Legal advice labels charitable trust as a ‘ high risk entity’

Auckland councillors fail in attempt to broker peace deal in row over sports cash

Legal advice sought by Counties Manukau Sport ( CMS) in their ongoing battle with charitable trust Aktive has returned a view Aktive is a “high risk entity”.

The advice, prepared by South Auckland firm Rice Craig, states they do not believe Aktive is behaving as a Charitable Trust and should instead be “identifying itself as a Crown Entity Subsidiary”.

It suggests the concerns of CMS should be raised with the AuditorGeneral.

Aktive and CMS have had a toxic relationship since Aktive’s creation in 2012 and recently announced they would no longer work together, potentially putting a number of South Auckland community sports programmes in peril.

The Herald highlighted the ugly separation this week and since then some Auckland councillors — who are in partnership with Aktive — have tried to broker a peace deal, without success.

One of the men responsible for the formation of Aktive, Sir John Wells, believes it would be a “stretch” for CMS to attack Aktive’s organisational status. He also believes the time has come for Aktive to cut ties with CMS.

Wells believed CMS was posturing and should be cut loose. The regional sports trusts were, he said, a “dog’s breakfast” and a carry- over from Auckland’s fractured council structure of the time. “When the Super City came into being we needed to replicate that to some extent with an umbrella organisation.”

Wells, who left Aktive shortly after its creation, said there were obvious efficiencies to be gained from a oneAuckland approach.

A lawyer engaged by CMS believes Aktive are essentially acting as conduit for Sport NZ, placing them in a legal grey area where they are not acting in accordance with the Charitable Trust Act or the Crown Entities Act.

The advice i s based on Aktive’s remit being closely aligned with Sport NZ, and investment that was previously channelled through regional sports trusts now flows through Aktive.

“The delegation by Sport NZ of its primary functions, namely overseeing the allocation and observation of the performance of those funds to Aktive is not itself a charitable purpose recognised at law,” Neville Woods, partner at Rice Craig, wrote in a summary of his advice to CMS.

Woods told the Weekend Herald the issue is what the dominant purpose of Aktive is. “The difficulty I see here, and this is triggered by their decision to ditch CMS, is they’re actually acting as a pseudonym for a foreign entity [ Sport New Zealand].”

Aktive chief executive Sarah Sandley believes Woods’ legal assessment has “no substantive grounds”.

“We’re an independent charitable trust, we have multiple sources of other funding,” she said.

Meanwhile, CMS chief executive Russell Preston said his organisation was not looking for preferential treatment from Aktive.

“We’re not trying to claim any rights of under- privilege status due to the demographics of our region,” he said. “All we asking for is to be treated fairly and equitably alongside our greater Auckland colleagues and the offers table from Aktive are not in accordance with those principles.”

After attempts to reach a resolution this week failed, both organisations have resolved to move on independently.

Sandley said around $ 880,000 of funding that had been earmarked for locally- led delivery in the Counties Manukau area will be fully allocated to another provider or providers.