The $5million mystery

by Lindsay Shelton
When I reported last week that a city council organisation had received a $5million management fee from the council, there was an angry denial from the organisation’s chairman. Which was strange, as the information came from his annual report. The mystery continues.

The organisation is Positively Wellington Venues, set up by the city council two years ago to handle bookings for the Town Hall, the Michael Fowler Centre, The St James, the Opera House, and the TSB Arena. The work had previously been done by council staff.

When I wrote about the new organisation, I was focusing on the salary of $260,000 paid to its chief executive Glenys Coughlan. Its annual report showed that when the council was doing the same work in house, a salary of $100,000 had been paid to the person in charged. The salary increase seemed extraordinary.

Positively Wellington Venues chairman Chris Parkin was defensive about the salary. She is “worth every penny of it,” he thundered in a comment that he sent to Wellington.Scoop. He also defended the fact that the chief executive has a family connection with Councillor Jo Coughlan, who’s on the board of the new organisation that had employed her.

For the record, Glenys Coughlan was married to Jo Coughlan’s cousin over 20 years ago. The only connection between them is that they both share a passion for improving Wellington.

But most of Chris Parkin’s anger was focused on denying that the new organisation received any fee from the city council, though such a fee was printed in his annual report.

The Council does not pay $5.1 million to Wellington Venues, it pays nothing. (Perhaps you are confusing us with the Museums Trust or the Zoo?)

Chris Parkin sent a second comment later the same day:

It may be a Council report, but certainly not from wellington venues. Suggest you quiz the Council’s CFO. I can assure you it is not a subsidy to Wellington Venues.

I was a bit slow to follow-up his suggestion. So I’m grateful to Wellington.Scoop reader Michael Gibson for doing the follow-up:

I have asked the Council CFO Peter Garty about the $5,444.776 Management Fee and here is his response:

“This is correct and represents the management fee paid by Wellington Venues Project (part of WCC) to Wellington Venues Limited so it appears as revenue in the Wellington Venues Limited accounts. The Chairman of the board would have seen these financial statements as they are signed off by him. The auditors, Audit New Zealand, have also signed off the accounts as part of the audit opinion.”

So now we have confirmation from the city council’s chief financial officer that a management fee of $5.4million was paid to Positively Wellington Venues, and reported in financial statements signed off by Chris Parkin.

But we still have a denial from Chris Parkin that any such fee exists.

Who’s right?

The next move seems to be up to Chris Parkin. Or his well-remunerated chief executive.

 

13 comments:

  1. peter@south/eastwelly, 16. May 2013, 17:31

    Love it Lindsay. There’s obviously muck at the bottom of the barrel, so keep digging. The truth will come out.

     
  2. elmer, 17. May 2013, 14:45

    As Joe Public, I have to say: $5.4 million in revenue from the city council seems a very large amount to be ignorant of – especially if you signed off the accounts.

    I always presume (or at least hope) that “sign off” from a senior executive comes with proper knowledge and scrutiny.

     
  3. JC, 17. May 2013, 17:34

    Isn’t this just a case of people talking at cross purposes? One person is saying there isn’t a “subsidy” and another person is saying there is a “fee”? A fee for services rendered is a very different thing to a subsidy.

     
  4. Michael Gibson, 18. May 2013, 9:28

    With great respect: what point is the excellent “JC” trying to make?
    This is what was said by the chap who was legally responsible for the accounts:
    1/ “The Council does not pay $5.1 million to Wellington Venues, it pays nothing.”
    2/ ” It may be a Council report, but certainly not from wellington venues. Suggest you quiz the Council’s CFO. I can assure you it is not a subsidy to Wellington Venues.”
    I have been given a speaking-slot at the Council at 11.45 on Thursday morning, 23 May, & have given due warning that I intend to ask about the quality of directors who are appointed by Councillors to CCOs, whether past Councillors are given preference on a “mate’s rates” basis & what criteria are used for them to be sacked..

     
  5. Wayne Newman, 19. May 2013, 14:26

    JC seems to be overly indulgent. The opening sentence makes it clear that a “management fee” was at issue and denied. It was Mr Parkin who used the word “subsidy”. Whatever opinion we might form on the value for money received from Positively Wellington Venues or its CEO, it is abundantly clear from these exchanges that Mr Parkin is out of his depth as chairman and contributing nothing.

     
  6. Driver, 19. May 2013, 14:51

    Can the council tell us: are all the other Chief Executives of council-controlled organisations also paid at the same level as Glenys Coughlan?

     
  7. chris parkin, 20. May 2013, 15:46

    Positively Wellington Venues does not receive a subsidy (whatever you wish to call it) from WCC. This year we expect to acheive an EBITDA of around $200,000. That is we will actually contribute $200,000 to the Council pot through the excellent efforts of our appropriately paid CEO and her equally hard working staff.

     
  8. CC, 21. May 2013, 8:35

    Assuming Positively Wellington Venues achieves it EBITDA, the ratepayers will still be covering costs for a board (led by someone who seems to sign off reports without knowing the contents) along with a CEO and staff who seem unable to achieve satisfactory results. Obviously, the Council should bring PWV and the other CCO’s (WWL in particular) in house and under the management of the presumably well qualified CEO.

     
  9. Trish, 21. May 2013, 10:33

    Chris Parkin, Chair of Wellington Venues, says it “does not receive a subsidy (whatever you wish to call it) from WCC.” I would simply call the $5.4m receipt from WCC showing in his organisation’s accounts a “payment”.

    The Council CFO Peter Garty has confirmed that the Management Fee is “paid by Wellington Venues Project (part of WCC) to Wellington Venues Limited so it appears as revenue in the Wellington Venues Limited accounts”.

    The payment is shown as income in Mt Parkin’s accounts and contributes to the profit (EBITDA) of $200,000. I cannot believe that he continues to claim that he does not receive $5.4m from the Council, whatever he wishes to call it.

     
  10. elmer, 21. May 2013, 19:30

    From Chris Parkin: no explanation, just gobbledegook.

    Thanks for clarifying nothing. Are you not at all publicly accountable?

     
  11. Jack Ruben, 21. May 2013, 21:15

    Trish,
    You obviously don’t know Chris Parkin! He believes bull and bluster will divert attention away from the issue of management and direction at Wellington Venues. When this fails, he simply refuses to answer the questions, as does Ms. Coughlan, However, their reputations and credibility suffer, as does the organisation they are paid so much to manage. What a pity all our councillors condone this. .

     
  12. Michael Gibson, 28. May 2013, 17:20

    Just to record that, after my oral submission on Thursday (see above), I was promised that officers would give me an explanation of the “mystery” about the disputed $5,444,766 but I have not heard yet.
    Re the “mystery”: it won’t involve Cr Morrison who wasn’t there – the only absentee, I think.

     
  13. Rob, 29. May 2013, 16:51

    If it is indeed a management fee of $5,444,766 with close to $0 return after interest, taxes, depreciation and amortization and if indeed the previous in house cost was $1.1 million then what exactly has the spun off organization accomplished or planning to accomplish?

     

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