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7.20 Similarly, TWOA could not provide any evidence of negotiations over theprice, or other terms, of the purchase. We expected to see evidence of somenegotiation, to indicate that TWOA had sought to achieve sound value formoney. We do not know precisely how the terms were arrived at, and who wasinvolved on behalf of TWOA. We were told that all parties saw themselves asworking for the common good of TWOA.7.21 It was conceded that Rongo Wetere would have been involved in somediscussions, but we were told that he had very little direct involvement indiscussions about the purchase of the Mahi Ora course, and that this wasdeliberate. For instance, he did not sign the sale and purchase agreement.Former members of the TWOA Council told us that Rongo Wetere noted hisconflict of interest and distanced himself from the purchase. However, theminutes of the relevant meeting of the Council indicate that he participated inits consideration and approval of the proposal, including moving one of therelevant resolutions.7.22 Rongo Wetere’s participation in the Council’s consideration of the purchasecame to the attention of our appointed auditor during his audit of TWOA’s2001 financial stataments. He referred the matter to our Office. We wrote toTWOA in 2002. We expressed concern about Rongo Wetere’s apparentinvolvement in the Council’s consideration of the matter, given his conflict ofinterest, and sought an explanation. TWOA told us at the time that “althoughnot accurately reported in the Wananga minutes” Rongo Wetere had actuallyexcluded himself from “many of the discussions relating to this acquisition”.TWOA said –In future, should circumstances arise we will more accurately record inour minutes, disclosures on conflicts, and exclusions from discussions.7.23 We wrote again to TWOA. We reiterated that we thought Rongo Wetere oughtto have abstained from all matters relating to the purchase of Mahi Ora. Wesuggested that TWOA consider taking legal advice on potential conflicts ofinterest should they arise in the future.7.24 This was the first time we became aware of a conflict of interest at TWOA. Weaccepted TWOA’s assurances about that matter, and expected it to managesuch situations better in future. After expressly raising the issue with TWOA in2002, we did not expect this sort of poor practice to recur.7.25 As soon as the purchase took place, Kingi Wetere and William Wetere took onsenior management positions in MO1 Limited, and they and Rongo Weterebecame directors of MO1 Limited. Ms Cullen continued to provide somevoluntary advice and assistance in respect of the Mahi Ora course. At the sametime, the AI Trust bought a property from Ms Cullen that had served as theoffices for managing the course, and leased that property to MO1 Limited.62
Lifeworks7.26 Ms Cullen’s company Awarua Limited then created another course, similar toMahi Ora but targeted at Pākehā. It was called Lifeworks. In 2003, after thecourse had been prepared, MO1 Limited and Awarua Limited signed anagreement. MO1 Limited agreed to pay $1.7 million to Awarua Limited as aonce-only fee for the creation of this course, and then took ownership of fullrights to the Lifeworks course in New Zealand. We understand that RongoWetere was not involved in this transaction. However, Kingi Wetere andWilliam Wetere held senior positions in MO1 Limited at the time, and wouldhave been involved in the transaction.7.27 MO1 Limited has licensed the Lifeworks course to The Open Polytechnic ofNew Zealand. Delivery of the course began in early 2003.Kiwi Ora7.28 Kiwi Ora is a similar course, but aimed at immigrants and intended to helpthem adapt to life in New Zealand. It was created entirely by Ms Cullen’scompany Ora Limited.7.29 A joint venture agreement between TWOA and Ora Limited was first signed inlate 2002. Delivery of the course began in early 2003. The nature of the jointventure agreement is similar to the one used for Mahi Ora in 2000. That is, OraLimited is to deliver the course, and is responsible for all costs (including, forexample, employing administrative and tutorial staff to deal with students, andpreparing the course materials). TWOA is the identified education provider,monitors the quality of the course, and ensures that the necessary Ministry ofEducation and New Zealand Qualifications Authority approvals are obtainedand maintained. Again, the revenue from the course, which is whollydependent on student numbers, is split between the parties. The sharetransferred to Ora Limited under the joint venture agreement was initially 85%,while TWOA retained 15%. Ms Cullen told us that the agreement favouredTWOA.7.30 Like the courses discussed above, Kiwi Ora has attracted many enrolments. Inits first 6 months, it had attracted about 5000 students, and by 2005 it wasaccounting for about a quarter of all TWOA’s enrolments.7.31 As with Mahi Ora, the course was considered and approved by TWOA’sAcademic Board. There was no documentation of any business case orcommercial assessment of the joint venture by anyone in TWOA. 25 There wasno record of any TWOA discussions or decision in principle to proceed withthe business arrangement. There was no documentation of any negotiation thatmight have occurred over the terms of the joint venture agreement.25In saying this, we are not suggesting that Ora Limited did not thoroughly research andplan the course.63
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For example, in 2003 TWOA bought th
Page 12 and 13: Part 1 - Introduction1.1 In this Pa
Page 14: What we did1.13 We obtained a signi
Page 17 and 18: The AI Trust and the entities it co
Page 19 and 20: Figure 2.Continuing arrangements be
Page 21 and 22: Figure 4.Business transactions betw
Page 23 and 24: • Power Chill NZ Limited, Aranui
Page 25 and 26: Figure 6.How Rongo Wetere, his chil
Page 27 and 28: e based on thorough analysis or adv
Page 29 and 30: 3.21 There are 2 aspects to dealing
Page 31 and 32: Part 4 - Appointing TWOA and MO1Lim
Page 33 and 34: William Wetere - Information Office
Page 35: 4.25 The third contract was agreed
Page 38 and 39: Part 5 - Acquiring land and buildin
Page 40 and 41: consider that conflicts of interest
Page 42 and 43: 5.27 There was no written business
Page 44 and 45: 5.41 The costs significantly over-r
Page 46 and 47: Part 6 - Acquiring goods and servic
Page 48 and 49: subcontractors. TWOA told us that i
Page 50 and 51: 6.25 Kingi Wetere acknowledged to u
Page 52 and 53: Wetere’s brother, in the manner i
Page 54 and 55: 6.58 In our view, the invitation to
Page 56 and 57: 6.74 Once TWOA’s conflicts of int
Page 58 and 59: 6.86 We were told that this has nev
Page 60 and 61: mainstream education. It involves p
Page 64 and 65: 7.32 We were told that the idea for
Page 66 and 67: TWOA personnel we spoke to are plea
Page 68 and 69: 7.58 TWOA communicated the nature a
Page 70 and 71: documented business cases and trip
Page 72 and 73: 8.22 Rongo Wetere did not begin to
Page 74 and 75: 8.38 We did not identify clearly pr
Page 76 and 77: 8.55 The first donation was made to
Page 78 and 79: 8.70 It was suggested during the co
Page 80 and 81: 8.78 Figure 8 excludes the airfares
Page 82 and 83: Appendix 1 - Terms of reference for
Page 84 and 85: financial position and financial vi
Page 86: Conflicts of interestState Services
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