On 4th August I applied to Graham Wakefield, Secretary of Auckland Film Studios Limited (AFSL) for a copy of the 2011 AFSL accounts. I expressed my displeasure at being stonewalled when I had a one to one meeting with the Mayor on Friday 12th August. He offered to follow the matter up.
Meanwhile my request for a copy of the confidential document presented at the Council meeting held on 28 July 2011, has been met. The document contains some inaccuracies and some strange legal interpretations.
On 21 January 2011 Gary Swift, CEO of Auckland Council Investments Limited (ACIL) claimed “AFSL has been profitable since it was established.” He then went on to say “AFSL is trading at a small loss but the Board are hopeful that further TV or film productions will restore profitability.” A week and a half later the major shareholder in AFSL, Tony Tay Film Limited, was in receivership.
On 13 February 2011 Gary Swift commented in the Sunday Star Times “I would describe our position as being a reluctant buyer. We would prefer someone who has got some empathy with the industry to come in as the other shareholder.”
The confidential document presented to Councillors on 28 July claimed Tony Tay Film Limited was owned 90% by Tony Tay Group Ltd and 10% by Rehoboth Ltd but, in fact, the ownership is Tony Tay Trust Ltd (85%), Rehoboth (15%). Rehoboth Ltd is entirely owned by Kieran Fitsimmons who is also the Manager of AFSL. Tony Tay and Kieran Fitsimmons are currently joint directors of two other companies, namely Jireh Entertainment Ltd and Successful Trading Ltd, formerly known as Millionaires Club Ltd and prior to that Southern Lakes Studios Ltd. It was Rehoboth Ltd, the minority shareholder of Tony Tay Film Ltd, which put Tony Tay Film Ltd into liquidation.
On 25 May 2005 Waitakere City Councillors voted “That the Council restricts its shareholding in the proposed joint-venture property owning and management companies respectively, to a maximum of 49.99%.” The effect of that vote was to make sure neither company became a CCO (Council Controlled Organisation) and thereby was exempt from full public accountability. Section 6 of the Local Government Act 2002 (LGA) makes quite clear the definition of a CCO.
On 4 August AFSL became a CCO.
Consultation required before council-controlled organisation established
Section 56(1) LGA states
“A proposal to establish a council-controlled organisation must be adopted in accordance with the special consultative procedure before a local authority may establish or become a shareholder in the council-controlled organisation.”
No consultation took place!
I can only describe the comments in the Confidential Document under the heading of “Significance of Decision” as flannel. Inter alia, Council officers claimed “One of the criteria for determining significance is whether the decision has a history of generating wide public interest within the local body area. Although there was a degree of public interest in Waitakere City Council’s investment in the film studios, this was limited to a few individuals and was not widespread.”
Under the heading of “Local Board Views” it said “Because of the confidential nature of the proposal, Local Boards were not consulted with.” However, one of my Henderson-Massey Local Board representatives told me he was quite happy with the consultation that had taken place.
In order to try to justify the lack of consultation the Legal team put forward the facile argument “An additional factor is that ACIL has rights to appoint 2 directors out of 5 on the board of AFSL and the right to veto the appointment of the 5th director. It is arguable that this right gives ACIL indirect control of 50% or more of the directors and therefore mean that AFSL is already a CCO (and has been since its establishment) negating the need for any consultation.”
Now you can’t have your cake and eat it. Say we were to accept this argument, and I don’t for a moment, then AFSL has been in breach of Sections 67, 68 and 69 of the LGA, regarding public accountability since its establishment. —Further food for thought in this whole messy affair which the Council has now locked itself into until at least September 2014.
For a copy of the Confidential Document please ring Gary Osborne
Ph 09 834 4513
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Send an email to gary.osborne@vodafone.co.nz
Accountability in Auckland Council 