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The struggle over gambling corruption

Written By: - Date published: 10:04 am, March 25th, 2014 - 48 comments
Categories: accountability, community democracy, corruption, crime, peter dunne, poverty, same old national - Tags: ,

The concern and debate over the loss of funding to the Problem Gambling Foundation has focused a lot on the PGF’s opposition to the SkyCity deal and the government’s, especially Peter Dunne’s, possible role in the de-funding decision.

Powerful pokie trusts & non-transparent manipulations

However, there are indications that the most significant of PGF’s opponents are not within government itself, but powerful commercial networks involved within the gambling industries – not just at SkyCity, but those involved in managing pokie trusts.  Such trusts lack full transparency. It is highly likely that key people involved in the trusts are buddies with, and/or move within the same networks as influential, wealthy and powerfully connected people.  This would make it very hard to locate the ways in which anti-PGF interests influenced the outcome of the decision to limit funding to the PGF.

The NZ Herald editorial yesterday hinted at this.  The government, especially Peter Dunne as Minister of Health, the ministry responsible for the decision has bent over backwards to ensure that he is not linked to the decision making.  However, the editorial also suggests ways that public servants can act in ways to provide the outcome that the government wants, without being directly instructed to do so.

As that minister, Peter Dunne, said in reply to criticism from the Greens, Labour and the Public Service Association, the ministry “went beyond the requirements of best practice”. Which could well confirm the critics in their cynicism. They know and the electorate knows public servants can pick up on political winds, anticipate their masters’ prejudices and move to consider them. Not always to meet them, but to find a way for the political within the strict machinery of the state.

[Edit: The NZ Herald is confusing on ministerial responsibilities.  Peter Dunne is Associate Minister of Health – responsible for problem gambling-;  and Minister of Internal Affairs – responsible for gambling legislation and licenses, etc]

Other news articles have pointed to complaints against the PGF by Pokie Trusts.  For instance, Steve Kilgallon on Stuff reported 2 days ago,

A senior industry source said pokie trusts had lodged several complaints with the ministry about PGF’s behaviour, resulting in the foundation’s chief executive, Graeme Ramsey, being called to “please explain” meetings.

Ramsey confirmed the meetings, saying “it’s fair to say our political activity creates tension with the funder” but said he had told the ministry no taxpayer money was spent on advocacy work.

The main concern about the pokie trusts is that they don’t return as much of the profits from pokies back to the community as the laws and regulations intend. The trusts must therefore be involved in some secretive manipulations to siphon profits back to the trust managers.

The PGF has been campaigning against such corruption since at least 2010.  In this press release of November 2010, the PGF supports Maori Party MP Te Ururoa Flavell’s private members Gambling Harm Reduction Bill.

The Problem Gambling Foundation says now is the time to review the current system of distributing pokie funds through trusts, a system which continues to be abused.

[…]

Graeme Ramsey, Problem Gambling Foundation CEO, says this will address the issue of the blatant misuse of pokie money by people held in positions of trust that is rife in New Zealand.

“Year after year, the number of cases involving the misuse of pokie funds is outstanding. People who are trusted with the distribution of large sums of public money continue to flout the law, and it is the community that is deprived of valuable funding for worthy causes,” he says.

According to yesterday’s NZ Herald editorial, the decision to review the allocation of funding for problem gambling was “signalled” in 2012.  In an article by Simon Collins in today’s NZ Herald, Graeme Ramsay of the PGF says they were not aware that such a review was being undertaken.  The PGF is considering a legal challenge to the de-funding.

Flavell’s Bill was introduced to parliament in late  2010.  In the course of progress through the House, the government succeeded in ripping the teeth out of the Bill.

Kate Shuttleworth reported in the NZ Herald on July 10 2013:

Maori Party MP Te Ururoa Flavell defended his Gambling Harm Reduction Bill in Parliament tonight, after most of its measures to minimise the harm caused by pokie machines were removed or weakened.

The Bill became law on 14 September 2013.

Previously a Maori Party document claimed that:

The system is rife with corruption and misuse of public money

It included this graphic

Gambling Harm reduction Maori Party document

The Nats, crime & addictive gambling systems

A well researched 2012 submission to the Gambling Harm Reduction Bill by the PGF had outlined the harms of gambling addictions, of which pokies are the most damaging.  It also points to the lack of transparency and accountability in the allocation of public money to pokie trusts.

On the passing of the Bill, Green MP Denise Roche claimed that the National government had “hijacked” and “gutted” the Bill as a result of pressure from the pokie trusts.

The struggle over gambling addictions and the alleged corruption of the powerful Pokie Trusts has been going on for several years, with the government acting in support of the interests of these trusts in the gutting of the Gambling Harm Reduction Bill.

The PGF has also been outspoken about the association with gambling addictions and various criminal activities, including money laundering via casinos and pokies. See for instance the interview with ex PGF head John Stansfield on RNZ’s Panel, part 1, on 21 March 2014 (h/t joe90) – from 7 minutes into the audio.

[audio http://podcast.radionz.co.nz/aft/aft-20140321-1610-the_panel_with_susan_hornsby-geluk_and_nevil_gibson_part_1-048.mp3 ]

The removal of most of the funding for the PGF is the latest chapter in this struggle: a chapter in which the government bent over backwards to ensure that they are not linked with the decision.

48 comments on “The struggle over gambling corruption”

  1. Colt45 1

    Yeah but in total – 72.12% is going to the public[according to that Maori graph] – either directly, or via government. There’s no smoke here at all let alone a fire.

    • Colonial Viper 1.1

      Wait – you’re not worried about where the remaining 28% of hundreds of millions of dollars end up?

      You’re not worried about who exactly receives that 37% of hundreds of millions of dollars going “to the community”?

      That’s a massive amount of money, and we’ve already seen evidence in the courts of big money rorts. Why are you taking such a laid back attitude?

    • karol 1.2

      You need to look more closely at the Maori Party document. The money should be returned to the community that the pokies took the money from – not be spread throughout all communities in the country.

      And the aim should be to return 80% of the funding to the local community. But Pokie managers tend to aim for the lower 37% minimum as the standard.

      Then you also need to look at the amount being returned to the trusts – 27% – the trusts are meant to be covering their costs, not profiteering out of it. The Maori Party document gives these examples.

      Shane Alvin Cosgrave

      a former pokie boss and was a trustee of the South Auckland Community Trust. Admitted giving himself personal loans from the trust, and used $139,000 of trust money to pay for expenses and renovations to his pub.

      The Trusts Charitable Foundation (TTCF)

      Murray Acklin was paid $425,254 over three years as an “executive trustee with special responsibilities. DIA considered the expenditure to be excessive and not reasonable or necessary to the gambling operation.

      Otago Rugby Union

      Investigated for use of pokie money. Grants being used to pay creditors instead of for authorised purposes.

      Plenty of other examples including money being given to clubs etc in wealthier areas and not the low income areas where the pokie machines extracted revenue.

      • wyndham 1.2.1

        Dunne not Minister of Health, Karol. Associate, I think.

        • karol 1.2.1.1

          Thanks, wyndham. Will correct.

          Edit: On checking I found it was the NZ Herald editorial that first made the error. I repeated it. Dunne is Assoc Minister of Health and Minister of Internal Affairs. The Health Ministry is responsible for problem gambling. The Internal Affairs Ministry is responsible for gambling legislation, licenses, etc.

    • Mark 1.3

      You have got to be joking. I owned a hotel from 2002 to 2007 and money was and still is awash in the system. Every rule was circumvented and hobby horses were funded. The CEO of the trust I was involved with was heavily involved in Ice hockey in Nz. It somehow managed to get $300,000 from the trust each year even though it wasn’t listed as one of the core groups the trust was looking to fund. The system is a crock for the benifit of a few at the expense of the rest of us.

  2. Penny Bright 2

    http://www.parliament.nz/en-nz/pb/presented/petitions/50DBHOH_PET3196_1/petition-of-penelope-mary-bright-and-13-others-that-the

    Petition of Penelope Mary Bright and 13 others

    That the House conduct an urgent inquiry into why New Zealand Auditor-General Lyn Provost did not disclose that she was a shareholder in Sky City Entertainment Group Ltd at the time she declined to conduct an urgent investigation into the failure of the Organised and Financial Crime Agency of New Zealand to carry out ‘due diligence’ on the increased risk of money-laundering arising from the New Zealand International Convention Centre (Bill) 2013.

    Petition number: 2011/101
    Presented by: Denis O’Rourke
    Date presented: 12 March 2014
    Referred to: Finance and Expenditure Committee

    The NZ Auditor-General Lyn Provost IS A SHAREHOLDER IN SKY CITY and was so at the time I asked her to investigate a matter involving Sky City (which she declined).

    This petition is now before the Finance and Expenditure Committee of the NZ Parliament.

    In my considered opinion, (and I have told her to her face), I believe that NZ Auditor-General Lyn Provost is UNFIT FOR DUTY – CORRUPT and SHOULD BE SACKED.

    So far NO mainstream media have picked up this story!

    ‘Believe it or what’?!

    Don’t you think one or two members of the public (locally, nationally and internationally ) might be just a little bit interested in this, given that NZ is supposed to be the ‘least corrupt country in the world’ and all that crap ….. ?

    Penny Bright

    ‘Anti-corruption / anti-privatisation Public Watchdog’

    • srylands 2.1

      “So far NO mainstream media have picked up this story!”

      Gee I wonder why? You come across as a bit mad. Like most of us she probably has shares in dozens of companies. Are you suggesting that her financial stake in Sky City was so material, both absolutely, and relative to her total net wealth, that her shareholding was a real conflict of interest with her official duties? Can you substantiate such a claim?

      • One Anonymous Bloke 2.1.1

        S Rylands, your refusal to take the Mad Queen seriously is evidence of your corruption. You must resign forthwith!

      • Murray Olsen 2.1.2

        Most of us don’t have shares at all. Things might be different in your Sydney neighbourhood, but I think this gives us a clue as to how you sustain your delusions……

  3. thatguynz 3

    From memory I think Martin has posted here in the past but I’m sure now is a prescient time to bring his findings back into the light…

    http://www.stuff.co.nz/national/crime/6785852/The-inside-man

    tl;dr The gambling industry in NZ has always been “corrupt”/unexplained. This is but another (albeit tragic) chapter in an already long story..

  4. Puckish Rogue 4

    The Ministry of Health had several meetings with the Problem Gambling Foundation to address concerns about political lobbying after complaints by poker machine trusts about outspoken attacks on the sector, the Sunday Star-Times has been told.

    A senior industry source said pokie trusts had lodged several complaints with the ministry about PGF’s behaviour, resulting in the foundation’s chief executive, Graeme Ramsey, being called to “please explain” meetings.

    Ramsey confirmed the meetings, saying “it’s fair to say our political activity creates tension with the funder” but said he had told the ministry no taxpayer money was spent on advocacy work.

    The ministry decided on Thursday not to renew its problem gambling counselling contract with PGF.

    PGF is highly unpopular among the gaming sector, a senior official said, saying it “was blatant politicking and it went beyond advocacy and into manipulation. They had become a vehicle for the Greens and the Labour left”.

    • thatguynz 4.1

      Surprising that you would come along and parrot that as fact PR…

      Do you think that it may have been in the interests of the gaming sector to politicise this as stated “They had become a vehicle for the Greens and the Labour left”.?

    • One Anonymous Bloke 4.2

      …as opposed to the National Party, which has become a vehicle for money launderers, casinos, and Judith Collins’ close friends and family.

    • Naki Man 4.3

      When I was a volunteer fireman pub charity paid for all our and many other fire brigades rescue equipment to cut people out of car wrecks. Graeme Ramsey has had his snout in the trough sucking on tax payer’s money for far too long. I am glad the funding has been transferred to the Salvation Army. You are to blame Mr Ramsey no one else. That will teach you to bite the hand that feeds you.

      • One Anonymous Bloke 4.3.1

        Surround yourself with yes-men. That’s the way to be a raging success, yes sirree.

      • McFlock 4.3.2

        When I was a volunteer fireman pub charity paid for all our and many other fire brigades rescue equipment to cut people out of car wrecks

        The gist of your argument seems to be that social services should be funded by untreated addicts we exploit, rather than by government taxing those who have reaped the most benefit from the society we create.

    • McFlock 4.4

      So PGF were only allowed to try an clean up the harm caused by gambling, not point it out?

      While I’ve never been an ally of ASH, saying that “PGF is highly unpopular among the gaming sector” is like saying that ASH is highly unpopular amongst tobacco growers.

    • Tracey 4.5

      all sounds reasonable until the major paranoia exhibited in the last sentence. why should an organisation that deals on a daily basis with the human face of the destructive side of gambling be a friend to the pokie trusts…

      the pokie trusts biggest problem has been themselves and tgeir dubious connections with rugby and rugby league ex players.

  5. ghostwhowalksnz 5

    Switching to another provider – who seems as surprised as anyone else- just doesnt add up.

    To het these sort of contracts you have to fill out plenty of forms to show you have capacity- ie trained counsellors and support staff etc.

    As well the final awarding of contract is usually done with a scoring system to cover all these items and the overall management of the program. This scoring system is normally given to the applicants before they apply

    But still the SA ( a highly reputable organisation) got the full contract, something it hadnt asked for.

    The paper trail of this will make hilarious reading, given that Dunne the responsible minister claims its
    “beyond best practice”

    Its hard not to see that ‘every rule in the book’ was broken to do this.

  6. ianmac 6

    Well this would be interesting.
    “Foundation for helping problem gamblers is seeking lawyers’ advice over Govt decision to cut its funding.”
    I bet the Govt will find a way to block that.

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11225568

    • ghostwhowalksnz 6.1

      It wont block the court hearing…

      But as part of the process it has to supply all the information it had to make the current decision

      Which is what the PGF is after

      • ianmac 6.1.1

        Thanks Ghostie. Wonder how long the procees will take? Very peculiar all round but appears to tie in with the “National looks after their cronies” and ” National always in dodgy deals.”

  7. captain hook 7

    When it comes to gambling the rule is the House always wins. The National party is making sure that the house has enough money off the skim to pay for donations so the lowbrows can enjoy their brief stint in power. They are just as much crooks as the guys that “FIX” the take.

  8. captain hook 8

    they still crooks naki man and if you support them then you must be bent too.

    • Mainlander 8.1

      Tard comment of the day, so you are saying half of all of NZ is corrupt because they support the “Blue Devils” kinda insulting to your fellow Kiwis isnt it

  9. Tracey 9

    i cant find pete georges post of dunnes statement explaining the non tender process and how sallies didnt know they were getting funding increase and what for. he was so helpful on friday.

    • One Anonymous Bloke 9.1

      pg;dr

    • I haven’t seen anything from Dunne on it, but NZ Doctor have done some checking.

      “The fact the Salvation Army said it did not tender for the contract to supply problem gambling services, yet was awarded it, adds weight to the allegation that the Problem Gambling Foundation was being punished for its opposition to the SkyCity deal,” Ms Roche says in a press release.

      We tendered, says Salvation Army

      But the head of the Salvation Army’s Addiction Services, Captain Gerry Walker, says this is wrong.

      “We tendered for it,” he told New Zealand Doctor, “We tendered for what we believed we had the capacity and capability to deliver.”

      Captain Walker says he does not know where the idea the Salvation Army was surprised to receive the contract had come from and that it had not described itself as the “national provider”.

      “There is no surprise. We have been waiting to hear what we will be contracted to provide.”

      http://www.nzdoctor.co.nz/news/2014/march-2014/24/we-did-tender-for-gambling-addiction-services,-say-sallies.aspx

      I think there’s valid questions to be asked about the tender and how the service can best be provided but making this a highly politicised issue and making what appear to be incorrect claims is diverting from what should be examined.

      • Tracey 9.2.1

        interesting statements given the very recent decision by the sallies to give up premises suitable for providing more services than currently and the shedding over the last few years of qualified and experienced counsellors for those learning on the job.

        i am sure the sallies wouldnt object to their tender document being available for public scrutiny given they were the only ones going for this new super provider position.

      • Tracey 9.2.2

        mr walker also said

        “… the army has 18 gambling-related staff in six “Oasis” centres, compared with 63 Problem Gambling Foundation staff in 10 centres.”

        the quality of some of those staff in one oasis centre is very questionable.

        • McFlock 9.2.2.1

          I’m just surprised that PG has a paid-up subscription to NZ doctor, given that the article he links to is behind a paywall.

          Unless someone else gave him a copy of the article, or even a prepared excerpt that handily avoids stating exactly what “it” was that the sallies tendered for…

          But then pete’s completely impartial, isn’t he? I’m sure he’s no longer on Dunne’s email list.

          • Tracey 9.2.2.1.1

            i did try to find it but struck the wall.

            • karol 9.2.2.1.1.1

              Strangely I can’t access the article from PG’s link, but I accessed it via google news on chrome.

              http://www.nzdoctor.co.nz/news/2014/march-2014/24/we-did-tender-for-gambling-addiction-services,-say-sallies.aspx

              I’ll include the raw link so as to compare it to PGs – looks the same to me.

              Edit: no the link doesn’t work here. More of article:

              “There is no surprise. We have been waiting to hear what we will be contracted to provide.”

              No details on tender

              Asked how much of the total services the Army had tendered for, he says it is not appropriate to discuss the content of its tender.

              “It was for what we could deliver,” he says. “It was an open and transparent tender.”

              • karol

                Also, the PGF were aware of the tender process, but not that it was going to involve a formal review. The tender process was seen by the PGF as no different from the previous submissions for funding.

                The public tender process was “signalled” in 2012. A formal review of the submissions was commissioned at the end of 2013.

                From today’s NZ Herald article.

                Details are still sketchy. Associate Health Minister Peter Dunne denied allegations of political influence and said on Friday that a public tender for problem gambling services was signalled in 2012 because the sector had developed “in an ad hoc manner with duplication of services from national providers simply not achieving the best value for money”.

                He said a six-member panel evaluated the 32 bids late last year and the ministry commissioned an independent review by PricewaterhouseCoopers (PWC) before proposing that the major national provider would be the Salvation Army.

                But Mr Ramsey said he was unaware of the PWC review and had no inkling the foundation’s main contract might be axed until he was told last Thursday that the ministry had accepted “a superior bid or bids”. He said no reasons were given.

          • Pete George 9.2.2.1.2

            Odd, I get the wall when I follow the link but I accessed the article without any problem (and still can) from a Google search: salvation army tender gambling

            • McFlock 9.2.2.1.2.1

              I stand corrected – works via that google search, but not directly. Weird.

              Anyway, the sallies reckon they got what they tendered for, but are cagey as to whether they tendered for more than quadruple what they currently provide (their current plus the PGF).

              Still looks dodgy, and the use of an external review screams “hatchet job”. Who commissioned the review and defined the terms of reference? Did they pull a Parata?

              Something stinks

              • One Anonymous Bloke

                It’s the stink of having to wade through acres of Pete George before you can get to the raw Peter Dunne sewage.

                Edit: “Peter Dunne sewage” is a tautology.

            • lprent 9.2.2.1.2.2

              There is also the possibility of the page being redirected to a readable copy when coming from a google search. That is getting fairly common behind paywalls to keep their pages up in the google search criteria.

              You also may be reading a cached copy courtesy of google. If the page was at any point visible to the world (as they often are on publications for short periods) and marked as cacheable, then they can and often are. If you ever looked closely at google’s search pages in the past (but not now apparently) you’d have seen a “Cached version” on many pages. These days they often just serve it up transparently when the site can’t be contacted.

              It took a bit of work to make sure that didn’t happen here.

              In this case looking at delivery, it looks like there was a redirect 304 at the NZDoctor

  10. Ad 10

    What bothers more more than this instance is how much democracy has cooled down under this government.

    Deleting the Problem Gambling Foundation is small. But meaningful.

    The stripping out of the night-school classes in their first term deleted a whole layer of activist community.

    The rapid decline of unions is another alternative voice – of both protest and alternative analysis – which this government has hastened.

    The tone in which their Ministers and their agencies have shut down rather than opened up dialogue with the Christchurch rebuild has been startling and so consistently rude.

    The GCSB Act – while it may not affect many people, it still has a chillling effect on the societal expression that is possible.

    The major retrenchment planned for the role of local government in New Zealand also undercuts the full role of democracy as a value and as a function.

    Even this recent move to enable bloggers to join the Press Council and hence be disciplined by them can send a little unnecessary chill.

    None of them are connected explicitly. But all of them add up to a society in which our expressive being is smaller, more uniform, less interesting and challenging. Not only do we become more easily led, but we also find less reason to contest any existing order – eg through elections.

    Not that New Zealand could ever be accused of being pro-intellectual – quite the opposite. But it’s a lazy path for a central government to take us down. Few miss any one element now, but – like the Kiwi itself – collectively we will miss them when they are largely gone.

    • Ergo Robertina 10.1

      Add to your list the Disability Amendment Act, which removed the right of the disabled to use the courts to pursue future equity cases on family payment matters. Attorney General Chris Finlayson said it could violate the Bill of Rights. But of course like all the Nat sheep he voted for it.
      – Enabling charter schools to avoid public scrutiny by exempting them from the OIA.
      – Removing democracy in Environment Canterbury and refusing to reinstate it.

    • tc 10.2

      Night classes showed the ugly early and the cavalcade through the sectors has continued to this recent PGF situation.

      NZ as a restaurant has had the legs sawn off alot of tables by the nact. Some taken off with barely a whisper.

    • Chooky 10.3

      +100 …NZ democracy is being undermined and trashed in many many conceivable ways by this NACT govt

      ….but I fear worse and more fatal onslaughts from without if the TPP goes ahead and if internet freedom is undermined by the USA and multi-nationals

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