Shortcomings revealed
A Department of Internal Affairs review has revealed years of systematic failures and legal information being withheld from ministerial briefings.
It comes after DIA regulatory services manager Maarten Quivooy commissioned an internal review of the department’s handling of the failed South Waikato Class 4 gambling merger between Pockets 8 Ball Club, The Olde Establishment and the Putaruru District Services Memorial Club.
The venues sort to establish a super venue with 30 pokie machines in the heart of Tokoroa’s CBD with Pockets also retaining a separate venue nearby with 18.
Despite the process beginning in 2015, and withdrawing in 2018 when Pockets was put into liquidation amid the DIA’s licensing delays, it’s taken almost two years to complete.
It acknowledges the DIA was aware of years of ‘‘serious concerns’’ with Pockets, which were brought to its attention by multiple auditors and investigators who questioned whether it was operating as a genuine club (its primary activity), the conduct of its management and lack of governance.
Yet despite compliancy issues arising time and time again it allowed the licensing application process to continue citing ‘‘confusion in the relationship and interconnectivity’’ between the two. Throughout it all Pockets was permitted to operate on a 2013 licence without renewal.
‘‘Understanding the interface of licensing and compliance activities is critical to achieving the purposes of the [Gambling Act 2003], however, in this case it appears the compliance history was treated quite separately from the licensing process,’’ the report states.
‘‘Whilst the application process was ongoing, new concerns were uncovered around continued poor financial management. Concerns had also been noted with Pockets’ non-compliance going back to audits from 2008, 2011, and 2014.
‘‘The department took no formal compliance action against Pockets as a result of the . . . audits . . . choosing instead to work with Pockets to make improvements. There was a strong emphasis on educating, assisting and working with regulated parties to achieve compliance.’’
But improvements were often halfheartedly enforced.
After being made aware in 2014 of then venue manager Wendy Cook using a club credit card to obtain over $50,000, the DIA came to an agreement with the club’s committee that she was to be removed. A permanent director was also to be appointed amid concerns that the committee was made up of family and friends.
Cook was stripped of her role, but up until the venue’s closure served as general manager. DIA gambling regulatory team head Chris Thornborough confirmed the department never placed a permanent director on the committee.
‘‘The Pockets’ committee placed restrictions on Wendy Cook’s responsibilities within the club.
‘‘There was no requirement that she not be involved with the club at all,’’ he said.
Legal advice was also withheld from then Minister of Internal Affairs Peter Dunne who signed off the merger application in December 2016.
Prior to his briefing the department sought legal advice which found Pockets failed the precondition to merge. That was due to it wanting to continue to operate a separate venue despite the act stating venues need to demonstrate ‘‘intend to merge into a single club operating at a single Class 4 venue’’.
Staff, however, only advised Dunne that Pockets required an ‘‘intention to operate a single merged venue for a short duration’’ to meet the precondition, despite their legal advice stating it was a ‘‘strained’’ approach.
‘‘The briefing did not adequately explain the full legal position to the minister,’’ the report claims.
Yet the same day Dunne signed the merger off, the review notes the department issues Pockets with a formal warning letter for further financial mismanagement.
After progressing with the licensing application, in November 2018 prior to Pockets announcing it was to close, the department did draft a letter refusing to grant the merger a Class 4 licence. The review, however, states there’s no evidence of it ever being sent.
Lack of role clarity and responsibilities within the DIA’s Gambling Systems Group, poor internal communication and transparency of decision-making are noted as having lead to the long delays. Some documentation relevant to the review, which was initially set for release in early 2019, was also found to be missing.