from?

One of the main objects of this investigation has been to determine how and why the then Mayor, Councilors and RRAL Directors could have been kept in ignorance of AKL-304 and the Chapman Tripp payments throughout 2009 and even to the present. We have paid less attention to the source of the $610,155 used to reimburse RRAL, but this is also a very important question which must be answered in the interests of the financial integrity of Council. Not even the "financial wizards" on Council staff can conjure such a sum of money out of nowhere, and if it was possible for them to appropriate large amounts from Council accounts for politically sensitive purposes without the knowledge of Councilors then what is the point in having a democratically elected Council? A further concern is that there can be no assurance of financial probity within the Council administration when transaction trails are either non-existent or need to be re-constructed.

In August 2015 Bob Martin, who was both a Councilor and an RRAL Director speculated that funding for AKL-304 may have come either from the sale of council property (specifically a farm at Rerewhakaitu) or from money provided for the management of council/private tender contracts which could be carried over from one contract to another. Cr Sturt on the other hand has suggested that Council might have raised a loan to finance the case. It should not be necessary for the Mayor and Councilors to speculate over such matters. They should know, and the public should also know.

In September 2015 Cr Sturt remarked "Cr [Glenys] Searancke and I questioned where this money was coming from...” - without receiving an answer. Mayor Kevin Winters and Cr Dave Donaldson (now the Deputy Mayor) both admitted in July 2015 that they had no knowledge of the source of funding for AKL-304. If any Councilors or RRAL directors did know, they are are not telling.

Did the $610,155 "Reimbursement" cover RRAL actions against Ngati Uenuku Kopako?

We have also found that the "Reimbursement" payment was not strictly speaking a reimbursement at all, and was not limited to the AKL-304 case. The money was used to clear the RRAL "Legal Expenses" (396) account on the second to last day of the financial year, so that the end of year balance would not reveal the mass of transactions totaling $542,360.42+GST, which included the secret Chapman Tripp payments. This payment from RDC left an outstanding balance of only $10,986.78 in the Legal Expenses account, which presumably represented non-controversial transactions. Of the Legal Expenses transactions $336,607.78+GST was for the secret Chapman Tripp AKL-304 payments. The rest related to other payments which are still undisclosed. Some may have been for witness fees and such-like for AKL-304 but Cr Sturt stated on SteamNMud ("RLC airport inquiry a request for costs" September 5, 2015) that the payment to RRAL covered "accounts the airport could not pay and included mitigation for [Mr] Fischer, legal bills and other cost involving the trees at the northern end of the runway". In other words, Ngati Uenuku Kopako.

We know that RRAL/Chapman Tripp cases involving non-Maori landowners were handled directly by Council with Clayton Oldham as the Chapman Tripp contact person, and that these cases were open to Council scrutiny, proper accounting records were kept, and the disputes were resolved with a minimum of fuss and expense. On the other hand we know that AKL-304 was expensive, confrontational, and conducted out of view of both Councilors and RRAL Directors. If Cr Sturt is right, the Ngati Uenuku Kopako case ("trees at the northern end of the runway") was also conducted out of sight of Councilors and Directors. That would fit with the perceived political symmetry of the Ngati Uenuku Kopako and AKL-304 cases. Council saw both these cases as representing a political challenge or difficulty, linked the two cases together, and treated them differently to all other cases. ( I should mention that although I collaborated closely with members of Ngati Uenuku Kopako throughout 2009 I have no personal knowledge of the dispute between the hapu and the airport company).

Who is telling the truth: Thomas Collé, Neil Oppatt, or Bob Kingi, Mike McVicker and Bob Martin?

On 4 June Bernie Hornfeck wrote to Thomas Collé
" three out of five RRAL Board members (Cr McVicker, Mr Bob Martin and Mr Bill Kingi) maintain that they were not aware of the transactions. ....To the best of my knowledge the fourth board member, Mr Ray Cook, has made no comment, which leaves only the Chair, Mr Neil Oppatt, who you say has advised you that “the board were aware.”
This is an unfortunate situation in which the word of one board member is contradicted by statements from three others. I therefore request that Council release extracts from the minutes of the relevant RRAL board meetings so as to provide independent evidence as to how this matter was communicated to the board."
SteamNMud reported on 24 April that "Cr McVicker said Mr Fischer had received responses from three of the five directors of Rotorua Regional Airport Limited [RRAL] which confirm that such a charge did not appear in the airport’s books". Neil has had over two months in which to respond publicly to the claims of his three fellow Directors and he has failed to do so. He has (so we are told) had a word in the ear of Thomas Collé and Geoff Willliams but that really is not good enough. If Collé and Oppatt are telling the truth they should be willing to make a public statement.

Chapman Tripp Payments Update #7

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

20 July 2016

In this update:
*    Thomas Collé replies to Bernie Hornfeck
*    No word from Julie Rowe
*    Where did the $610,000 come from?
*    Where do Councilors stand?
*    Is this a "witch hunt"?
*    Is it just a "historical matter"?

Thomas Collé replies to Bernie Hornfeck

Were the RRAL Directors aware of the AKL-304 payments that RRAL made to Chapman Tripp?
Bernie Hornfeck had written to Thomas Collé " three out of five RRAL Board members (Cr McVicker, Mr Bob Martin and Mr Bill Kingi) maintain that they were not aware of the transactions...This is an unfortunate situation in which the word of one board member is contradicted by statements from three others. I therefore request that Council release extracts from the minutes of the relevant RRAL board meetings so as to provide independent evidence as to how this matter was communicated to the board."
Collé replied to Bernie on 11 July 2016 "I have contacted Rotorua Regional Airport Ltd and have been informed that they no longer hold these records". In other words, Collé is saying that the minutes of the RRAL Board meetings from 2010 have disappeared, along with the AKL-304 invoices totalling $386,795, Invoice #16242 for $610,155, and all records relating to the 2000 Environment Court case.
Even Richard Nixon would not go as far as to erase the White House tapes, which provided evidence for his impeachment over the Watergate scandal. But it would appear that someone has gone through and systematically destroyed or removed the governance records which would have helped to expose duplicity and abuse of power by the Rotorua Council.
The minutes of Board meetings are crucial documents of record for any company. In this case, we would have expected the minutes to reveal who is telling the truth - Neil Oppatt or Mike McVicker, Bob Martin, and Bill Kingi. Instead of asking why RRAL "no longer hold(s) these records", Thomas Collé has simply repeated his assertion that "Mr Oppatt advised that the board were aware of the transactions you have referred to". Three out of five Board members have made it very clear that the board was not aware, one has made no comment and the fifth is Mr Oppatt himself who according to Mr Collé claims that his fellow board members were aware of the transactions. However Mr Oppatt has made no public statement. We can now confidently conclude that the board was not aware and that the claim that "the board were aware of the transactions" is false.

Silence from Julie Rowe

Was Finance Manager Julie Rowe responsible for the incorrect RRAL Annual Return to the Companies Office? Was the incorrect return a "mistake"?

Mr Frank Murray of the Companies Office suggested that we follow up our enquiries by contacting Julie Rowe directly for an answer to these questions, so on 30 June I wrote to Julie Rowe
"1. Did you file the 2010 annual return to the Companies Office?
If so
2. Was the affirmative response to the question "Did the shareholders pass unanimous resolution not to appoint an auditor for the current year?" your mistake?
If not
3. Were you instructed to give an affirmative response to the question?"
Julie Rowe will not respond. If the incorrect return was indeed due to a "clerical error" as Thomas Collé has claimed, she would have no reason not to admit the error. Collé's claim (which he made without having first spoken to Ms Rowe) is no longer credible. We can now conclude that the false 2010 return to the Companies Office was designed to deceive.

Where did the $610,000 come from?

On 29 June 2010 RRAL received a payment from Council for $610,155. But no one has disclosed the source of that money. Councilors have speculated that it might have come from the sale of a farm at Rerewhakaitu, manipulation of tender contract money or undisclosed borrowing. We are now awaiting a response from Council to our LGOIA request for an answer to the question of where the $610,000 came from. We have noted that the RDC 2010 Annual Report failed to record the payment. On the face of it that suggests that the Annual Report was falsified to hide the payment from Councilors and the public, but Council's response to our LGOIA request will show whether or not that was the case.

Where do Councilors stand?

Dave Donaldson, with his background in the New Zealand police, must know that something very wrong took place in 2009-2010. He will know that the fudged Chapman Tripp invoices, the missing invoice documents, the missing minutes from RRAL board meetings, the falsified 2010 RDC Annual Report, the sham transactions, the incorrect 2010 RRAL Annual Return to the Companies Office, the deception of Directors, and Councilors are evidence of wrong-doing.

The new Councilors who were not in office in 2009 - Mark Gould, Rob Kent, Tania Tapsell, Merepeka Raukawa Tait and Peter Bentley - may be literally dumbstruck by the revelations of what took place in 2009-2010.

Of the old Council, Trevor Maxwell and Janet Wepa have stayed silent, while Karen Hunt and Glenys Searancke have been generally unforthcoming.

Only Mike McVicker and Charles Sturt, to their credit, have commented publicly.

We know that Councilors as a whole were not personally complicit in the scandal. On a personal level, they may be embarrassed by their failure to exercise proper oversight in 2009, and fear the impacts on their political and professional careers. They may also be trying to protect Council as an institution from the damage which they fear might follow from full disclosure of the facts.

Councilors are acting, or rather failing to act, out of a sense of misguided loyalty. If they really want to do what is best for Council, the people of the district, and themselves they should demand an end to the duplicity over the Chapman Tripp payments.

Is this a witch hunt?

In 2009 we were accused of "holding the town to ransom".
That claim was made to excuse the unlawful invasion and destruction of our private property in blatant breach of court rulings.
Now some Councilors accuse us of being
    "one-eyed"
    "on a witch hunt" and
    after a "pound of flesh"
These claims are being made to disguise the fact that Council is embarrassed by the findings of our investigation and knows that there is no real defence against the mounting evidence of serious wrong-doing.
Council argues that
    it is a new council
    these are historical matters
    Council procedures have improved
    Council has more important things to do than examining its past misdeeds
All that may be true, but it is also a tacit admission of wrong-doing in 2009.
Consider the case of a person guilty of a crime which he had successfully concealed for six years. If he insisted that his crime was committed many years in the past, that he was now a changed person, and that in pursuing the matter the police were being "one-eyed" were engaged in a "witch-hunt", were seeking their "pound of flesh" and that he had better things to do than digging up the past, how would we react?   Would we not say "If you have truly changed you would have freely confessed your crime.   You would not have waited until you were charged, you would not try to obstruct or delay the prosecution, and only after confessing would you plead in mitigation that your character had been transformed for the better.
I would rather spend my own time working on constructive community projects.   I only pursue this matter because I am conscious that if citizens allow abuse of power to go unchallenged government will only become more corrupt and oppressive and we will all pay the cost.   No one is paying us to investigate the Chapman Tripp payments affair.   We are doing it at our own expense out of a sense of civic responsibility.   Councilors and Council staff on the other hand are paid handsomely in the expectation that they will deliver open and honest government.   Because they have failed to do that it falls to us to make up the deficiency, and we will not shirk the responsibility.

Is this just a "historical matter"?

Mayor Chadwick claims that is the case. In a sense everything is history, even the events of yesterday or last week. The Chapman Tripp affair goes back 7 years, which is quite a long time, so it could reasonably be called "history". However that begs the question of whether history matters. The answer is that sometimes history matters and sometimes it doesn't, depending on whether it is relevant to the issues of the moment. For example the New Zealand wars which began 170 years ago, and the raupatu confiscations which followed are history, but we cannot regard them as unimportant, because they shaped the way New Zealand is today, and continue to influence the way we think and act. No one remains alive from those times but the institutions - the British crown, Maori iwi, the Kingitanga and other nationalist movements - remain in place.

By the same token, the Chapman Tripp payments affair is still relevant, because both RRAL and RDC remain in existence, many of the Councilors and one RRAL director remain in office, as do the respective heads of the RDC and RRAL finance departments.

In terms of public law, Chadwick's argument makes no sense. A new council inherits all the powers, rights, assets, responsibilities and liabilities of the old council. It cannot pick and choose which debts or liabilities it will accept, and which it can disclaim as the responsibility of the old council.

Most importantly, the Chapman Tripp Payments affair showed how the system of governance, with its checks, balances, and correct administrative and accounting procedures could be circumvented and upset by a party with an agenda which was inimical to the best interests of the Rotorua community. Council's arguments - that it is a "new council", it has "changed", the Chapman Tripp payments affair is a "historical matter", we are being "one-eyed" and are engaged in a "witch hunt" are implicit admissions of wrong-doing in 2009. The Mayor now needs to front up and tell the truth about AKL-304 and the Chapman Tripp payments. She has to choose between the truth and a cover-up, and if the matter was no longer relevant, there would be no reason to persist with the cover-up. It is that simple.

Chapman Tripp Payments Update #8

2 August 2016

In this update

*        The people's right to know
*        What you can do.
*        A brief history of the Chapman Tripp payments affair

The people's right to know

Rotorua Council has now refused to reveal the source of the $610,155 payment made to RRAL on 29 June 2010. We insist that the the public has a right to know where the money came from, but it has become clear that we will not win that right without a fight.

The right to know is the most fundamental human, political and civil right that we have. Without open government democracy becomes a charade which can quickly degenerate into despotism. When a government's actions, lawful or otherwise, are conducted in secret, then we are all put at risk.

The final step in our investigation was to reveal the source of the funds for the $610,155 payment made to RRAL on 29 July 2009, which was the means for concealing AKL-304 affair from the eyes of RRAL Directors, RDC Councilors, and the public of Rotorua. Speculation has been rife over the source of the $610,155 and in my request of 1 July I noted:

Cr Sturt is quoted as saying “Cr [Glenys] Searancke and I questioned where this money was coming from in confidential... Guerin borrowed if I recall to pay these accounts.” Former Cr Bob Martin has suggested that the money may have been obtained through sale of Council assets....

Specifically, Councilors have suggested that the money could have come from the sale of a farm at Rerewhakaitu, or from dipping into Council tender contract funds. Yet these explanations seem improbable, not least because the Related Party Transactions section of the Rotorua Council 2010 Annual Report implies that the money must have come from outside of Council.

Council is now flatly refusing to say from where, from whom, or how the $610,155 was obtained.

What you can do.

Council clearly does not want the public of Rotorua, and New Zealand, to know the truth about AKL-304.

But the people have a right to know. To tolerate this kind of secretive government and shady dealings would be to open the door to runaway corruption and abuse of power.

Council must be obliged to tell its people where the Chapman Tripp money came from. This is not just an issue for Maori, or for Pakeha. It is not something that should only concern those from the right of politics or those from the left. It is of vital importance for us all, and for the future of honest government in this country.

You can take a stand today.

Write to the following officials demanding the release of information on the source of the funding for AKL-304.

The Mayor of Rotorua Steve Chadwick Steve.Chadwick@rotorualc.nz

The Deputy Mayor Dave Donaldson dave.donaldson@rotorualc.nz

The Editor of the Daily Post newspaper editor@dailypost.co.nz

Local Members of Parliament

Todd McClay (National) Todd.McClay@parliament.govt.nz

Fletcher Tabuteau (New Zealand First) Fletcher.Tabuteau@parliament.govt.nz

Te Ururoa Flavell (Maori Party) teururoa.flavell@parliament.govt.nz

Any other Rotorua Councilor, Council candidate, or Mayoral candidate.

and please forward this email to all your contacts

A brief history of the Chapman Tripp payments affair

• In 2009 an expanding Rotorua Airport sought to encroach on Maori land at the runway northern end and Pakeha/European land to the south. At the time the Airport company, Rotorua Regional Airport Ltd, RRAL, was insolvent, but it engaged lawyers Chapman Tripp to take legal action against one of the property owners.

• That action, known as AKL-304, engaged the services of 17 Chapman Tripp lawyers, which we now know cost $386.795 in legal fees alone, and was ultimately unsuccessful.

• When the legal action failed, RRAL illegally entered the private property in dispute and began felling the owner's trees, in violation of the court ruling and in defiance of the law.

• In 2010 RRAL filed a false Annual Return to the Companies Office which claimed that its shareholder (Council) had decided not to appoint an auditor for RRAL in 2010. In fact, from all accounts Council made no such decision.

• In 2015 we asked RRAL Directors who paid for the AKL-304 litigation. Three out of five RRAL directors claimed to know nothing about the litigation, and insisted they had not authorised any payments to Chapman Tripp. All three believed that Rotorua District Council paid for the Chapman Tripp services.

• We asked the Rotorua District Mayor and Councilors if they knew who had paid Chapman Tripp, and how much. The Mayor of the time, Mr Kevin Winters, had absolutely no idea, and other Councilors could only speculate, but most believed that Council had a hand in the matter.

• In May 2015 we filed a Local Government Meetings and Information Act (LGOIA) request with Rotorua Council seeking to know if Council had paid, and if so how much. Council refused the request on the grounds that “that the information requested cannot be made available without substantial collation or research”.

• In June 2015 we told Council that the answer could be contained in its Accounts Payable ledger and Invoices. Council replied that the Chapman Tripp invoices relating to AKL-304 could not be found.

• We then asked Council to request copies of the invoices from Chapman Tripp. Eventually Council provided us with these copies which were addressed to RRAL, which by that time was wholly owned by Council. Council then declared that "Rotorua District Council paid the Chapman Tripp costs".

• We discovered that the Chapman Tripp invoices had been "fudged" or doctored. Council initially denied that was the case, but subsequently in the face of irrefutable evidence were forced to concede that the invoices had in fact been doctored.

• We asked for evidence that Council paid the Chapman Tripp invoices. Council then changed its tune claiming that "the nine Chapman Tripp invoices were paid in full by RRAL" and that "There were no offsetting payments or contributions from other parties"

• We recognised that claim was not consistent with the RRAL accounts summary as shown in the RDC Annual Report for 2010, and was not consistent with the evidence given by RRAL Directors. We therefore made a further LGOIA request, and Council once more changed its tune, saying that Council had in fact offset the RRAL payments to Chapman Tripp by means of a cheque for $610,155 received by RRAL on 29 June 2010.

• We then asked Council where this $610,155 came from, noting that the former Mayor and Councilors claimed to have no knowledge of the payment, that the payment does not show in the Council's 2010 Annual Report record of accounts, and that speculation has been rife as to the source of the money. Council has now refused our request to know the source of the $610,155 payment. (The evidence suggests that rather than being the source of this money, Council may have only provided a conduit for funds coming from a third party.)

Chapman Tripp Payments Update #9

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

22 August 2016

In this update:

*    Potaua takes the fight to Keaney's castle
*    Thomas Collé's answer to Potaua
*    Ructions in the media
*    Councilors pressured not to ask questions but Residents and Ratepayers candidates will demand disclosure.
*    Thomas Collé makes stuff up - again.

Potaua takes the fight to Keaney's castle

After the truth of the AKL-304 affair had lain concealed for six years, after we had spent fifteen months trying to pry the facts from a reluctant Council, and after Council CEO Geoff Williams had bluntly refused our LGOIA request for Council to disclose the source of the money used to fund AKL-304, Potaua Biasiny-Tule, one of two Te Arawa representatives on Council's Operations and Monitoring Committee, raised the issue in formal session, and put the question "Who paid for AKL-304?" to Council Chief Financial Officer Thomas Collé.

Regrettably, Collé did not tell the truth to the Committee and the watching public. To no one's great surprise he prevaricated, but even in daring to raise the matter Potaua struck a blow for democracy.

Thomas Collé's answer to Potaua

In his answer to Potaua, Collé claimed "On the June 30, 2010, the legal costs were invoiced to the council...The airport then paid Chapman Tripp, the Auckland legal firm engaged by the council"

That statement is untrue. Council's own records show that RRAL, not Council, engaged Chapman Tripp. RRAL paid the Chapman Tripp bills as they fell due through 2009 and early 2010. Then on 29 June 2010 RRAL received a cheque for $610,155, and on the following day, 30 June 2010, RRAL invoiced Council for the same sum of $610,155. The actual sequence of the transactions has important implications, as Mr Collé well knows The scheme was designed so that neither the Mayor, nor the Councilors nor RRAL Directors would have any real idea about what was going on. To that end RRAL managed AKL-304, when all other airport litigation was being managed more or less transparently through Council itself. The $610,155 payment was used to clear the RRAL Legal Expenses account on the second to last day of the financial year, so that RRAL directors would not discover the expenditure in the end-of-year balance sheet. The following day a sham invoice was raised to explain the payment received the previous day. That invoice was never sent to or received by Council. Then followed a meticulous cover up in which RRAL disposed of the Chapman Tripp invoices, and the minutes of its Board meetings.

Now Thomas Collé is telling the Committee that the transactions followed the exact reverse order to that shown in the RRAL financial records. If he was telling the truth then someone in Council or RRAL would have needed to forge the Chapman Tripp payment records, RRAL Invoice #16242, and the RRAL Westpac Bank Account statement. The one document whose authenticity is in question is the "Copy" of the sham RRAL Invoice #16242 to Council for "Reimbursement of legal expenses" dated 30 June 2010. That invoice is addressed to "Rotorua Lakes Council" which did not exist under that name until November 2014. In 2010 a name change for Rotorua District Council was not even on the radar. So there is no credible evidence that RRAL sent invoice #16242 to Council, and certainly nothing to suggest that the invoice was required by Council.

The Council Annual Report for 2010 (Related Party Transactions) indicates that the payment could not have originated from Council, because RRAL "Accounts Receivable from the Council" totaled only $243,000 for that year. Therefore the $610,155 must have come from a third unrelated party, unless Council is claiming that its 2010 Annual Report was also falsified.

In 2010 RRAL filed an incorrect annual return to the Companies Office, claiming that Council had agreed not to have RRAL audited in that financial year. Mr Collé first attributed this to a "clerical error" by a "fairly junior staff member" (RRAL Finance Manager Julie Rowe) before he had even spoken to Julie about the matter. Collé then shifted ground, claiming that the "blame" for the false return lay with the former Council Chief Executive Mr Peter Guerin. Mr Collé needs to explain how the Chief Executive of Council could be responsible for a "silly little mistake" by a "fairly junior staff member" of a separately managed entity. The idea beggars belief.

Mr Frank Murray of the Companies Office recommended that I speak directly to Julie Rowe about the false annual return. When I did, she refused to admit a mistake and would say nothing more on the subject. So there is no reason to believe that the false return was due to a "silly little mistake".

Ructions in the media

The "Daily Post" reporter Matthew Martin, who was present at the Operations and Management Committee Meeting on 4 August, followed orders and in his report of the meeting, published next day, he made no mention of Potaua's question. (Anything to do with AKL-304 has been declared strictly off-limits for "Daily Post" journalists).

However Phil Campbell reported the question and Collé's answer in an article published on the "SteamNMud" website on Sunday 7 August. Although my photograph was attached to the article ("Ratepayer footed the bill"), Phil only quoted Thomas Collé and the article contained no comment or rebuttal from myself. From 7 August through to 10 August "Glass Half Full" who acts as Council's resident apologist on "SteamNMud", and I posted a number comments. My last three comments were held back from publication, and by Friday 12 August Phil was no longer the Editor of "SteamNMud". Then on Monday 15 August 15 he was reinstated, and my comments on the article were finally approved for publication, with only one exception.

In the past the order to block comments on the AKL-304 affair on "SteamNMud" have come from higher up than Phil Campbell or the proprietor of Tarawera Publishing, Philip Macalister, and we can surmise that once again someone came in over their heads to block public comments on the issue. On the Monday following Phil's "lost weekend" from "SteamNMud" the powers-that-be belatedly realised that it was better to have Phil back inside their tent rather than leave him outside with the freedom to tell all.

Councilors pressured not to ask questions but Residents and Ratepayers candidates will demand disclosure.

It is not only the media that is being pressured to "kill" the AKL-304 story. A reliable source on Council has told us that Councilors themselves have been told not to ask any questions about the affair in public, and so far Potaua is the only representative to have broken ranks.

But now the Rotorua Residents and Ratepayers ticket for the upcoming Council elections have declared for full disclosure of the AKL-304 affair, saying "We would act in concert to have the question asked of and answered by the CE. RDRR members would step forward to protect the public's democratic right to know about the affairs of local government and to the source of the AKL-304 payment. Our platform is to restore democracy, and therefore the right for ratepayers to be fully informed regarding the affairs of local government and to the source of the AKL-304 payment." The RDRR candidates are Dr Reynold Macpherson (for Mayor), Cr Peter Bentley, Julie Calnan (a former Councilor), John Dyer, Shelly Fischer (no relation), Rosemary McKenzie and Raj Kumar.

The present Mayor, Steve Chadwick and the candidates supporting her continue to resist an enquiry into the matter. We will endeavour to canvas all other Council and Mayoral candidates to determine where they stand.

The third party

We have now established beyond reasonable doubt, from RRAL's own accounts receivables records and the RDC Annual Report for 2010 that AKL-304 was funded by a third party referred in Council's draft AKL-304settlement agreement only as "the parties (whether or not known to or capable of being known by, Mr Fischer)..". This third party had a million dollars of funding at its disposal to prosecute the affair during 2009-2010. In covering its tracks over the past 15 months, it has had access to even greater resources. It has used those resources to coerce Council into a protracted process of concealment and denial, and to persuade the press to maintain strict silence over the issue - even when it has been raised in a public session of a Council committee. As the old saying goes "He who pays the piper calls the tune" and money on a grand scale has been poured into the AKL-304 affair. We are concerned by the extent to which Councilors and the media have been induced to collude in the cover-up of AKL-304, but we can also take heart from the knowledge that there were people who could not be bought or intimidated by the power of parties "whether or not known to or capable of being known by" the people of Rotorua.

Who is to blame? Is it George White, or Peter Guerin as Thomas Collé has claimed? What is the culpability, if any, of the current Mayor Steve Chadwick and the Chief Financial Officer Thomas Collé? Fundamentally none of these individuals are to blame. They all believed, albeit misguidedly, that they were acting in the national interest. Those among them who deliberately deceived the public did so out of a sense of duty, as much as self-interest.

Thomas Collé makes stuff up - again.

Thomas Collé has become Council's go-to man for making outrageous, unsubstantiated or plain dishonest claims.

It began with his "explanation" for the fudged Chapman Tripp invoices. Collé claimed that doctored invoices were nothing unusual, and that in his experience all large legal firms fudge their invoices. (Collé's "experience" is the ultimate justification for all his surprising claims and allegations). He made that statement without having done what any reasonable and honest person would have done. That is, go to Chapman Tripp and ask them why the invoices were fudged.

Then he claimed that the false 2010 RRAL Annual Return to the Companies Board was due to a "clerical error". He made that claim without having spoken a word to Julie Rowe, the RRAL Finance Manager and the person whose name was attached to the false return.

After that he went on to say that the "blame" for the "clerical error" lay with the former Chief Executive of Rotorua District Council Mr Peter Guerin, while making no attempt to explain how the Chief Executive of RDC could be blamed for a minor clerical error by the Finance Manager of RRAL.

He claimed that the cost of AKL-304 was incorporated in the capital cost of the airport runway extensions - another blatant fiction.

Then he wrongly claimed that the RRAL board "were aware" of the Chapman Tripp transactions, without heeding the RRAL Directors, referring to the minutes of the Board meetings, or consulting with the person who took the minutes (who we believe to have been Julie Rowe).

To be fair, Thomas Collé has not been the only source of misinformation emanating from Council, and it could be argued that in trying to throw us off the track of AKL-304 he is only doing his job. If that is the case, however, the prospects for his key performance indicators in 2016 are not looking good.

The people's right to know

Council is now flatly refusing to say from where, from whom, or how the $610,155 was obtained.

What you can do.

Council clearly does not want the public of Rotorua, and New Zealand, to know the truth about AKL-304.

But the people have a right to know. To tolerate this kind of secretive government and shady dealings would be to open the door to runaway corruption and abuse of power.

You can take a stand today.

Write to the following officials demanding the release of information on the source of the funding for AKL-304.

The Mayor of Rotorua Steve Chadwick Steve.Chadwick@rotorualc.nz

The Deputy Mayor Dave Donaldson dave.donaldson@rotorualc.nz

The Editor of the Daily Post newspaper editor@dailypost.co.nz

Local Members of Parliament

Todd McClay (National) Todd.McClay@parliament.govt.nz

Fletcher Tabuteau (New Zealand First) Fletcher.Tabuteau@parliament.govt.nz

Te Ururoa Flavell (Maori Party) teururoa.flavell@parliament.govt.nz

Any other Rotorua Councilor, Council candidate, or Mayoral candidate.

and please forward this email to all your contacts

A brief history of the Chapman Tripp payments affair

• That action, known as AKL-304, engaged the services of 17 Chapman Tripp lawyers, which we now know cost $386.795 in legal fees alone, and was ultimately unsuccessful.

• When the legal action failed, RRAL illegally entered the private property in dispute and began felling the owner's trees, in violation of the court ruling and in defiance of the law.

Chapman Tripp Payments Update #10

1 September 2016

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

In this update:

*    Walter Bateson goes to Audit New Zealand
*    Bernie Hornfeck writes to RLC CEO Geoff Williams
*    Official tolerance of endemic corruption lies at the root of our problems
*    Mayoral candidates (with the exception of Ms Chadwick) vow to uncover the facts behind AKL-304
*    STOP PRESS: Geoff Williams briefs all candidates for election on the AKL-304 affair

Walter Bateson goes to Audit New Zealand

Walter Bateson is a well known commentator on Rotorua Council affairs and a frequent contributor to the correspondence columns of the Daily Post and the Rotorua Review.   His involvement with the AKL-304 affair goes right back to 2010.   Walter has been as frustrated as any of us by the code of silence imposed around AKL-304, and has repeatedly tackled Councilors and Council staff over their failure, or refusal, to disclose the full truth behind the affair.   Very recently he wrote to Council once more, and the Council staff member who answered his email suggested that he take the matter to Audit New Zealand.   Walter has now done that, and we will have to wait and see how matters progress from here with Audit New Zealand.
While I support and commend Walter's initiative, I would offer some words of caution.   Firstly, I believe that the Council should have referred Walter to the Office of the Auditor General (OAG), rather than Audit New Zealand. This is because the Auditor General is the one responsible for detecting and exposing abuses and corruption in local government in New Zealand. Unfortunately the OAG has a chequered history.   The then Auditor-General Jeff Chapman was himself convicted of fraud and sentenced to prison in 1997, and this year the OAG has had to apologise to the Kaipara district community for the office's failings and has agreed to pay $5.38 million to Kaipara District Council as a consequence of its lack of diligence in auditing the Council books, which has had massive implications for ratepayers in that district.   But for all its many faults and shortcomings, the OAG is the only institutional check on corruption in local government in New Zealand and it should not be denied the chance to do its job.
Audit New Zealand on the other hand is the firm which conducts audits of local government on behalf of the OAG, including the 2010 audit of RRAL (which we are told did in fact take place, despite the false return made to the Companies Office by RRAL in 2010).   So Audit NZ may be inclined to defend its 2010 audit which, apparently, disclosed nothing untoward.   However, sources in Audit NZ have told me that because of the methods adopted in the audit, it would not have uncovered the irregularities around AKL-304.   That could mean that Audit NZ might be willing to review the RRAL accounts with an open mind.

Official tolerance of endemic corruption lies at the root of our problems

If corruption is seen as being in the interests of the political establishment in New Zealand, it will be tolerated and even encouraged. A couple of examples from recent months are the Filipino dairy worker and the sub-standard bridge steel scandals. In the first scandal, Filipino workers with fake dairy industry qualifications were brought in to provide low-cost labour on New Zealand dairy farms, and government decided not to send the fraudulent labour home because of the operational and financial difficulties that might create for their employers. In the second scandal, steel with fake certificates of compliance with international quality standards has been used in the construction of bridges, power stations, high rise buildings and private homes in New Zealand. Again, government has decided to take no action, because the fraudulently documented steel is cheap and that means the costs of infra-structure can be kept low through the use of sub-standard steel. What the New Zealand government fails to realize is that corruption not only presents material risks for our people - depressed wages and conditions in the dairy industry, bridges and buildings that will collapse in a major earthquake - but that corruption is corroding the moral fibre of politicians and bureaucrats, business people and even ordinary working families. Acts of terror will not destroy New Zealand, but corruption is doing that, insidiously yet surely, every day of the year.

Bernie Hornfeck writes to RLC CEO Geoff Williams

On 29 August Bernie Hornfeck wrote to Geoff Williams "On 4 August the RLC Chief Financial Officer Mr Thomas Collé told the Operations and Monitoring Committee of Rotorua Lakes Council that Rotorua District Council had made the payment (of $610,155) to Rotorua Regional Airport Ltd (on 29 June 2010), which sum was credited to the RRAL Legal Services account and covered by an RRAL Invoice (No. 16242) to Council (raised on 30 June 2010).
However Mr Collé’s claim does not appear to be consistent with the record in the Related Party Transactions section of the 2010 RDC Annual Report which shows a total of only $243,000 was paid by Council to RRAL Accounts Receivables in the 2009-2010 financial year.
Please explain, in the light of Council’s accounting records as published in the 2010 Annual Report, how Mr Collé’s statement to the Committee could be true."
We await Geoff Williams' reply with interest. Will he admit that Thomas Collé did not tell the truth to the O&M Committee? Will he claim that the 2010 Annual Report contained a false statement of transactions? Will he come up with some other explanation? Or will he take the safest option and refuse to respond?

Mayoral candidates (with the exception of Ms Chadwick) vow to uncover the facts behind AKL-304

Our survey of Mayoral Candidates has yielded the following replies to the question of whether they would disclose the facts behind the AKL-304 scandal:

Steve Chadwick: "In my view the forensic assessment has been undertaken and I am satisfied with the findings. I find the allegations in this email to be disturbing and serious. I have nothing further to adding (sic) this matter"
(Note from GF: "forensic" means "in relation to the detection of a crime". So while Mayor Chadwick is acknowledging "disturbing and serious allegations" and a process of criminal investigation, she will not be telling the people of Rotorua what that forensic assessment uncovered).

Reynold Macpherson: "We would act in concert to have the question asked of and answered by the CE....Our platform is to restore democracy, and therefore the right for ratepayers to be fully informed regarding the affairs of local government and to the source of the AKL-304 payment."
(Note from GF: A very clear statement of intent from Dr Macpherson and his team).

Rob Kent: "If I am elected Mayor I will hold an enquiry and thoroughly investigate this matter, reporting the findings publicly - whatever the outcome".
(Note from GF: An unequivocal statement from Cr Kent).

RangiMarie Kingi: "It needs military raiding of their offices, systems, and people need to be held to account .. I want further full investigations into this matter .. because WE NEED CLOSURE. ..... Wheres the Media in all this? "
(Note from GF: We won't be doing raiding Council offices or systems, but we will be holding people to account. A very good question with respect to the media, and my answer to that question is quite simple: with the exception of SteamNMud, the media have failed to do their job. Now that Geoff Williams has briefed all election candidates on AKL-304, making it a formal election issue, will Daily Post reporters continue to be banned from reporting the issue?)

Frances Louis: " I trust your Facts ..."
(Note from GF: Our thanks to Ms Louis, but we are not asking anyone to trust our facts. Rather we have been consistently urging people to demand answers from Council)

Mark Gould
No reply received.

John Rakei Clark
Not surveyed.

I do understand that there are many issues in this Mayoral contest, and few if any individual votes will be cast on the basis of the candidates' policies on the AKL-304 affair. I personally am not endorsing any candidate. However I believe that it is important to let people know where the candidates stand, and in general, the response of the Mayoral candidates has been encouraging

I will be reporting on the positions of Council and Local Board Candidates later.

STOP PRESS: Geoff Williams briefs all candidates for election on the AKL-304 affair

The Council CEO Geoff Williams has sent me a letter, copied to all candidates for the offices of Mayor, Councilor and Local Board Member in the upcoming elections.
In my reply I told Geoff
"I welcome your decision to resume the path of disclosure and dialogue over the AKL-304 affair. ...
I have based statements on information supplied by Council, and therefore those statements would only be false if the information I have received from Council was itself false. That said, I do not accept that my statements have been in any way defamatory but will withdraw any statements which may be shown to be incorrect on the basis of new information supplied by Council or others. At present I am not aware of any of my statements which would fall into that category and the documents attached to your letter confirm to my satisfaction that the Operations and Monitoring Committee was misled. However I will not dwell on the matter of false or misleading information provided in the past, but will move on to obtain clarification of the remaining anomalies.
In that regard, I have three questions which I hope that you will be able to answer for the benefit or all parties.
1. If the "Invoice Date" shown on the "Copy" of RRAL Invoice Number 16242 is 30 June 2010, and if that "Copy" is authentic, as you claim, how is it that "the invoice was processed and approved for payment on 29 June 2010" as your letter states?
2. Where in Exhibit D attached to your letter is the RRAL Invoice Number shown?
3. If Council paid $610,155 to RRAL on 29 June 2010, why does the Council 2010 Annual Report show a total of only $243,000 in Related Party Transactions (RRAL Accounts Receivable)?
When we have answers to those questions we will be in a position to address the more substantive issues of apparent failures of governance."

Chapman Tripp Payments Update #11

10 September 2016

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

In this update:

    New revelation: Council borrowed to pay for AKL-304
    Thomas Collé replies to Bernie Hornfeck's query over the Related Party Transactions anomaly
    Did Council refuse to disclose the source of funding for AKL-304?
    Did Thomas Collé tell the truth to the O&M Committee?
    Has Council told the same story all along?
    Is Geoff Williams acting to protect RLC staff?
    Council candidates on AKL-304
    Time to front up Charles, Dave, Mike - and the others

(My apologies for the length of this update, but much has happened since Update #10 was issued, and it all needs to go on the record)

New revelation: Council borrowed to pay for AKL-304

On 30 August 2016 Geoff Williams, the Chief Executive of Rotorua Lakes Council sent a statement to all current RLC election candidates and the media. In his statement Mr Williams revealed for the first time that Council had borrowed $600,000 from the BNZ to reimburse the RRAL Legal Expenses account for the AKL-304 payments to Chapman Tripp. The borrowing was a panic move initiated on 29 June 2010 when it was realized that after 30 June 2010 the Chapman Tripp payments would show in the RRAL Annual Accounts unless RRAL received an offsetting payment. So $600,000 was borrowed from the BNZ, and immediately paid into the Legal Expenses Account of RRAL. That created another problem. There was no invoice from RRAL to explain the payment received from RDC. (A fictitious "Invoice Number 1" had been used to justify the payment on the RDC side, but this invoice did not exist in the RRAL accounting system). Therefore on 30 June 2010 Invoice Number 16242 was generated in the RRAL accounting system to explain the payment received from RDC the previous day. (Since the RRAL system would not allow RRAL staff to generate "Invoice #1"). Readers will not be slow to realize that if RDC staff could borrow and on-pay $600,000 with only a fake invoice number as documentation, they would have been able to so in any other situation.

Thomas Collé replies to Bernie Hornfeck's query over Related Party Transactions anomaly

Council has replied to Bernie Hornfeck's letter of 29 August 2016 in which he asked for an explanation of the contradiction between Council's claim that Council paid for AKL-304 with a $610,155 payment to RRAL on 29 June 2010, and the RDC Annual Report which shows that related party transactions for that year totaled only $243,000. The same question has been sent to Audit New Zealand. This matter is key to determining whether or not third party money was laundered through the BNZ loan facility. The full text of Bernie's letter and the reply from Thomas Collé can be found below in the item "Time to front up Charles, Dave, Mike - and the others" which is copied from an email sent to all candidates for office in the forthcoming Rotorua Lakes Council elections. Collé's letter to Bernie is truly extraordinary. In my view it is one of the most brazenly dishonest statements to have come from Council during the entire course of this affair.

Did Council refuse to disclose the source of funding for AKL-304?

Geoff Williams says it did not. In his letter of 30 August he wrote that my "allegation" that Council had refused to disclose the source of funding is "unfounded and untrue...false and defamatory". Yet on 21 July I received a letter from Council stating "I refer to your letter of 1 July 2016 requesting disclosure of the ultimate source of the sum of money Council paid to Rotorua Regional Airport on 29 June 2010...We are.. declining this request under s17(h) of the Local Government Official Information and Meetings Act "that the request is frivolous or vexatious..."
The letter is signed "Geoff Williams Chief Executive" and Geoff Williams' signature is attached.
So make up your own mind. Was Geoff Williams telling the truth when he told you Council had not refused to disclose the source of funding for AKL-304?

Did Thomas Collé tell the truth to the O&M Committee?

On 4 August Mr Thomas Collé, the RLC Chief Financial Officer told the Operations and Monitoring Committee in response to a question from Mr Potaua Biasiny-Tule that on 30 August RRAL invoiced RDC the costs of Chapman Tripp legal services, RDC then paid RRAL and RRAL then "duly paid" Chapman Tripp. That sounds like a reasonably "correct" process.

But the actual sequence of events was very different. An extract from the RRAL Accounts Payable Register provided to me by Council in January 2016 shows that an effectively insolvent RRAL paid the Chapman Tripp AKL-304 invoices in full and more or less as they fell due between 20 May 2009 and 20 February 2010.

Then the documents attached to Mr Williams letter show that on 29 June 2010 someone at RDC drew down a loan of $600,000 from BNZ and made a direct credit of $610,155 to RRAL in payment of RRAL "Invoice #1". There is no evidence that Invoice #1 actually existed. The reasonable presumption is that it was a fiction.

On 30 June 2010 someone entered into the RRAL computer system "Invoice #16242" for $610,155 to RDC. There is no evidence that the invoice was ever sent and in any event it would not have been necessary to send the invoice because the payment had already been received before the invoice was generated.

The actual sequence of events shown by the documents is the exact reverse of that claimed by Mr Collé in his statement to the Operations and Monitoring Committee and through the Committee to the public of Rotorua, and it is a sequence of events which raises disturbing questions. My claim that Mr Collé misled the Committee is based on documents supplied by Council and the documents attached to Mr Williams' letter. So Mr Collé's statement to the Committee was misleading if the Williams documents are bona fide, and at this stage, with the exceptions of Invoice #1 and Invoice #16242, there is no reason to doubt that they are bona fide.

Has Council told the same story all along?

Geoff Williams, RLC CEO in his letter of 30 August 2016 stated "we have told you all along.. that RLC paid the legal costs by reimbursing these costs to Rotorua Regional Airport Limited ('RRAL') in 2010" and Martin Lee of Bright Wild Thomas & Lee in a letter to Mr Williams dated 31 May 2016 wrote "The invoices for legal services were paid by Rotorua Regional Airport Limited and were offset by a reimbursement received from Rotorua District Council in the same financial year"

But Jean-Paul Gaston's executive assistant, Kim McGrath emailed me in January 2016
"I have checked with the finance officer at Rotorua Regional Airport Ltd (RRAL) and the nine Chapman Tripp invoices were paid in full by RRAL. There were no offsetting payments or contributions from other parties"

When I sought clarification, pointing out that "while RRAL was fully owned by the RDC the two organisations were separate entities for accounting and other purposes and that the distinction between RRAL and RDC is an important one" Ms McGrath replied "Any reference to the payments coming from RDC were made because RDC is a 100% owner of RRAL... the RRAL invoices were received and paid through the RRAL accounting system" .

So in January this year Council was misrepresenting the truth about the AKL-304 payments, and we have only advanced the truth to this point by persistently questioning Council's story. We still do not have the whole truth, and regrettably Council still continues to misinform the public. Over the past eighteen months there have been more twists and turns in Council's story than there are in the road to Ruatahuna.

Is Geoff Williams telling the truth when he claims that the Council story has been consistent "all along"? Council may have been confused over the AKL-304 payments, because the transaction trail had been carefully concealed from RRAL Directors, RDC Councilors, the Mayor and the public of Rotorua. Furthermore the AKL-304 Invoices and the RRAL Board Minutes have "disappeared" from the records. But Council should be honest and admit that over the past fifteen months it has been unable to provide a consistently truthful account of how AKL-304 was funded.

Is Geoff Williams acting to protect RLC staff as he claims?

If Mr Williams wanted to protect RLC employees he would have told the truth and he would have apologised to Council staff and to the public of Rotorua for the AKL-304 affair. However the manner in which he has chosen to intervene in the political process, and the many false claims in his statement to candidates suggest that he is more concerned to protect the political interests of certain Councilors in the current election campaign and to perpetuate a cover-up which is now all but dead in the water.

Council candidates on AKL-304

The response of Council candidates (as distinct from Mayoral candidates) to our survey was, with the exception of the Rotorua District Residents and Ratepayers candidates and Cr Rob Kent, disappointing. The RDRR candidates and Cr Kent made a clear and unequivocal commitment.
The position of other candidates is illustrated by this comment from a Community Board candidate "I am unable to contribute an opinion to this as I am newly appointed to the rural board and we do not have any sway with Council". In other words, this candidate isn't able to give a good reason as to why she would even want to retain her seat on her Community Board.
A second candidate confesses "Have had similar experiences of the clandestine dealings of Council myself." but offers no ideas about what he might do to effect change.
A third writes "If i were on the committee with a Councillor when this issue of AKL-304 affair. was positioned for a positive outcome I would have supported this notice of motion, on this issue,imag-ne what the out come would have been if the numbers stacked up ?" That candidate may know what his words mean, but I confess that I do not.   It would have been better if he had given a straight answer to the straight questions asked: "Do you support the decision of Council not to disclose the identity of the party which funded the AKL-304 litigation through Rotorua Regional Airport Ltd?   If so, on what grounds? What steps will you take to ensure that the public is finally told the truth about AKL-304?"
A more intelligible reply came from Waitsu Wu who wrote "I do not support the decision of Council not to disclose the identity of the party who funded the AKL- 304, but I am aware in governance matters sometimes confidentiality is needed to prevent any further liability/damage. Therefore I can not give you the answer until I have studied the matter fully. If I get elected could you please make an appointment to see me and we will go from there." Ms Wu is inviting electors to vote for her, and then find out where she stands once she is in office.
All this says to me that local government democracy is in deep trouble.
The Council candidates who have made a clear and positive commitment on AKL-304 are Rosemary McKenzie, Shelly Fischer, Raj Kumar, Peter Bentley, Julie Calnan, John Dyer and Rob Kent.
On the other hand, Potaua Biasiny-Tule from Te Arawa is the only representative with the political courage to have put the AKL-304 question squarely before the Council administration in a public session of Council.   To the best of my knowledge Glenys Searancke (who is a leading member of RDRR but is not standing at this election), Peter Bentley and Rob Kent have not.
Our strategy cannot rely on either politicians ("the third estate") or the mass media organisations ("the fourth estate") to realize the people's right to know because both these groups have a vested interest in controlling and restricting the flow of information and both, as we have clearly seen, are vulnerable to political and financial pressure from vested interests. It has become evident over the fifteen months of this campaign that even when the politicians have a will, they been unable to find their way through the false trail laid by the parties which orchestrated AKL-304.   Therefore whatever happens during and following the election, I will continue to put all the facts directly to the public.

Time to front up Charles, Dave, Mike - and the others

(Copy of an email sent to Crs Charles Sturt, Dave Donaldson and Mike McVicker, along with all candidates for Council offices in the forthcoming elections)

Recent correspondence has left us with no option but to conclude that Council has been blatantly deceiving the residents and ratepayers of Rotorua over the AKL-304 affair.

The person who must bear the primary responsibility is the Mayor, Steve Chadwick. But other sitting Councilors cannot escape some degree of culpability.

Dave, you are the Deputy Mayor. You were on Council in 2009. Before that, you were an officer in the New Zealand Police. Most of the public believe that they can trust you. All of them look to you to conduct yourself with honesty and integrity. You still carry on your shoulders the reputation of the New Zealand Police.

Charles, you are a long-time Councilor, and a vocal supporter of Mayor Chadwick. In 2009 you were Chair of the Finance Committee.

Mike, you are a sitting Councilor. In 2009 you were on Council, and also on the board of RRAL. I can't say that you support Mayor Chadwick, but I can say that, as is the case with Dave, the people of Rotorua look to you as a person of integrity, and believe that they should be able to trust you.

Yet not one of you has been prepared to take a public stand for the truth in this affair.

Now I invite you to look at the correspondence below, and try to tell me, if you can, that Council has not been lying to the people of Rotorua.

On 29 August 2016 Mr Bernie Hornfeck wrote to Geoff Williams as follows:
Dear Mr Williams
On 4 August the RLC Chief Financial Officer Mr Thomas Collé told the Operations and Monitoring Committee of Rotorua Lakes Council that Rotorua District Council had made the payment (of $610,155) to Rotorua Regional Airport Ltd (on 29 June 2010), which sum was credited to the RRAL Legal Services account and covered by an RRAL Invoice (No. 16242) to Council (raised on 30 June 2010).
However Mr Collé’s claim does not appear to be consistent with the record in the Related Party Transactions section of the 2010 RDC Annual Report which shows a total of only $243,000 was paid by Council to RRAL Accounts Receivables in the 2009-2010 financial year.
Please explain, in the light of Council’s accounting records as published in the 2010 Annual Report, how Mr Collé’s statement to the Committee could be true.
In this matter I suggest that you may wish to consult with Mr Jean-Paul Gaston who was the person responsible for the management of Council finances in 2009-2010.
Yours sincerely
Bernard Hornfeck

Bernie received a reply from Council, dated 31 August 2016, as follows:
Dear Mr Hornfeck
I refer to your letter of 29 August 2016 addressed to Chief Executive Geoff Williams. Mr Williams has asked me to respond.
The transaction you have referred to was accounted for correctly. The $610,155.52 was invoiced and paid prior to the end of the 2009/10 financial year, and would therefore not be recorded as an accounts receivable (owing) for that year as funds had been received.
Yours faithfully
Thomas Colle
Chief Finance Officer

Now, I should not need to tell you that the purpose of the Related Party Transaction report is to reveal the financial relationships between related parties - such as Council and Councilors and Council and RRAL. To do that the report shows the sum total of money passing between the parties in the course of the year. Mike, you yourself receive a mention in the Related Party Transaction Section of the 2010 Annual Report. Therefore you should know exactly for what purposes that Section is intended, and how it is to be interpreted.

Thus for example the Related Party Transaction Section of the 2010 report also discloses:
"During the year, the Council purchased goods and services from Clean Green City Maintenance 2010:$1,334,473 (2009:$1,283,541) and Gardeners Landscape Supplies 2010:$772 (2009$1,208), businesses owned by Councillor Bentley and her husband.
During the year, the Council purchased goods and services from Putt Putt (Rotorua) Ltd, a business owned by Council Mc Vicker. 2010 $450.00 (2009:$800)."
This does not mean that at the end of the financial year Council owed $1,334,473 to Peter and Maggie Bentley's company. It means that Council paid Peter and Maggie Bentley's company a total of $1,334,473 over the course of the year.
If the Related Party Transactions Report showed only the outstanding end-of-year balance, as Thomas Collé suggests, then Peter and Maggie could have received $50 million from Council, and provided that the full amount owing was paid by 30 June, nothing would show in the Related Party Transactions report and the public would be none the wiser about the relationship between the Bentleys and Council. That is not the way things are meant to work.

Under "Rotorua Regional Airport Ltd" the Related Party Transactions Section shows
"Interest Paid to the Council ($9000)....Accounts Receivable from the Council ($243 000)....Directors remuneration including non-monetary benefits paid to RDC Councillors Councillor Martin ($11 000) Councillor McVicker ($11 000)"
These are all transaction totals. They are not end-of-year balances of showing money still owing. End-of-year balances would have no relevance at all to the purposes of a Related Party Transactions report.

My questions to you, and all other sitting Councilors are:

Do you believe that the letter to Bernie Hornfeck contains anything but pure invention which Council somehow imagines will suffice to delude supposedly gullible residents and ratepayers?

If not, are you willing to call a halt to the pattern of deception, duplicity and misrepresentation which has characterised Council's conduct of this affair to date?

Chapman Tripp Payments Update #12

26 September 2016

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

In this update:

*    A change of tack?
*    Operations and Monitoring Committee Transcript produced
*    What is the role of the Auditor-General?
*    Where things stand
*    Why did AKL-304 come unstuck?
*    A brief history of the Chapman Tripp payments affair

In this update, as in the previous updates, there is a lot of analysis of Council and RRAL financial transactions which may be tedious to some readers. The reason why we have to include this material is that the transaction trail is key to uncovering what really happened in 2009.

We are assuming that all the accounting records provided to us by Council (with the exceptions of Invoice #1 and Invoice #16242) are authentic. We have closely examined and have confidence in the 2010 audit conducted by AuditNZ. If the Council accounts and the audit report are to be trusted, as we believe they are, there is no escaping the fact that AKL-304 was funded by the third party known to us as the AKL-304 group.

There have been many contradictory statements from Councilors, Council staff and other informants and the transaction trail has allowed us to sift truth from invention or deception. At the outset of this investigation was we were advised to "Follow the money" and that advice has proved its worth. However in the end it is the political motives behind AKL-304 that matter most, and having determined what happened, we are now in a position to say why it happened, and what steps we can take to avoid such events in future.

A change of tack?

Since May 2014 this investigation has taken a patient, conciliatory and forgiving approach to all parties to this affair - the present Mayor and Council, the 2009 Council, the Board of RRAL, Council staff, RRAL staff, former Mayor Kevin Winters and former Council CEO Peter Guerin. We have not had cooperation from all parties and never expected that we would. Some Councilors, the then RRAL Board Chairman Neil Oppatt, board member Ray Cook and RRAL Finance Manager Julie Rowe have not put a single word about the affair on public record. Council itself was initially reluctant to assist, and our first LGOIA request for the AKL-304 invoices was declined, but some staff members, who had no personal involvement in the affair, were helpful to the point of fulfilling their obligations under the law, and that is all we have ever asked of Council. Thus our knowledge of events advanced slowly and somewhat painfully over the space of more than a year, during which Council staffers gave out conflicting and incorrect information - almost certainly as a result of the confusion arising from the measures that had been taken to conceal the AKL-304 transaction trail six years previously.

It is Council, and not the investigation which has changed tack. We remain committed to a constructive, collaborative and thorough-going investigation of AKL-304, as we have been all along. Council's response to this investigation has been mixed from the start. Some Councilors and officers have been either uncooperative or obstructive. Others did their best to tell what little they knew and provide what information they could by searching Council records. But as we progressed closer and closer to the truth, the obstruction became more determined to the point where Mayor Chadwick effectively ordered Council staff to put a stop to further disclosures. We then entered the penultimate phase in which, sadly, Council officers resorted to the use of blatant falsehoods about AKL-304, the cover up, and the investigation. When these falsehoods were exposed, Council tried to intimidate, claiming that our "allegations" were "defamatory". Now that intimidation has failed, Council has brought down a curtain of silence over the affair, seeking to tighten the gag upon the mass media, with some success. Two candidates have told us that they have been instructed by senior Councilors to "delete without reading" emails relating to AKL-304. This is a sign of desperation on the part of the AKL-304 protagonists. The reality is that obstruction, deceit, and silence can no longer serve to conceal the truth about AKL-304.

Geoff Williams has written that it was "hurtful" to Council staff when we called them to account for their dishonesty. In reality it is the dishonesty itself which does harm. It creates anger and distrust in the community. It also harms the spirit and endangers the souls of those who are called upon to deceive the public. The way forward is for those who have been guilty of dishonesty to finally tell the truth and then apologise for their actions to the people of Rotorua.

We also need to remember that there are good people working within local government in Rotorua. Some good people in difficult situations may fail to do what they should, or may do what they should not - out of ignorance or out of weakness, as much as out of their own deliberate fault. We should allow these people time and space, and not drive them to increase their burden of guilt.

Finally those who have done nothing wrong, should not be unfairly discredited by their association with those who have been dishonest and duplicitous. Geoff Williams needs to heed the interests of honest Council employees as well.

Operations and Monitoring Committee Transcript produced

We have now made a transcript of the audio recording from the Operations and Monitoring Committee meeting of 4 August 2016. The transcript confirms that the CFO Thomas Collé misled the committee and the public in his reply to Potaua Biasiny-Tule's question on AKL-304 at this meeting. The transcript shows that Collé said "..so on the 30th of June the legal costs were invoiced to Council and Council paid the funds across to the airport and the airport duly paid um Chapman Tripp"

Yet the financial records of Council show that on the contrary RRAL paid Chapman Tripp in 2009 and early 2010, Council paid RRAL on 29 June 2010 and RRAL invoiced Council on 30 June 2010 - the exact reverse to the sequence of events claimed by Thomas Collé.

Collé also avoided a direct answer to Potaua's question. "where did the amount of $610,155 come from? was it from RDC, RRAL or was it a third party?". Collé answered " if you look at the Annual Report for two thousand and ten (2010) you can clearly see that council borrowed about $10 million ..clearly Council would have borrowed to pay for those transactions and ultimately the ratepayers have paid for it". Thomas Collé's somewhat vague choice of language ("would have" instead of "did") and his reference to $10million, as distinct from the specific draw down of $600,000 on 29 June 2010, is understandable. On 4 August 2016 Council was still trying to avoid any specific reference to amounts, dates, and source of funding.

Collé's claim that "ultimately the ratepayers have paid for it" is meaningless in terms of the Council accounts and it does not answer the question of whether a third party made payments against the BNZ loan facility, but AuditNZ has provided the answer to that question. Mr Collé has stated "the two thousand and ten (2010) Annual Report was audited by Audit New Zealand..those transactions were reviewed by Audit New Zealand and were appropriately accounted for". We are told that Audit New Zealand "reviewed those transactions" (the $610,155 payment to RRAL) and then passed the 2010 Annual Report in which the 29 June payment was NOT disclosed as a Related Party Transaction. The auditor accepted that the 29 June payment was not a Related Party Transaction because another unrelated party (the AKL-304 group) had offset the cost to Council by making payments against the BNZ loan. That meant that Council was merely functioning as a conduit for funding from the AKL-304 group, and so the auditor "appropriately" decided that the 29 June payment should not be listed as a related party transaction between Council and RRAL. So the 2020 Annual Report and the auditor's report were both technically correct. Mr Collé's subsequent statements to the Committee were not.

What is the role of the Auditor-General?

Despite the false annual return filed by RRAL with the Companies Office in 2010, we accept that RRAL and Council were audited in 2010, and we accept the findings of the Office of Auditor General in respect of that audit. In particular, we accept that that the 2010 Annual Report "fairly reflect(s) the District Council and group's financial position... and the results of operations and cash flows for the year.."

Having said that the OAG has a limited role, and matters of great concern to the public may be of no concern to the OAG. There are some things that the OAG does not do for us. For example in relation to AKL-304 the OAG has told us "The OAG .. does not look into legal issues" whereas most residents would like some assurance that their local bodies are acting within the law and that "It is not the role of the OAG to intervene in management decisions or to consider whether such decisions are right or wrong." whereas most ratepayers would want to know that their local bodies are making sound business decisions. However the OAG can take a broad or narrow interpretation of its role depending on the circumstances of the case, and it does have a statutory duty to look at what are called "performance" issues. Why would the expenditure of over $600,000 on a matter which had already been resolved at no cost not count as a case of poor performance? The OAG decided that it did not, and that was a technically correct decision if, as the OAG determined, the $600,000 was not a cost to Council or RRAL

In respect of AKL-304, AuditNZ may have got some things wrong. For example it is under the impression that Invoice #16242 was raised on 29 June 2010, the day that payment was received, rather than on the day following, 30 June, as was actually the case. Clearly, the OAG is not infallible, and can be fooled by a well-planned and executed fraud. However in the crucial matter of the Related Party Transaction report we concur with the decision of the auditor that the 29 June payment was not a related party transaction, and in general we accept that the financial statements in the 2010 Annual Report are correct.

So the OAG audit was correct in all material respects. Yet AKL-304 was a profound abuse of power and a radical departure from the principles of good governance. This sends the message that the work of the OAG is not in itself enough to keep government bodies functioning efficiently and on the right side of the law. It is incumbent upon the public themselves to keep government honest, and they cannot abdicate that political responsibility to the OAG or any other institution of government.

Where things stand

Over the past fifteen months we have learned that three out of five RRAL directors, the Mayor Kevin Winters and most, if not all, of Council had been kept in ignorance of AKL-304. Then we learned that the original AKL-304 invoices, alone among the Chapman Tripp invoices, had were not to be found among the Council records. Copies, obtained through Chapman Tripp, were discovered to be "fudged" or "doctored" for reasons which Council and Chapman Tripp chose not to disclose.

Later we were told that the minutes of RRAL Board meetings for 2010 have "disappeared".

In the past couple of months we have learned of the panic of 29 June 2010 when $600,000 was borrowed from the BNZ That money and a fictitious "Invoice Number 1" were used to clear the RRAL Legal Expenses Account before the 30 June balance date. (Council has called the $610,155 payment a "reimbursement", but the independent accountant Martin Lee more cautiously describes it as an "offsetting" payment, because an AKL-304 payment made to Chapman Tripp by RRAL in the previous financial year was not included in the total, which was calculated to clear the Legal Services Account before the end of year balance date, and not to reimburse RRAL for its expenditure for any particular set of legal expenses. A Councilor has suggested that the extra money was used to fund measures taken with respect to the Ngati Uenukukopako hapu in tandem with AKL-304, but that cannot be confirmed as Council redacted the relevant data). On the following day RRAL invoice Number 16242 was raised to balance out the receipt of $610,155 into the RRAL Legal Expenses Account. Then a false annual return was sent to the Companies Office, claiming, by all accounts incorrectly, that Council had decided not to have RRAL subject to financial audit in 2010. The purpose of these moves was to conceal the AKL-304 payments RRAL Board members and RDC Councilors.

At the commencement of this investigation we did not know who paid for AKL-304, or how much. All we had was the assurance of former RDC CEO Mr Peter Guerin that it was not the ratepayers of Rotorua. Now we know that the sum involved started with the $386,795 paid to Chapman Tripp and escalated to something in excess of $600,000. We know that while RRAL made the initial payments, that arrangement was only intended to hide the identity of the true source of funds from Councilors and the public. There was never any intention that RRAL itself would carry the cost of AKL-304. Neither had Council undertaken to bear the cost. The transaction trail leads from Chapman Tripp to RRAL, from RRAL to Council, and from Council to BNZ, and from BNZ to the AKL-304 group.

Why did AKL-304 come unstuck?

Despite the great resources, skills and experience dedicated to the task, the AKL-304 group made quite a few mistakes in the course of their project. They failed to allow for the possibility that we would mount a legal defence, and then they failed to contemplate the possibility that it could succeed. They misjudged, when, late in the day, and in a fit of desperation they attempted to bring the political element before the court which was simply not interested in whether or not I was a loyal or disaffected subject of the British crown. Then the elaborate fudging of the Chapman Tripp invoices, which at the time seemed necessary, but which could have been avoided, and should have been avoided given the risk, however small, that the invoices would at some time come to public notice.

The debacle of 7 December 2009, which Peter Guerin has described as one of the worst days of his life, was the death knell for AKL-304, and all that remained was to securely nail down the lid of its coffin. Yet the mistakes continued. The draft settlement agreement revealed the existence of the AKL-304 group which should have been kept secret. The panic of 29 June 2010 gave rise to the fictitious "Invoice Number 1" and Invoice Number 16242 was only raised the day after payment was received. Then there was a misguided, unnecessary and counter-productive attempt to avoid an RRAL audit in 2010.

In 2015-2016 the poorly managed cover-up rapidly unraveled in the unskilled hands of Steve Chadwick. The false claims made by Kim McGrath on behalf of Jean-Paul Gaston were starkly contradicted by the facts as revealed by independent accountant Martin Lee. The "Copy" of Invoice Number 16242 dated "30 June 2010" was anachronistically addressed to "Rotorua Lakes Council" which did not exist under that name before November 2014. Thomas Collé vainly struggled to deny that RRAL directors were kept in the dark, made misleading statements on the record before the Operations and Monitoring Committee, offered an implausible explanation of the false annual return as being due to "a silly little mistake", and ludicrously asserted in a letter to Bernie Hornfeck that the Related Party Transactions section of the 2010 Annual Report was intended to show the outstanding balance rather than transaction totals.

Mayoral candidate Dr Reynold Macpherson has asked us why Collé did not apologise for such an "elementary blunder". The answer is that Collé's blunder was to assume that Bernie Hornfeck would be taken in by such a false claim. When challenged, Collé decided to stay silent, in the knowledge that if he was to apologise he would then either have to offer a more plausible explanation, or, in an extremity, tell the truth. As Dr Macpherson has observed, Collé's exercise of the right to silence was rational in the circumstances, but it was certainly not ethical.

So from start to finish, "mistakes" abounded. Geoff Williams' confession that "at a high level an error was made" is something of an understatement. But in the end, AKL-304 foundered on the dilemma of all covert operations. Who must you include in the operation? Who can you afford to leave out? The more that are included, the greater the risk of leaks from defectors and whistle-blowers. But include too few and someone -say a police officer, accounting clerk or janitor - may stumble across, and quite unwittingly uncover the covert action.

That is what has happened with AKL-304. It was decided that RRAL Director Bill Kingi could not be taken into confidence, not because he was untrustworthy, but because AKL-304 directly threatened the Ngati Uenukukopako interests which he represented. But if Bill Kingi had been kept alone in the dark, Bob Martin would have objected, and if Bill Kingi and Bob Martin had both been excluded, then Mike McVicker would have been uneasy. So effectively the whole board, apart from Neil Oppatt (with a question mark over Ray Cook) had to be kept in ignorance. That was bound to make for complications further down the track if the project failed - as it did.

Operational planning also failed to fully allow for the human factor. Rhys Caunter, knowing that the instructions given to him to fell the trees in defiance of the Court ruling was unlawful, hesitated to put them into effect until the very last moment - which was too late, because I returned to Rotorua and the property before the felling was completed, and hence the debacle of 7 December. Then Julie Rowe was willing to stay silent, but not ready to tell a lie. (Thomas Collé was desperately anxious not to have Rowe's name emerge in public. I initially obliged him, as did Phil Campbell, but I retracted that undertaking once it became apparent to me that the purpose for concealing Ms Rowe's identity was to protect the AKL-304 group, rather than to protect Ms Rowe herself)

Thomas Collé should have followed the example of the woman he described as "a fairly junior staff member" who had made a "silly little mistake" by keeping his mouth shut, for he and Geoff Williams both fell into the trap of making statements which could be proven false.

Another problem was that AKL-304 was, from the beginning, a partnership between a small group of senior Council staff, the RRAL Board Chairman and Chief Executive and the driving force in the AKL-304 group. At the beginning, the interests of all three partners coincided. The partners had envisaged an undefended hearing resulting in the granting of an enforcement order by the court, followed by a police action to give effect to the enforcement order. All relatively quick, cheap and painless for the parties. Of course RRAL had already settled the dispute through a land swap agreement in principle negotiated by the previous General Manager Bob Wynn, but RRAL reneged on that agreement in order to pursue the use of force as advocated by the AKL-304 group. As far as RRAL could see, resort to force promised to be no more expensive, and rather less troublesome, than the alternative amicable settlement for which the detail still had be worked through.

As it happened, the attempt at enforcement proved to be vastly more expensive and troublesome than a negotiated settlement would have been. This might be seen as an unfortunate miscalculation, but it was more than that. Bob Wynn was a New Zealander who knew from a life time of experience that while New Zealanders will accept a fair compromise they are likely to resist arbitrary abuse of power. His successor, George White, was a South African whose attitudes had been formed out of a very different experience, in which blunt force was deemed necessary to maintain social order and control. It was not just a matter of calculating, or miscalculating, the odds. In the end it came down to a matter of attitude and political or moral philosophy. There were pragmatic arguments in favour of the use of force (just as there were pragmatic arguments in favour of compromise) but there is no question that ethically and morally the previously agreed compromise would have been the proper course to follow. Thus fundamentally the decision to go with AKL-304 was a moral error rather than a pragmatic miscalculation. From that point RRAL, Council and the people of Rotorua were pawns in the AKL-304 group's game. As Bill Kingi has observed RRAL was "essentially a disinterested party", but that is not to say that they were unaffected

The fudging of the AKL-304 invoices was not done for particularly sinister reasons. Obviously there could be no written contract or memorandum of understanding between the AKL-304 group and Council, but Guerin in particular wanted some assurance that the money expended by RRAL would be reimbursed by the AKL-304 group. So Chapman Tripp was asked to estimate in advance each month's costs, and those estimates were passed to the AKL-304 group for their approval. Chapman Tripp then billed to the amount of the estimate, which required them to doctor their regular invoices by means of a fairly complex algorithm that adjusted charge out rates so that the total equaled the estimated charge. Guerin's lack of trust in the AKL-304 group thus gave rise to one more anomaly in the financial records of the affair. (The reason why the AKL-304 invoices could not be found in Council records in 2015 was that quite simply they did not belong there. They had been passed on to the AKL-304 group for payment in 2009-2010).

Later it became evident that proceedings might not be concluded until close to the time when the first international services were scheduled to arrive at Rotorua. This gave rise to tensions between White, Oppatt, Guerin and the ALK-304 group. The tensions heightened after the Court issued its unfavorable decision on 9 November and the AKL-304 group then advocated the preemptive strike of 7 December, assuming that some form of physical retaliation would follow, in a last ditch effort to salvage the plan.

The preemptive strike failed to achieve its object and there was no physical retaliation. Peter Guerin then separated himself from White and the AKL-304 group, and stepped in to negotiate a settlement that allowed the planes to land on schedule. However in his settlement agreement, Guerin had attempted to protect Council from civil liability for its involvement with the AKL-304 group, by seeking an indemnity for the acts of Council in association with "parties not known to or capable of being known to" myself (in other words, the AKL-304 group). At this point Peter Guerin was putting the interests of Council before the need of the AKL-304 group for absolute secrecy. In doing so, he had let the cat out of the bag, but his actions were entirely understandable. Guerin believed, not unreasonably, that the group had failed the airport and failed Council, and he was determined that Council should not bear the full cost of that failure - even if it put the AKL-304 group at some risk of being exposed. But Peter Guerin's actions would hardly have made him popular with the group, and that may explain why Thomas Collé has pointed the finger of suspicion at Guerin, arguing that the blame for the false RRAL annual return "lay with the Chief Executive (of RDC) .. Peter Guerin" (hardly consistent with his other claim that it was a "silly little mistake" on the part of Julie Rowe, but never mind that). It may also explain why National Party Cabinet Minister Todd McClay suggested to Walter Bateson and myself that Guerin was responsible for the fiasco. Council and central government are lining up to blame the affair on Guerin when in fact he only had a peripheral involvement in the crucial early stages, and in the latter stages he was engaged in a legitimate effort to protect Council's interests in the aftermath of the debacle.

The mercurial journalist Phil Campbell QSM had covered the airport case in 2009 when editor of the Rotorua Review, and in the latter half of 2015 and early 2016 as editor of the SteamNMud website he published the results of our LGOIA requests to Council, and some of the material which we had circulated to Councilors. (As far as we know SteamNMud is the only New Zealand media organisation to have published a word about the AKL-304 investigation). Crucially, the SteamNMud articles provoked comment from Crs Mike McVicker and Charles Sturt who had both been on Council in 2009-2010, with McVicker also being a member of the RRAL board. From the perspective of the investigation, the greatest benefit from Campbell's AKL-304 articles came in the form of the comments made by McVicker, and, to a lesser extent, Sturt, and without those SteamNMud articles progress towards full disclosure would have dragged on even longer than it has. On the other hand Campbell is a man much trusted in Wellington, having remarked in relation to his sources on AKL-304 "I contacted the source on the basis of confidentiality... even PMs and leaders of the opposition have had enjoyed this protection. I even took a call from the 9th Floor some years ago on the basis of an SPH (safe pair of hands)". (This comment is actually very revealing of the nature of the relationship between the institutions of state and the media in New Zealand).

However, about the same time that Steve Chadwick instructed Council staff not to cooperate with the AKL-304 investigation, Campbell came under pressure from his publisher, Philip Macalister, to drop the AKL-304 story and in his last two articles on the topic he restricted himself to publishing very questionable (but unquestioned) statements from Thomas Collé. Macalister himself seems to have come under pressure from Council, as Campbell reports that both he and Macalister had been summoned to "Keaney's Castle" to discuss the AKL-304 affair shortly before public access to comments on one of the key AKL-304 articles was blocked. Campbell does subscribe to the Council and government line that Guerin was to blame for AKL-304. Throwing to the winds his habitual caution in such matters, Campbell published Collé's allegation in relation to the false return to the Companies Office that "the blame for the error lay with the chief executive, which at the time was Peter Guerin". A number of Councilors have also pointed the finger at Guerin. So there is a general readiness to blame Guerin for AKL-304. Guerin on the other hand is reported to have described his handling of the affair as one of the notable successes of his time in the role of CEO at Council. In a sense both views are right. Guerin was wrong to allow the AKL-304 group to take charge of the process through to 7 December 2010, and wrong to set up a secret conduit for group funding of the case. But by stepping in at that point to ensure that Council and RRAL interests were not compromised by the group agenda Peter Guerin certainly did the right thing by the Rotorua Council and its ratepayers.

The $610,155 payment of 29 June was not, and should not have been, included in the in the Related Party Transactions of the 2010 Annual Report because it had been fully offset by AKL-304 group payments into the BNZ loan facility. Therefore the nett payment from Council was nil.

If the payment had indeed come from Council, the auditor would have objected on two grounds.

First, that both Invoice #1 and Invoice #16242 were fraudulent because they purported to charge Council for services which Council had not requested and for which it therefore had no liability. So if the $610,155 had come from Council, the auditor would have pointed out that there was no evidence of liability by Council and therefore no reason for Council to pay. But from the auditor's viewpoint, the invoices were irrelevant. Ultimately, Council did not bear the cost, and that was the end of it.

Second, that the 29 June payment was not disclosed in the Related Party Transactions section of the 2010 Annual Report. But again the auditor did not object because he was satisfied that the money did not originate from Council. Council, the auditor concluded, merely functioned in this instance as a conduit for AKL-304 group money.

In this matter we concur with Council's accountants and auditors. Yet six years later the absence of evidence of financial liability and the failure of the payment to appear in the Related Party Transactions Report, was to create a situation for which Thomas Collé could not provide a plausible explanation consistent with the claim that there was no third party involvement, with the resulting damage to his own personal credibility. Collé was right about one thing that he told the Operations and Monitoring Committee: "everything is in the right place" in the Council accounts with respect to AKL-304.

However more than anything else, AKL-304 came unstuck because there were still people in the judicial system, in Council and in AuditNZ who acted in accordance with their responsibilities under the law. This is something that the group had not really considered to be a serious possibility. They were wrong about that, and that was the single greatest contribution to their undoing. If a similar situation arose today, the outcome could be different. The courts are more willing to submit to the will of government, the mass media are more compliant, and there has been a societal shift away from the protection of people's rights and freedoms, and towards measures which enhance or protect the authority of the state. So in a sense it was a mere matter of luck and timing that AKL-304 failed - or, if you prefer, AKL-304 failed by the grace of God.

We now see that the Auditor-General, the media, and the politicians can only be of incidental benefit to the campaign for honesty in government. As often as not, the media will be obstacles along the way. Sadly we don't have investigative journalists in the likeness of Carl Bernstein and Bob Woodward who uncovered the Watergate scandal in the United States of America. If the editor of the Washington Post had been as close to the White House as the New Zealand media are to the "ninth floor of the Beehive", then the word "Watergate" would still signify nothing more than the name of an office complex in Washington DC and a gate in the city wall of ancient Jerusalem.

A brief history of the Chapman Tripp payments affair

• That action, known as AKL-304, engaged the services of 17 Chapman Tripp lawyers, which we now know cost $386.795 in legal fees alone, and was ultimately unsuccessful.

• When the legal action failed, RRAL illegally entered the private property in dispute and began felling the owner's trees, in violation of the court ruling and in defiance of the law.

• In May 2015 we filed a Local Government Meetings and Information Act (LGOIA) request with Rotorua Council seeking to know if Council had paid, and if so how much. Council refused the request on the grounds that "that the information requested cannot be made available without substantial collation or research".

• We then asked Council where this $610,155 came from, noting that the former Mayor and Councilors claimed to have no knowledge of the payment, that the payment does not show in the Council's 2010 Annual Report record of accounts, and that speculation has been rife as to the source of the money. In a letter from CEO Geoff Williams Council refused our request to know the ultimate source of the $610,155 payment. (The evidence suggests that rather than being the source of this money, Council may have only provided a conduit for funds coming from a third party.)

Chapman Tripp Payments Update #13

8 October 2016

Further reports on the investigation into Rotorua Regional Airport Ltd AKL-304 litigation scandal

In this update

*    Beyond reasonable doubt?
*    Walter Bateson still has questions
*    Do we need to name the individuals in the AKL-304 group?
*    "Nothing to see here folks"
*    Steve Chadwick replies.
*    Is AKL-304 a "left versus right" or "Pakeha versus Maori" issue?
*    Has the AKL-304 investigation achieved its goals?
*    If you can't find any terrorists - make some

Beyond reasonable doubt?

Update #12 went out to all Council and Mayoral Candidates and to Neil Oppatt (Chairman of the RRAL Board in 2009), Mike McVicker and Bob Martin (Board members), George White (CEO), Julie Rowe (Finance Manager), Kevin Winters (RDC Mayor) Peter Guerin (CEO) and Clarence Susan (AuditNZ, responsible for the 2010 OAG audit of RDC and RRAL) and many more. In other words, almost all those who have been named for their involvement have been apprised of our findings and the facts remain uncontested by any of those at the centre of the affair. This is tacit acknowledgement that the history as laid out in Update #12 is correct. AKL-304 was financed and directed by a third party, not by the airport company or the Rotorua Council, and this third party involvement has been kept secret from Councilors, the RRAL Board and the public of Rotorua for the past seven years.

Walter Bateson still has questions

Walter Bateson wrote "Geoff, can you name the individuals who were supposedly involved. Before these names are divulged I am afraid that I cannot accept this as an acceptable conclusion to the very important matter under review. Until this is properly resolved I will never again have faith in a town council. What are councillors for only to make themselves aware of all happenings and make sure they are acceptable to the the public. Do they not understand accounts..?". Walter has been working to get the truth about this affair since 2010. He is understandably incredulous that a third party paid the costs of AKL-304. Yet the evidence from the OAG and the Council 2010 Annual Report establishes that as a fact.

Do we need to name the individuals in the AKL-304 group?

I have the names of people who may have been part of the AKL-304 group. However I do not have documentary evidence to verify that those individuals were involved. Throughout this investigation I have been careful to make no claims which cannot be substantiated with solid written evidence, and I will not change that policy now. Therefore I do not intend to reveal names at this time.

Of course, Council could name the individuals involved, or the individuals themselves could step forward to disclose their idenity, but that is simply not going to happen after six years of secrecy and an active cover-up that has extended over the six months. Te Pa Whakamarumaru could also give us the names if it chose to do so.

In the end, the names of individuals do not much matter. We have documentary evidence from the Office of the Auditor General, Council's own 2010 Annual Report and other records which show that a group of people with access to considerable resources were able to spend up to a million dollars to marshal the airport company, the district council and the media into collaborating with a plan which would have deprived a Pakeha landowner and Maori hapu of their property rights, and we have convincing circumstantial evidence that the collaborators' purpose was to provoke political violence over land issues. Who these people were is much less important than what they were able to do, and what they tried and failed to do. We don't need to pursue the individuals responsible. Instead we need to acknowledge that all the structures behind the AKL-304 group remain in place and intact, and that there will be further attempts to provoke political violence in this country, which may be aided and abetted by the media.

"Nothing to see here, folks"

Philip Macalister has written to object to our characterisation of his relations with Council on the one hand and SteamNMud editor Phil Campbell on the other. I had reported that Macalister was "Summoned to Keaney's castle". I now concede that "Invited to the Council offices" would be a more objective way of reporting what took place. I also acknowledge that SteamNMud had reported on the AKL-304 affair with integrity until June 2016. Regrettably, SteamNMud has now fallen with the Daily Post and line that there is "Nothing to see here folks". Despite the OAG clearly and convincingly showing that a third party secretly funded Council's unsuccessful litigation against one of its ratepayers at a cost of more than $386,795. The reality is "Too much to see here, folks". Polls suggest that most of us do not trust the media or their politicians, and the story of AKL-304 helps us to see why we don't.

Steve Chadwick replies.

Mayor Steve Chadwick has gratuitously suggested that we go back to the Auditor-General with our "concerns", and the Manager of the Chief Executive's Office, Craig Tiriana (who was not on the recipient list for Update #12) has volunteered the recommendation that we seek the assistance of the Ombudsman. These suggestions reflect the unease which the Mayor and Chief Executive of Council are now experiencing in relation to this affair. Chadwick knows that Council has misinformed, misled and deceived the public about AKL-304 over the past year. Now she hopes that someone else - either the Ombudsman or the Auditor-General - will step into the hot seat. But that will not happen. The Auditor-General knows the story behind AKL-304. She stands behind the 2010 audit, as she should, and will say no more. The Ombudsman has not been involved to date, but if he was to be involved he also would be obliged to acknowledge that the RDC 2010 Annual Report and the 2010 OAG audit were correct and that a third party funded AKL-304. He would take a year or more to reach that conclusion yet he would be unable to disclose the identities of the AKL-304 group. Therefore there is nothing further to be gained from the OAG or the Ombudsman.

Is AKL-304 a "left versus right" or "Pakeha versus Maori" issue?

Walter Bateson and Bernie Hornfeck have been two stalwarts in this campaign. Walter is from the right. He is passionately conservative. Bernie is from the left. He is a liberal activist and advocate for workers and Maori rights. Therefore campaign honours must be shared between the left and the right, both Maori and Pakeha. People of all persuasions have been drawn to defend the cause of justice, honest government and basic social values. By the same token the enemies of freedom, justice and open government have been exposed on both the right and left of politics, and among both Maori and Pakeha.

Has the AKL-304 investigation achieved its goals?

Right from the beginning we knew that AKL-304 was an abuse of power. It involved unlawful acts, misgovernance, secrecy, deception, and attempts to incite violence. But that was all we knew. We had no reliable evidence as to who funded and directed the operation, and at what cost, or how it had been managed. We now have comprehensive answers to most of those questions. So the first of our objectives - to uncover the truth behind AKL-304 - has been achieved.

Our second objective was to ensure that such outrages would not be repeated. In that respect we have failed. The organisation behind AKL-304 remains intact. There has been no open admission of wrong-doing, and no commitment to refrain from wrong-doing in future. Therefore it is only reasonable to expect that there will be further attempts to provoke violence between our peoples and the consequences will be devastating. Our children and grandchildren will pay the price of our failure in blood. It is they who will be left with the task of restoring peace between peoples, honest government and a decent society

If you can't find any terrorists - make some

Why did the Daily Post publish a series of incendiary articles and editorials in December 2009? And why have the mainstream media allowed no mention of the current investigation into the AKL-304 cover-up?

The answer to these questions is that in the aftermath of the Ruatoki raids the media were told of a potential terrorist threat in the area extending across the central North Island from Wairoa through to Taupo. In fact, there was no real terror threat. However some people were committed to proving that there was a threat. That was the reason for the 2007 invasion of Ruatoki, and that was why AKL-304 was set in train. The AKL-304 project was an intelligence-based plan which its authors believed would flush out those who were willing to meet force with force in disputes over land. The Daily Post and other media took what they thought was a responsible approach to what they believed to be a state-sanctioned anti-terror operation. They cooperated with AKL-304 at the time, and they continue to cooperate because they believe that to tell what they know would be to compromise not only AKL-304, but also future anti-terror operations.

However there is a line to be drawn between legitimate anti-terror operations, and rogue operations which are designed to provoke the very kind of civil conflict which they purport to prevent. AKL-304 was initially designed to allow a latent conflict to erupt into actual violence, but within the space of a year it had evolved into a plan to provoke violence in order to deal decisively with a perceived incipient threat to the authority of the state.

We need to have a conversation about what can, and what cannot, be justified in the name of the "war against terror". AKL-304 marked a step too far and I believe that most, if not all, New Zealand jurists would share that opinion, as would most of the public. The media might not, but they also need to reflect on what should or should not be permissible, and how to strike the right balance between their perceived obligations to the state and their duty to tell the truth.

In 1862 George Grey ordered all Maori living north of the Mangatawhiri to swear allegiance to Queen Victoria. Those living around Tuakau refused to do so, choosing to remain loyal to Tawhiao. Grey then forced them off their land and destroyed their homes, to thunderous applause from the New Zealand Herald (as it happens, from the same stable and of the same spirit as the Daily Post). When some Maori resisted, Grey used that resistance as a pretext to make war on all Maori aligned with the Kingitanga, and thus began the invasion of the Waikato by British and Australian armed forces. AKL-304 followed the same game plan by targeting those suspected of disloyalty, violating their property, and thereby attempting to provoke a wider conflict. But New Zealand has changed in the past century and a half. The strategies of provocation, conflict, mass immigration and subjection to foreign military powers which served the colonialists well enough in the nineteen century cannot work to anyone's advantage in our own age. Rogue political extremists engaged in clandestine efforts to divide one iwi from another and Maori from Pakeha should no longer be tolerated, no matter how "respectable" they may appear to some sections of the community.

Kia ora koutou katoa