Probe launched after the discovery of the Combined Establishment Board of South Auckland Middle School (pictured) and Middle School West Auckland paid management fees to Villa Education Trust in 2018. Photo / Doug Sherring
This story was updated on December 2 to include a statement from the Villa Education Trust.
The Auditor General criticized school board members who paid themselves $ 450,000 – and were unable to say what it was spent on, who authorized it or how the fees were determined.
An investigation was opened after discovering that the Combined Establishment Board of South Auckland Middle School and Middle School West Auckland paid the management fees to the Villa Education Trust in 2018, while the two charter schools were in the process of transitioning to designated character schools.
However, the school-appointed auditor noted that the board trustees were also the trustees of the trust and “effectively decided to pay each other money,” Auditor General John Ryan said.
The trust maintains that it handled the process “prudently, appropriately and with strong governance protocols.”
Ryan said his office found that “the integration committee members failed to recognize that a conflict of interest arose when they actually decided to pay each other money.”
“This means that the Council has taken no action to deal with the conflict,” he said.
Alwyn Poole founded South Auckland Middle School and Middle School West Auckland and organized all students from both schools into “villas” of 60 children, each with a class of about 15 students in each of grades 7-10.
Partner schools have been funded in bulk, allowing Poole and his wife Karen, Managing Director of Villa Education Trust, to hire more teachers while spending less on property and administration.
However, Ryan discovered that the $ 450,000 money was for the administration and management services required for the former charter schools to open as designated public schools.
“The directors actually wore two hats,” Ryan said.
“Shared membership was a potential conflict of interest which became a real conflict when the governing board considered engaging the Villa Education Trust.
“In a situation like this, we expect a public organization to recognize the conflict and put in place a process to deal with it.
The Governing Board, like any public organization, was accountable to the public and to Parliament for how it spent the public money entrusted to it, he said.
However, since then the board has still not been able to provide the Auditor General with “sufficient assurance as to the circumstances under which the fees were determined and paid, and what exactly was provided in return.”
“I expect more from a public organization spending public money.
“The circumstances of this payment create a perception of lack of integrity. Acting with integrity and being seen to act with integrity is essential for maintaining public trust in public organizations and in the public sector as a whole. “
From the time of the 2018 audit and throughout the investigation, there also appears to have been a lack of appreciation on the part of the Establishment Board of the position it was in when it found itself. has become a public school, or expectations when spending public money to properly account. for that money.
When performing the 2018 audit, the auditor appointed by the schools had not been able to obtain sufficient and appropriate evidence to determine which part of the payment was a valid expense.
“Information on how fees were determined, agreed, paid and managed, and what was received for payment, should have been available to our auditor when requested in the first place.
“This information is part of orthodox procurement and contract management and must be properly documented.
“If this information had been prepared and made available, it may not have been necessary for us to do all of the work involved in this matter to find out the circumstances of a payment like this.”
Ryan encouraged public organizations to read his office’s best practice guide on managing conflict of interest.
“This provides guidance on identifying and managing conflicts of interest, so the public can have confidence that the people who make decisions and spend public money are doing so in the public interest.”
Ryan also found that while the board had valid reasons to hire Villa Education Trust for the job, the board did not follow good procurement practices:
• There was no formal agreement between the board and the trust, and no scope of work before the $ 450,000 was billed and approved for payment,
• There was no evidence to show how the board of directors determined which services it paid for, assessed the appropriateness of fees or actively managed the services provided,
• There is no documentary record of who approved the expenditure as valid or authorized the payment of invoices, and whether he had the appropriate authority to do so.
In a statement to RNZ, Villa Education Trust Chief Executive Officer Karen Poole said that establishing schools as designated character schools is extremely complex and affects all aspects of schools, including ownership, leases operational, personnel, programs and governance policies.
“The set-up involved a significant amount of work (estimated at over 4000 hours) in a short period of time in order to regularize schools in the new political environment as quickly as possible. As our Ministry of Education appointed governance facilitator noted in pointing out that this was a new and stimulating environment for everyone involved, ”she told RNZ.
“We are confident that we have handled this prudently, appropriately and with strong governance protocols in place. We worked closely with the teams from the Ministry of Education and followed their advice at all times.
“While ultimately we accept the findings of the OAG that there could have been better documentation of the relationship and scope of work between the two entities, we remain confident that the school was within budget. of the establishment that the Crown gave us for change and was diligently devoted to the process of establishing the school.
– RNZ additional reports