R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . Appendix Page 1 Ranui Boys Incorporated Charities Services Investigation Report Paul Budd- Investigator O ffi 26 August 2014 Appendix Page 2 Ranui Boys Incorporated Registration Number CC31289 Date Received 19/01/2011 Date Assigned 29/06/2013 Date Completed 26/08/2014 Investigator Paul Budd R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . Investigation 1. Executive Summary 1. Ranui Boys Incorporated is a registered charity, set up to manage and operate Youngstars Preschool and Day Care Centre at 26 Longburn Road, Henderson, Auckland. 2. It was registered with the then Charities Commission (Commission) on 30 June 2008. 3. The aim of the Society’s pre-school is to provide early childhood education and learning for Samoan and other nationality children using the Samoan language and Faa-Samoan culture and customs. This is done in the context of other languages and cultures, in New Zealand. The Society has always relied heavily upon grants from the Ministry of Education (MoE) to operate the school. 4. The MoE informed Charities Services that one Officer Siaifoi Lisa Palmer (aka Siaifoi Viliamu, and many other variant names) was being prosecuted for falsifying data leading to overpayment of MoE grant money. Her husband Faavae Too (aka Fraser Soi) they suspected was also disqualified by convictions from being an ffi Officer of the Society O 5. When Charities Services made initial contact with the Society concerning these issues, it was discovered that Faavae Too had resigned as an Officer. A subsequent Ministry of Justice (MoJ) check revealed that s9(2)(ba)(i) and did not prevent him holding office. 1 Appendix Page 3 6. However, it was discovered that the pre-school operated by the Society had substantial IRD debts, penalties and compounding interest charges as a result of failing to pay tax and PAYE liabilities. 7. Palmer was convicted in 2012 by the MoE on three counts of fraud relating to falsifying attendance figures, upon which funding was calculated. At a subsequent Teachers Disciplinary Tribunal she was banned from school management for five R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . years. 8. The conviction under the Crimes Act 1961 also disqualified her from holding the position of officer on a registered charity. 9. The Society failed to respond fully to section 51 (s 51) notices and has disregarded two s 51 notices. Some of the documents requested appear to lack credibility and some of the information is believed to be untrue. 10. The Society has failed to submit any Annual Return for the years ending 31/03/2013 and 31/03/2014. 11. The investigation has discovered gross mismanagement and lack of governance in relation to most aspects of the Society’s operations, but especially finance. The Society incurred a huge IRD debt and is reliant on commercial loans and MoE grants to survive. 12. The s9(2)(ba)(i) and a s9(2)(ba)(i) ffi , have both presented concerns that Palmer is stealing from the Society’s O funds. A gambling habit and investment in a family motel in Samoa have been suggested as to where the funds have been diverted. 2 s9(2)(ba)(i) Appendix Page 4 13. None of the current Officers or staff responded to a request to be interviewed by Charities Services. NB. Timeline of significant events is attached as an annexure. Complaint R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 2. 14. In January 2011 the then Charities Commission (the Commission) was informed by the Ministry of Education, that they were investigating possible offences of fraud linked to false returns supplied to them on behalf of the school by Siaifoi Lisa Palmer. The MoE informed the Commission that they were investigating the attendance figures supplied by Palmer on behalf of the Society School as they believed they had been over inflated to falsely obtain greater cash funding from MoE. 15. Palmer was subsequently charged and convicted on 13 June 2012, when she pleaded guilty to three representative fraud charges and was sentenced to 127 hours community sentence. 16. This Crimes Act conviction rendered Palmer ineligible by section 16 of the Charities Act 2005 (The Act) from holding a position of officer on a registered charity. 17. The MoE also believed Faavae Too was disqualified from holding office on a registered charity by virtue of crimes act convictions. No other specific complaint was levelled against the Society. ffi 18. O 3. 19. Background The entity began in the early 2000’s as an after school club and homework assistance group for mainly the Samoan community of Ranui Samoan Church, West Auckland. Initially known as Faavae Ile Alofa it was popular and provided a good service. It had no fixed premises and used the Ranui Church before moving 3 Appendix Page 5 to the community hall. Eventually, Palmer and Too formed the entity into the Ranui Boys Incorporated Society. 20. The Society was first registered under the Act on 30 June 2008 as the Ranui Boys Incorporated. It was set up to own and operate the Faavae Ile Alofa School which later became Youngstars Preschool and Childcare Centre. Palmer and Too obtained substantial funding from MoE to convert their home at 26 Longburn Road R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . into the centre. Apparently, they moved out and rented accommodation for themselves. They remain the owners of the property and benefit from rent paid by the Society to lease their home. A mortgage with ANZ bank in both their names relates to 26 Longburn Road. 21. Initially the MoE were pleased with the operation of the Society’s school and it received favourable appraisals and recognition. The Society benefited from various grants, some small donations but most importantly substantial funding has been supplied by the MoE towards its operating costs. 22. In January 2011 the MoE alerted the Commission to its concerns regarding Faavae Too potentially being disqualified from holding office on a registered charity. The Commission sent a request to Faavae Too to give consent to a convictions check being made with the Ministry of Justice (MoJ). The form was returned completed and signed, indicating he consented. s9(2)(ba)(i) However, the Society then requested his removal from the register as an Officer stating he had ceased as a Officer 11 March 2010. 23. The Commission then waited for a result of the MoE investigation and court O ffi hearings into Palmer for supplying fraudulent pupil attendance figures. 24. On the 30 October 2012, having identified concerns over the Society’s annual return (AR) financial statements and the debt of $131,000 with IRD, Charities Services (as it became 1st July 2012), sent a s 51 notice to the Society requesting two overdue AR from 2010 and 2011 and an explanation of the IRD debt. 4 Appendix Page 6 25. The response to this section 51 had been prepared by Palmer (by then legally disqualified from holding office at the Society). She claimed the Society’s building extension project in 2008 had been improperly planned. As a result they had to use money set aside for GST and PAYE to pay for it. The initial debt was for $31,298 but because they ignored IRD requests it grew from periods 2008/9 to 2009/10 to R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . $131,000. 26. June 2013, Investigator Paul Budd was assigned the investigation. A review of the financial information and allegations made in the complaint was conducted resulting in the following issues being identified. 4. Investigation Purpose Potential Issues  Failure to comply with the duty to provide annual returns under section 41 of the Charities Act 2005.  Breach of Charities Act 2005 by not filing a notice of change to remove a disqualified officer under s16 of the Act.  Other breaches of the Charities Act 2005  Potential private pecuniary profit by Officers and/or staff.  Serious wrongdoing in the operation of the Society and Youngstars Pre-school and Childcare Centre.  Failure of the Board to adhere to the Society’s rules. Objectives Determine whether there has been a breach of the Charities Act 2005 or any other ffi  act. Determine whether there has been any serious wrongdoing;  Determine whether there has been private pecuniary profit by any individual; and  Determine whether the entity is established and maintained exclusively for O  charitable purposes. 5 Appendix Page 7 5. Actions Taken Second s 51 Notice 27. On 24 July 2013 Charities Services sent a second s 51 notice to Palmer requesting R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . she consent to a convictions check. She signed a consent form and subsequently it was confirmed she had convictions for dishonesty under the Crimes Act which excluded her from qualification to be an Officer of a registered charity. Third s 51 Notice 28. The Society was sent its third s 51 Notice on 25 July 2013 requesting explanations and details around financial activity and administration. Specifically, knowledge of Palmer’s convictions for fraud and impact upon the charity were sought. The s 51 was sent to the alternative contact details on the charity register, Adiseshaiah Nallapaneni the Society’s accountant. Despite her disqualification Palmer was still listed as the primary contact. 29. Nallapaneni responded by telephone alerting Charities Services that he should not have been identified on the register as the alternative contact and this had been done without his knowledge. He stated he would leave the section 51 notice in the school administrative office for the attention of the charity. s9(2)(ba)(i) ffi Fourth s 51 Notice O 30. 31. On 16 October 2013 a fourth s 51 notice was sent to the Society containing the same requests as the third s 51. On 21 October 2013 Sesilia Talamaivao describing herself as Secretary, responded by email that the Society had ignored the previous s51 as it was addressed to the accountant. The s 51 was addressed to the Society’s designated 6 Appendix Page 8 alternative contact (Nallapaneni) at the Society address clearly marked for the attention of the Committee Members. Talamaivao requested more time to call a board meeting to deal with the s 51 requests. 32. Eventually, on 18 November 2013 an unsigned letter dated 31 October 2013 was forwarded to Charities Services giving some of the requested information. It failed R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . to deal adequately with all the information requested. 33. It stated that Palmer had been dismissed from all management roles and that she had resigned after her conviction. It stated she remained only as a teacher. Dealing with the security of Society funds, it stated that the Board of Officers secured the account and reviewed it at every monthly meeting. The Society was required to supply the building consents for the work carried out on the school that Palmer claimed caused the IRD debt, the Society responded that none was required as it had only been an outdoor deck and temporary sun shelter. 34. The Society claimed that despite its obvious financial difficulties, increases in rent and salaries were unavoidable due to them having been frozen for several years and raises being overdue. A review of the Society AR clearly contradicts this statement. Year on year increase for rent per annum: 2008 total $25,000  2009 total $27,207  2010 total $35,909  2011 total $32,208 (slight dip)  2012 total $44,200 ffi  O Year on year increase for wages (without change to staff numbers) per annum:  2008 total $229,693  2009 total $298,741  2010 total $314,341  2011 total $401,383 7 Appendix Page 9  2012 total $468,766 Fifth s 51 Notice 35. On 21 November 2013, a fifth s 51 Notice was sent to the Society requesting information still not supplied to satisfy the earlier notices and additional information R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . concerning meetings, employees and their contracts and copies of receipts in respect of the building work. 36. The response which was due on 5 December 2013 was finally received on 18 December 2013. It still failed to supply required receipts and information about the building work. 37. It did include a resignation letter dated 25 February 2013, written by Palmer to the Society Chairman. It is also marked ‘B’ and seems to be an extract from a declaration or affidavit sworn by Palmer on 11 March 2013. This would indicate that despite conviction on 13 June 2012 it took eight months for her to submit her resignation. 38. Within the letter, Palmer states lack of funding by parents of the school children put the school in financial distress “...this is no excuse for my dishonest behaviour in producing false records on the funding forms provided.” She was very apologetic in the letter and detailed how work with “our Senior Pastor concentrating on the 8 h Commandment “Thou shall not steal” amongst other guidance had helped her. 39. The response also supplied minutes of the 10 February 2010 AGM and other ffi monthly meetings purported to have occurred in 2013. O 40. 41. The Society rule (xvii) requires seven Management Committee members for a meeting to be a quorum. On 18 May 2013, only four Management Committee members were present. The meeting did not reach a quorum. Taugofie Sagatu has her apologises for non8 Appendix Page 10 attendance noted and accepted. However, she is then recorded as seconding the first motion of the meeting and then raising an issue over parent debts at General Matters. 42. Also in the minutes supplied for 18 May 2013, “Ardi” (Adiseshaiah Nallapaneni the Society’s accountant) is recorded as presenting a financial statement and a budget for the financial year 2012 – 2013. Nallapaneni states whilst he did attend a R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . meeting on 18 May 2012, he did not attend one on 18 May 2013. It seems improbable that he would have presented a budget for the year 2012 to 2013, which had just ended, as suggested by this document. The financial year for the Society ran from 1 April 2012 until 31 March 2013 so the proposed budget was for the year already completed. 43. Sesilia [Talamaivao] is recorded proposing a motion to accept the previous minutes (not specified or identified) Sesilia [Talamaivao] is also recorded proposing a motion to accept the Budget for 2012- 2013.Talamaivao is not an Officer of the Society and is not entitled to vote or take an active role in the Committee meetings. 44. The meeting is recorded as commencing at both 2.40pm and 5.30 pm and closing at 8.00pm. Sixth s 51 Notice 45. On 16 January 2014 the Society was sent a sixth s 51 notice requesting urgent submission of the AR for the year ending 31 March 2013. The notice again required answers that the Society had still failed to supply in response to earlier s 51 notices. The Society was also required to supply the year ending 31 March ffi 2013 general ledger of accounts and all original receipts and accounts. O Interview Nallapaneni – Accountant 46. On 19 February 2014 Nallapaneni agreed to a recorded interviewed under caution. He detailed an entity struggling to survive on insufficient income, lacking financial discipline or proper controls and as a result, 9 s9(2)(ba)(i) Appendix Page 11 He explained the Society was s9(2)(ba)(i) dependent on loans to survive the periods between MoE grants. 47. R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . s9(2)(ba)(i) 48. He explained he rarely visited the Society premises and prepared the annual return accountants based only upon information supplied to him by the Society. He was unsure as to how the Society recorded its day to day incomings and outgoings. He did not know if they kept a ledger, how they recorded expenses or whether they kept receipts. He stated he received “papers” from the Society delivered to him upon which he based the annual return accounts. He confirmed he had absolutely no idea what the Society’s day to day accounts system was. 49. He confirmed he was currently working on the overdue annual returns. He agreed they were five months overdue, but denied the Society’s suggestion he had caused the delay by going away on holiday. He stated he had been asking for the Society to supply him the information for the last eight or nine months. 50. He said he warned Palmer that the school was struggling s9(2)(ba)(i) . He said Palmer told him she wanted to sell the school 51. s9(2)(ba)(i) ffi several years ago, Talamaivao had set up a similar childcare centre, Kelston Community Aoga Amata. O It received about $120,000 of MoE funding. It then closed with people and IR owed lots of money. 10 Appendix Page 12 52. s9(2)(ba)(i) 53. R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . s9(2)(ba)(i) 54. He stated the Society did not have proper meetings and did not know how to run a meeting properly or how to do business at a meeting. Nothing was ever circulated before a meeting. He had never been invited to talk at an AGM. 55. He had on one occasion attended a meeting when Palmer’s conviction was discussed, it was the first he ever knew of it. He said it was stated at the meeting, she was “expressly eliminated in participating in the board meeting”. 56. He was informed minutes supplied to Charities Services indicated Palmer’s brother Nofo Viliamu presented financial reports at AGM and meetings. Nallapaneni stated he had never spoken to Nofu about the school finances. 57. Nallapaneni believed there were about seven or eight full time staff at the school along with two or three volunteers. Jagger Too, Palmer’s son, was employed as a driver and cook. He believed that all employees received pay slips but although he had supplied a computer template to record the wages on, which he thought they used; he did not receive any copies of it. He stated Palmer paid the wages mainly ffi online by doing cash transfers herself. s9(2)(ba)(i) O 58. 59. s9(2)(ba)(i) 11 Appendix Page 13 s9(2)(ba)(i) 60. He confirmed some large cheques cashed at banks would probably have been to get cash to pay off loans. But, he went on to explain that several large cheques were made out to him to repay loans that he had made to Palmer and the Society when they had no funds to pay staff or bills. He said they bounced some large R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . cheques on him, and it took up to six months to get them to repay some loans he made them. 61. He was informed that the Society received a s 51 request to supply all 2013 receipts and expenses and any ledger of daily accounts. Nallapaneni said the entity had not contacted him about this request. He confirmed he was in possession of the Society’s financial papers and he showed a small bundle of about 10 receipts the entity supplied him to complete the AR. 62. 63. s9(2)(ba)(i) s9(2)(ba)(i) He confirmed that it was Palmer and Talamaivao that had come to ask him to do the school accounts again. s9(2)(ba)(i) O ffi 64. s9(2)(ba)(i) 12 Appendix Page 14 65. s9(2)(ba)(i) 66. Nallapaneni also mentioned that despite the school having about 50 children in attendance, very few actually paid any fees or even made donations and he saw R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . little evidence of the revenue that this should have generated. 67. The recorder was switched off and Nallapaneni took the two investigators into his home office, where using his computer, he confirmed with his own online bank account the movements of loans he had provided to the school from his own funds and repayments by cheques or cash from the charity. He believed he had provided loans totalling $200,000 over a few years. He did state he also charged the charity a one off fee for providing loans, normally in the region of $10,000. He stated this was less than the interest that the loan companies would have charged. Seventh s 51 Notice 68. On 12 March 2014, a seventh s 51 notice was sent to the Society repeating all the requests for documents and submissions, of the sixth s 51 as the Society failed to provide them with its belated response. To date, the seventh s 51 has received no response from the Society. Eighth s 51 Notice 69. Also on 12 March 2014, an eighth s 51 notice was sent to the Society asking for the personal contact details of Society Committee Members and staff members whom Charities Services wished to interview. An indication of whether each person ffi was prepared to be interviewed was requested. There has been no response to O this notice. Bank Records 70. Bank records were obtained from ANZ for the period 01/04/12 to 07/08/13. 13 Appendix Page 15 71. The Society has an account s9(2)(ba)(i) in the name of Youngstars Preschool and Childcare Centre. This account only had two signatories; Palmer and her daughter ‘Fie’ for some time before Palmer’s partner Samuelu was added on 18 October 2013, incorrectly described as the “Treasurer”. 72. Statements of two accounts held by Palmer, for which she is sole signatory, were R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . also obtained:  s9(2)(ba)(i) in the name of Siaifo Palmer  s9(2)(ba)(i) in the name of Lisa Siaifo Palmer 73. For the 2012/2013 period that statements were obtained, concerns with the activity upon the accounts were raised. Numerous cheques were drawn to pay cash, often for tens of thousands of dollars having a significant impact upon the balance of the account. Frequent money transfers were noted to benefit Palmer. Examples:  On the 3 July 2012 a money transfer of $34,000 was made from the Society account to Palmer’s -46 account.  In August 2012, Palmer made a number of money transfers from her -46 account to staff members.  On the 16 Aug a transfer for $13,156.44 was deposited into her -46 account.  On the 30 August 2012 $26,000 is transferred back to the Youngstars account.  On the 17 September 2012, a transfer of $1,880 to her -02 account from her -46 account left it with a balance of $3.99.  Activity on the -46 account is then reduced significantly and it is shown receiving ffi weekly W&I Family Tax Credits of $661.98 followed by a weekly transfer by direct O debit of $660 to Palmers -02 account marked as “wages”. Interview Palmer 74. On 23 March 2014 Palmer agreed to be recorded in an interview under caution. She was accompanied by a friend and adviser Taha Fasi. 14 Appendix Page 16 75. Palmer confirmed her and Faavae Too her ex-husband set up the Society and eventually let it take over their home. She said they obtained funding from the MoE for the building work to alter their home into a pre-school. 76. Palmer described the poor financial state of the Society, as only a few parents paid fees and they were forced to take loans from finance companies and even the R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . accountant Nallapaneni. 77. Palmer said the accountant was aware of their situation, so agreed to loan them money and in return when the Society was able to repay him, they provided a little bit of interest as a gift to him. 78. Palmer said they met all their PAYE commitments but not their GST. She claimed that her ex-husband Too, failed to manage the GST requirements properly and they lacked the funds to pay it. They were going to do some fundraising to pay the GST, but at that point they had problems in their marriage and he left. 79. She stated Nallapaneni took over calculating the GST. She described a system whereby all receipts were placed in a box in the admin office and these receipts were delivered to Nallapaneni every month. 80. Palmer described how her daughter and sister worked as the part time admin staff for the school. She said her daughter ‘Fie’ was more a volunteer although had previously been a part time paid reliever. She also said her sister Poto was a volunteer but had two children who the Board allowed to attend the school free of ffi charge. O 81. She talked of her son Jagger’s part time job as driver and cook for the school. She said all the children had food provided at the school and some were also picked up and dropped home by the school. 15 Appendix Page 17 82. Palmer confirmed the society had rules for authorising large payments and cheques needed two signatories. She said the four signatories on the Society bank account were, ‘Fie’, Samuelu (her boyfriend), Nofo Viliamu (her brother) and herself. She stated that the Board and Nallapaneni worked out a budget of $40,000 per year to operate the centre. 83. Later in the interview Palmer was informed that her brother Nofo (the Society’s R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . Treasurer) was not a signatory on the bank account. Palmer said he should have been, but he had failed to go to the bank and sort it out. She confirmed Nofo did not have online banking access to the account. 84. She said the Society’s school budget allowed $300 a week for groceries and if anything extra was required then they would pay it out of their own pocket. 85. Palmer stated that Nallapaneni had a high level of engagement with the board, attending some monthly meetings or sending reports and he monitored all spending. She added her brother Nofo was the Treasurer and he presented financial reports and also checked all invoices were there before they were supplied to Nallapaneni. 86. Palmer stated the Society used cheques but also made online payments. She said ‘Fie’ did them now, but up until three months before it had been her. 87. Palmer went through the list of registered Officers and confirmed the majority were closely related to her. Asked about responding to s 51 notices, she stated the board had responded to ffi 88. O them but had asked her to come and assist them. 89. She claimed that Sesilia Talamaivao was an ex-board member (who was never registered as an officer) but was a community person who came in to help out. She said she was not paid but received petrol money for volunteering and got food. She 16 Appendix Page 18 stated Talamaivao had no job title at the school and no job responsibility but because of the s 51 notices came in to help the board. 90. She was asked about the two outstanding s 51 notices. She responded that Talamaivao was leaving now and the board had asked Palmer to come back in and R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . assist. 91. Palmer was asked in interview if she knew what was wrong with the Society’s finances. She replied that there was nothing wrong as the accounts were audited and they had Nallapaneni, the Society’s accountant. 92. She was informed that Charities Services were concerned about a lot of cheques that were presented at banks for cash. Palmer explained that the school had previously bounced some cheques and now, a lot of companies they dealt with would not accept cheques. She was asked which companies they dealt with only accepted cash; she gave examples of The Warehouse and Mitre10. She also explained that some of the school staff preferred to be paid with cheques made out to pay “cash” not with their names on, so they could access the money straight away. 93. She explained that she did use online banking to pay some accounts and wages, but again the likes of Dollar Dealer and Nallapaneni always wanted to be paid in cash. 94. Palmer stated that she used to be paid $40 an hour when she was the Manager and Supervisor. However, now she was a teacher and a supervisor. She was also ffi training a new Person Responsible (PR). She said the board approached her and said the school was not running well without her and offered her $35 an hour to O come back. She said she was currently working full time eight hours a day as supervisor. She said that the MOE were happy with this. Challenged about her ban from being involved in management of teaching she explained it expired next year but all she had to do was complete an administration course and in any event she had already received her full teacher registration back. 17 Appendix Page 19 95. Palmer said that rent paid to her and her ex-husband went straight onto the mortgage of 26 Longburn Road (the school building) which was still owned by her and her ex-husband Too. 96. She was asked to explain why it took 8 months from when she was convicted to resign in writing from the Society’s Board; she said it was because she did not R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . understand that she had to, until something came up. She thought it was either the MOE or the Teachers Council that told her she could not be on the board. 97. Palmer was asked about a series of cheques written out to obtain large amounts of cash going back over several years. She stated that Nallapaneni required cash when they repaid the many loans he had provided them, totalling about $250,000. She said MOE grant money always came in at the beginning of a month so large amounts obtained as cash early in a month would often be for Dollar Dealer loan repayments. 98. She was informed that Charities Services were concerned about the numerous cheques presented for cash as it was hard to see where the money had gone. Palmer denied that she ever benefited from money that was intended for the school. 99. She said she believed the school actually owed her money for loans she had made to the school over the years and resources that she bought with her own money. 100. She was informed that Charities Services were concerned about numerous online ffi transactions, where money was transferred from the Youngstars bank account to her private account. Palmer stated the school owed her over $130,000 in a loan O and the transfers were to repay the loan. She said she had no record of the loan anywhere, but she put the money in the accounts and Nallapaneni had the records. 18 Appendix Page 20 101. Palmer was asked if she owned a business or had other income. She said she and Too use to own Fraser Shipping Company for 20 years but it closed before the school was established. 102. Palmer was asked what Brookzania was. She explained it was the name of her Mum and Dads Motel business in Samoa. She said her mum ran her own business in Samoa which included some fales, a shop and a small 6 bedroom bed and R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . breakfast called Mama T’s. It had been a much bigger motel but it was hit by the Tsunami in 2009. She said she had intended helping her Mum run fales and an accommodation business but it was wiped out by the Tsunami. Palmer was informed that she was listed as the 100% shareholder of Brookzania a company she registered in Samoa in 2008. She said the Brookzania motel idea was cancelled and does not exist. She said no money from the school had gone there. 103. Palmer was informed that lots of withdrawals on her own account were made at Sky City Casino. This concerned Charities Services as large cash withdrawals were made without appropriate records detailing the purpose of the withdrawals. Palmer said she worked at Sky City Casino up until 2003 and had been a member ever since and visited for fun and sometimes work functions. She stated she only ever used her own money, never the schools. She was asked to estimate how much money she had lost there over the years, she said it was not that much as she would always win and lose, win and lose. 104. Palmer stated that the school had stopped borrowing from Nallapaneni and Dollar Dealer. 105. The only current outstanding loan was with Aotea Finance. She said the IR debt O ffi had been greatly reduced. s9(2)(ba)(i) Interview 106. On 6 May 2014, s9(2)(ba)(i) interview under caution. 19 agreed to a tape recorded Appendix Page 21 107 s9(2)(ba) (i) xplained the history and setting up of the Society and how it had been a great success for many years. s9(2 said it did not change its name to Youngstars Preschool until after )(b ) s9(2)(ba)(i) said had no current involvement with the school. s9(2)(ba)(i) 108. R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . s9(2)(ba)(i) 109. explained as the school was not running properly and s9(2)(ba)(i) Palmer were having arguments about it. said had a meeting with the MoE. 110. s9(2 elaborated )b ) and consulted Taha Fasi and also s9(2)(ba)(i) that the problems with the school were that Palmer kept going to Samoa for months at a time. She would then return to take more money and then go back to Samoa again. 111. said school. said lots of the previous teachers left because of this. was upset when he found out Nallapaneni was providing loans to the spoke to and warned him not to. school they never needed loans stated when was at the said they got the fees and they planned the spending. 112. said many years ago the current chair Lui Hano wanted to resign and he wrote a resignation letter for him. was upset to find out that Hano was still at the ffi Society. O 113. said was aware that Palmer used to gamble a lot, as often as every day s9(2)(ba)(i) . She would visit Sky City Casino and smaller bars with pokies. 20 Appendix Page 22 114. knew Palmer’s mother had a shop in Samoa but s9(2)(ba)(i) aware of whether it was a motel. 115. s9(2)(ba)(i) had not heard of Brookzania or Mama T’s. received no financial benefit from Ranui Boys. s9(2)(ba)(i) had no knowledge of how much money was in the account. R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . said was not 116. said Sesilia had previously tried to take over running the Pre-school but would not let her. s9(2)(ba)(i) had a disagreement and as a result Sesilia went to the MOE and told them about what was going on at the school. 117. said that knew when Palmer’s family members visited from Samoa, Palmer would pay them temporary or volunteer expenses from the school. said in opinion 50% of the problem at the school was all Palmer’s family being paid to work there. The other 50% was mismanagement of funds, staff and people involved in the school. 118. Commenting on the current Society Board Members, stated:  Nofo Viliamu, Palmer’s brother had no proper training to be Treasurer.  Alefaio Vaisuai Palmer’s sister’s husband had no training to be employed as a teacher.  Jodi Norman was Jagger’s wife.  Poto Palmer, Palmer’s sister, registered as Secretary, had lived in Samoa for the last 15 years. Ken Fraser, Palmer’s brother has no skills in anything. ffi  Onosai Talataina, Palmer’s brother.  Afereti Samuelu, Palmer’s boyfriend, 90% of the time he lives in Samoa, he works O   full time as a policeman in Samoa. Taugofie ‘Fie’ Sagatu, Palmer and Too’s daughter. said she was the best trained and most competent person in the school.  Jagger Too, Palmer and Too’s son, work as driver and cook but has a catering qualification. 21 Appendix Page 23  Leua Leavasa.  Virginia Cowan, a parent of children who might no longer be at school. s9(2)(ba)(i) R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 119. did not know but assumed she was a teacher. 120. s9(2)(ba)(i) 121. s9(2)(ba)(i) s9(2)(ba)(i) 123. s9(2)(ba)(i) O ffi 122. 22 Appendix Page 24 s9(2)(ba)(i) 125. s9(2)(ba)(i) R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 124. 126. s9(2)(ba)(i) Officer Interviews 127. No other members of the Trust have made themselves available for interview. Contact details and requests for interviews were made in s 51 notices to which there were no responses. 128. To date the responses required by the seventh and eighth s 51 notices sent to the Trust in March 2014 have received no response. 6. Analysis ffi Operation of the Society School O 129. The information that has been gathered from a variety of sources gives a strong 1 indication that the school is being mismanaged and has fallen from the high regard with which it was once held. The Society has informed the MoE they are paying $3,000 rent per month (08/11/2014) 23 Appendix Page 25 130. The information provided indicates financial mismanagement has led to the Society becoming reliant on high interest loans from various sources to survive between grant payments from the MoE. 131. No evidence of finance controls or proper records have been produced and it is apparent the Society does not comply with its own rules on spending. The accountant Nallapaneni said he had never seen how the society recorded day to R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . day spending. He only produced accounts based on bank statements and a few receipts brought to him by the society. 132. The current Society appears to be mismanaged and lacks governance. The original charitable purposes seem to have been eroded and all the indications are that Palmer has created an entity that creates employment for her family and friends and allows them to benefit from free childcare. 133. The pre-school claims the regular attendance figures of 50 children with a waiting list for further places. 134. However, it is evident that the majority of Society members and staff either currently benefit from paying no fees for their children to use the school or previously have done. 135. In 2012 the Society claims a total income, including all grants and fees, of $752,123. Palmer has stated that the accountant and she, worked out an annual budget of $40,000 to operate the preschool. It is presumed this excludes salaries which in 2012 totalled $468,766 per year. However, despite this resulting in a surplus of $243,357, the Society still posted an end of year negative result of minus ffi $30,032. O 136. Palmer admits that very few of parents who send their children to the school pay the fees the school requires, despite the school providing hot meals and a collection and drop off service. 24 Appendix Page 26 137. The Society has failed to submit its annual return for the year ending 31 March 2013 and has failed to meet its obligations under the Charities Act 2005 to respond to s 51 notices, either sending only partial responses or totally disregarding them. 138. The accountant Nallapaneni has emailed a draft annual return to Charities Services Compliance, but despite claims that it would be uploaded to the Charities R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . Register, this has not yet occurred. 139. The failure to supply clear responses to questions on governance issues or to submit receipts, accounts and the General Ledger of Accounts for the year ending 31 March 2013 are strong indicators of endemic problems in the Society. 140. None of the Society board members or staff (many of whom are also board members) have made themselves available for interview. 141. It is apparent that one of its founders, Palmer despite being disqualified by s16 of the Act (after a conviction for dishonesty with offences linked directly to the school), remains active in the Society with uncontrolled access to the Society’s bank account and in a management and supervisory role at the direct request of the board. 142. The Society Board is now populated mainly by Palmer’s family and friends. The current Chairman Lui Hano is elderly and submitted his resignation in writing many years ago, but still remains. The accountant Nallapaneni states most board members only attend meetings for $50 in petrol money and free food. Nallapaneni ffi states the Board do not even know how to convene and run a meeting. O 143. The MSD have concerns around staff employed at the school and claims for benefit. The MSD enquired with the school the current status of Palmer’s employment. In a letter dated 27 November 2012 written to Palmer by the Society it stated that the school was not renewing Palmers employment contract due to lack of funds. However, Palmer has admitted failing to “understand disqualification” and continuing to work until writing a resignation letter dated 25 February 2013. In 25 Appendix Page 27 any event she admits continuing to work at the school after her resignation and signed a new annual employment contract dated 7 October 2013. 144. The MoE has indicated that a recent visit to the school by Plunket has raised concerns about the care being provided for young children at the school. The MOE indicated that they have reviewed the eligibility of the Society’s preschool to receive funding. As a result the preschool had been served with a 21 day notice R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . that its licence to operate would be suspended on the 21 October 2013. 145. IRD became dissatisfied with how the debt was being managed and repaid, and now deduct payments directly from the MoE grants at source with the MoE. Siaifoi Lisa Palmer (aka Siaifoi Viliamu) 146. s9(2)(ba)(i) 147. s9(2)(ba)(i) . Talamaivao previously set up a similar preschool in Kelston and obtained $120,000 funding from MoE. The school closed with debts soon after and the MoE recovered very little of the funding. This is confirmed by the MoE. 148. Palmer admitted numerous offences to a MoE Investigator, ranging from June 2009 until May 2010, when she overstated student and staff attendance figures, this included 11 occasions she claimed to have been at work, when she was ffi actually in Samoa. She was only charged with 3 representational offences to which O she pleaded guilty at court. s9(2)(ba)(i) . This information tends to defeat the suggestion by the Society in its response dated 31 October 2013, that Palmer’s actions were not deliberate and that she simply made mistakes on funding forms due to a high workload. Talamaivao as “secretary for the board” supplied this response despite 26 Appendix Page 28 previously being a prosecution witness stating that it had been a deliberate action by Palmer. 149. Palmer, despite disqualification under the Act, has admitted remaining active within the Society at the request of the Board who, she states, could not cope without her. Palmer has remained as manager/supervisor and trainer at the school in breach of R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . a ban from the Teaching Council. 150. It is apparent that Palmer is unchallenged by anyone in her financial mismanagement of the Society’s funds and she is happy to transfer Society funds, at will, into her private account. She then does not appear to keep proper records or even differentiate as she uses all funds in her private account as her own, making withdrawals at Sky City Casino and in Samoa. 151. The Society makes frequent use of cash transactions which lack any proper records or receipts. 152. There is evidence to support the allegations of s9(2)(ba)(i) that Palmer has misused funds of the Society to benefit a motel run by her mother in Samoa. In interview Palmer confirmed her mother ran Mamma T’s motel but denied she funded the motel in any way. Palmer was also discovered to be the sole Director and Shareholder of a company in Samoa, called ‘Brookzania’ which is registered at the same address as the motel. Bank statements confirmed Palmer frequently visits Samoa and withdraws cash from a personal account, which was boosted by the frequent and unregulated transfer of Society funds. ffi 153. Likewise, Sky City Casino records show Palmer has frequented the facility and actively gambled, using money withdrawn from a personal account ,which was O boosted by the frequent and unregulated transfer of Society funds. 154. These apparent misuses of the society funds whilst representing serious wrongdoing under the Act, could amount to criminal offences, which would require referral to the Police. 27 Appendix Page 29 155. In addition a number of alleged offences of forgery have been discovered where Palmer is suspected of being involved in the forgery on rent agreements, bank documents and s9(2)(ba)(i) s9(2)(ba)(i) . Again, whilst representing serious wrongdoing under the Act, this too could amount to criminal offences which would require R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . referral to the Police. The Complainant 156. The MoE alerted Charities Services to suspected wrongdoing within the Society. The MoE made financial grants to the school based upon pupil attendance figures. Palmer systematically inflated those figures for a period of time resulting in the MoE then over paying the school. Following her conviction the MoE requested Palmer no longer be involved in the process and for a short while “Fie” her daughter was put forward as the new licensee. However, a change in the rules allowed the Society Board to become the licensee. 157. s9(2)(ba)(i) claims to have repeatedly alerted the MoE to s9(2)(ba)(i) dishonest appropriation of Society funds which were largely the grants from the MoE s9(2)(ba)(i) 158. Following a series of inspections and meetings, with staff of the preschool and Officers of the Society, the MoE took the rarely used step, to suspended the Society’s licence to operate a preschool. All MoE funding to the preschool has ffi also been suspended. An extensive list of conditions2 has been served on the O Society which must be fully satisfied by 15 December 2014 if the Society is to have the suspension lifted. 159. One inspection by the MoE discovered Palmer and her son Jagger Too are living on the first floor of the preschool in breach of the licencing. 2 Copy of MoE Letter “Suspension of Licence” annexed. 28 Appendix Page 30 160. To date, the Society has failed to supply the MoE with an accurate record of the claimed 50 registered students and contact details for their parents/care givers. The MoE was frustrated in its attempts to contact parents/care givers of students of the preschool to explain the suspension of the preschools operation and offer alternative places. Conclusion R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 7. 156. Determine whether there has been private pecuniary profit by any individual? 157. There is evidence that Lisa Palmer has taken significant funds from the Society to advance her own private purposes. There is no evidence these transactions were authorised by the Society, or advanced the purposes of the Society. In addition, in making decisions to make distributions to herself, Lisa Palmer breached the terms of the Trust Deed at C(iii)(a)(iii) in materially influencing payments to herself. 158. However, despite opportunities being offered, the other officers of the Society have not provided any evidence that the Society did not provide these benefits to Lisa Palmer through its operation. The information on the operation of the Society from both interviewees indicates the Society’s operation is delegated to Lisa Palmer.3 159. Thus it is appropriate to consider the Society has permitted itself to be carried on for the private pecuniary profit of an individual under the Act. 160. Determine whether there has been any serious wrongdoing? ffi 161. There are numerous examples of conduct which may amount to serious O wrongdoing. 162. have provided corroborated s9(2)(ba)(i) evidence of endemic and systematic serious wrongdoing and dishonesty at the Society. It is apparent and confessed by Palmer that she has continued to run the 3 See for example, Investigation report at [150-152] 29 Appendix Page 31 Society and maintain ultimate control of its bank account and finances despite being disqualified under s16 of the Act. She is also banned for 5 years from being in a supervisory teacher role, but admits ignoring this ban as well. She claims to have ceased this control position three months ago. This is considered very unlikely due to her previous patterns of behaviour R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 163. No records of day to day financial activity have been supplied by the Society and the accountant states he has never seen any such records. The Society’s rules are not complied with in relation to how spending should be authorised. 164. The AR for the years ending 31/03/2013 and 31/03/2014 have not been submitted despite several requests to comply. 165. Determine whether there has been a breach of the Charities Act 2005 or any other act? 166. There are significant breaches (see 8. Summary of Breaches below) of the Charities Act 2005, in relation to the failure to comply with s 51 of the Act through submitting incomplete and false information to Charities Services, or not responding to notices at all. 167. The AR for the year ended 31/03/2013 and 31/03/2014 are both overdue. The Society has been persistently late in its submission of AR. 168. Likewise, Palmer controlling the Society and its finances despite being disqualified under s 16 of the Act (with the apparent knowledge of the Management Committee members) is another significant breach of the Act. ffi 169. In relation to the Crimes Act 1961, there is good reason to suspect that Palmer O has: a. been involved in the theft of funds from the Society b. Falsified signatures on official documents c. Falsified signatures on s 51 responses to Charities Services 30 Appendix Page 32 8. Summary of Breaches Charities Act 2005 S 16 (2)(c) 174. The following persons are disqualified from being officers of charitable entities an R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . individual who…, has been convicted of a crime involving dishonesty (within the meaning of section 2(1) of the Crimes Act 1961) and has been sentenced for that crime within the last 7 years. Evidence of Breach 175. The Society has allowed Siaifoi Lisa Palmer to remain as an officer of the Society despite being disqualified under s16 of the Act following her conviction on 13 June 2013 for crimes involving dishonesty under the Crimes Act 1961. S 41 and 42 176. Every charity registered with Charities Services is required to file an Annual Return within six months of its annual balance date under sections 41 and 42 of the Act. Evidence of Breach 177. The Society’s continued and persistent failure to file Annual Returns. This is despite being sent reminders and s 51 notices requesting the filing of Annual ffi Returns for the years ending 31 March 2013 and 31 March 2014. O S 40(1)(ca) 31 Appendix Page 33 178. Every charity registered with Charities Services is required to ensure that it sends or delivers to the chief executive notice of a change that disqualifies an officer of the charitable entity from being an officer of the entity, within 3 months of the later of either the effective date or the date the charity first became aware of the change, under section 40(1)(ca) of the Act. R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . Evidence of Breach 179. Siaifoi Lisa Palmer was convicted of dishonesty offences, relating to her role at the Society’s Preschool, under the Crimes Act 1961 on the 13 June 2012. This meant she was disqualified from holding office at the Society under section 16 of the Act. The Society failed to notify this change within 3 months. Charities Services only received a notification of change on 9 December 2013 (18 months later) as a direct result of a s 51 notice, requiring its submission. Serious Wrongdoing 180. Section 4 of the Act defines serious wrongdoing, in relation to an entity, as including any serious wrongdoing of the following types: a. an unlawful or a corrupt use of the funds or resources of the entity; or b. an act, omission or course of conduct that constitutes a serious risk to the public interest in the orderly and appropriate conduct of the affairs of the entity; or c. an act, omission or course of conduct that constitutes an offence; or d. an act, omission or course of conduct by a person that is oppressive, improperly discriminatory, or grossly negligent, or that constitutes gross mismanagement. an unlawful or a corrupt use of the funds or resources of the entity ffi (a) O Serious Wrongdoing- Private Pecuniary Profit 181. Charities Services considers the use of Society funds for the private pecuniary profit of individuals constitutes an unlawful use of the funds or resources of the entity. Officers and members of the Society have received private pecuniary profit (PPP) through the operation of the Society. 32 Appendix Page 34 Evidence of Breach 182. Funds were transferred from the Society’s bank account to private accounts without proper authorisation of the Trust, and not used for the charitable purposes of the Trust. We consider the funds were used for the private benefit of the officers R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . and members.4 183. Deriving PPP from the operation of the Society, falls within the following definition (a) of serious wrongdoing: "...an “unlawful or a corrupt use of the funds or resources of the entity…” (b) an act, omission or course of conduct that constitutes a serious risk to the public interest in the orderly and appropriate conduct of the affairs of the entity Serious Wrongdoing- Permitting Disqualified Officer 184. We consider permitting a disqualified officer to remain constitutes a serious risk to the public interest in the orderly and appropriate conduct of the affairs Siaifoi Lisa Palmer was disqualified from being an officer of any charitable entities as she had been convicted on of crimes involving dishonesty (within the meaning of section 2(1) of the Crimes Act 1961) and has been sentenced for those crimes within the last 7 years. Evidence of Breach 185. The Society has allowed Siaifoi Lisa Palmer to remain as an officer of the Society O ffi despite being disqualified under s16 of the Act. 4 Serious Wrongdoing- Management Ban See for example, Investigation report at 59, 65, 70-73,100,103,115 117, 119 33 Appendix Page 35 186. Siaifoi Lisa Palmer is currently the subject of a 5 year order of the Teachers Disciplinary Tribunal, banning her from holding a position with managerial responsibility that required registration and a practising certificate as a teacher, until she had undertaken courses on school leadership. Evidence of Breach R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 187. The Society has allowed Siaifoi Lisa Palmer to remain in a Managing and Supervising Teacher role at the Society’s preschool. This is despite Siaifoi Lisa Palmer being banned for 5 years by the Teachers Council from holding a position with managerial responsibility that required registration and a practising certificate as a teacher, until she had undertaken courses on school leadership. Allowing Palmer to continue, in breach of the 5 year order of the Teachers Disciplinary Tribunal, falls within the following definition (b) of serious wrongdoing: “… an act, omission, or course of conduct that constitutes a serious risk to the public interest in the orderly and appropriate conduct of the affairs of the entity. Serious Wrongdoing- Financial 188. The Society lacks proper financial governance, it is reliant on commercial loans to survive frequent shortfalls in its budget and fails to adhere to its own Society Incorporated Constitution rules in respect of: a. clause F; xix) Four signatories comprising of the Chairperson, Secretary, Treasurer and one other Management Committee member shall be for all bank accounts and two signatories for cheques or other withdrawal authorisations of which one shall be the Chairperson. b. xx) ..and may include any other persons who the Management Committee ffi considers as appropriate and fit to be a signatory. O c. xxii) “The Treasurer (in conjunction with the accountant…) keeps accurate and proper accounting records…. Evidence of Breach 34 Appendix Page 36 189. The Society only has three signatories on its bank account Siaifoi Lisa Palmer, her daughter Taugofie Sagatu and her partner Afereti Samuelu (incorrectly described to the bank as the Treasurer). Neither the Chairperson, Secretary nor Treasurer are signatories. 190. The Chairperson had not signed any of the examined cheques and in any event, R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . as he is not a signatory on the bank account, he is unable to do so. 191. One of the examined cheques dated 2 March 2013 was made out to pay ‘cash’ and was presented by Afereti Samuelu. $21,500 cash was obtained and Siaifoi Lisa Palmer was the only signatory on the cheque. 192. Siaifoi Lisa Palmer makes frequent online cash transfers from the Society’s bank account but no records of authorisation by the Chairperson have been produced. 193. The Society’s Accountant, Nallapaneni states he has never had a conversation about finances with the Society’s Treasurer Nofu Viliamu. 194. The Society failed to supply any general ledger of accounts, financial records or receipts for year ending 31 March 2013. The accountant stated he had never seen such documents and was unaware as to how day to day spending was recorded by the Society. 195. This failure to practise proper financial governance, reliance upon loans and the failure to adhere to its own Society Incorporated Constitution rules clause F xix) xx) and xxii) falls within the following definition (b) of serious wrongdoing: “… an act, omission, or course of conduct that constitutes a serious risk to the public interest O ffi in the orderly and appropriate conduct of the affairs of the entity. Serious Wrongdoing- Creation of Employment. 35 Appendix Page 37 196. The Society has created employment for family members and close friends who are unqualified or absent overseas or subject of a teacher banning order. Evidence of Breach 197. Evidence has been provided that qualified teachers left the school due to poor management and have been replaced by mainly unqualified staff who are all R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . family members or close friends. Some staff members have been paid even though they have been overseas in Samoa. The MoE licence to operate as a school has been suspended as of 21 October 2014 due to concerns about the care of children at the school. This falls within the following definition (b) of serious wrongdoing: “… an act, omission, or course of conduct that constitutes a serious risk to the public interest in the orderly and appropriate conduct of the affairs of the entity. (c) an act, omission or course of conduct that constitutes an offence Serious Wrongdoing- S 52(1)(a) 181. Any person who without reasonable excuse, refuses or fails to comply with a notice under s 51 commits an offence. Evidence of Breach 182. The Society has failed to respond to two notices issued under s 51 of the Act. Both notices were sent on 12 March 2014, with responses due by 25 March 2014... The failure to respond to these notices is an offence under s 52 of the Act. The failures to respond therefore fall within definition (c) of serious wrongdoing: “…an act, O ffi omission, or course of conduct that constitutes an offence”. 183. The Society has provided no excuse or explanation for failing to respond to the two notices. 184. The Society has failed to comply (fully) with five notices (sent on 30 October 2012, 25 July 2013, 16 October 2013, 21 November 2013, and 16 January 2014) issued 36 Appendix Page 38 under s 51 of the Act. This is an offence under s 52 of the Act. The Society did not provide adequate responses as required by the notice which is considered to amount to a failure to comply under the Act. The failures to comply therefore fall within definition (c) of serious wrongdoing: “…an act, omission, or course of conduct that constitutes an offence” 185. The Society provided various excuses for delaying provision of the information R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . required by the various notices, such as the requested documents being stored away, officers being overseas, attending funerals or needing clarification of questions. However, no excuse or explanation has ever been offered for failing to comply fully with any notice. Serious Wrongdoing - S 52(1)(b) 186. Any person who in purported compliance with a notice under s 51, supplies information, or supplies a document, knowing it to be false or misleading commits an offence. Evidence of Breach 187. The response to a s 51 notice issued 30 October 2012 falsely stated the IRD debt was due to building work. On behalf of the Society, Palmer provided the false statement response in writing but in interview stated that it was untrue. The accountant also commented that the debt was due negligence of the Society and ignoring IRD letters. 188. The response to a s 51 notice issued 25 July 2013 falsely stated the notice was addressed to the accountant so the Society did not deal with it. The notice was ffi addressed to the Society’s registered alternative contact Adiseshaiah Nallapaneni O the Society’s accountant (in lieu of Palmer the primary contact) at the Society’s address but for the attention of the Society’s Committee Members. Nallapaneni stated he had never agreed to this role, so he put the opened letter in the Administrative Office for the Society to deal with. 37 Appendix Page 39 189. The response to a s 51 notice issued 16 October 2013 falsely stated Palmer had resigned on April 2012 following her conviction. on dishonesty offences, in relation to supplying false attendance records to the MoE for funding. Palmer’s conviction is recorded by MoJ as 13 June 2012. Palmer’s resignation letter was dated 25 February 2013, which is 8 months later, but in any event she admitted in interview continuing her role at the Society in breach of her disqualification. R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 190. Also, the response to the s 51 notice issued 16 October 2013 falsely stated there had been no wage increase for 4 years and no rent increase since 2007.However, the Society’s AR record a year on year increase in both wages, without additional staff and rent. A copy of the Rent Agreement dated 17 February 2010 includes the formula for annual rent increases until 2015. 191. The response to a s 51 notice issued 21 November 2013 supplied false minutes of a board meeting dated 18 May 2013. It contains two different start times, and records comments from Taugofie despite accepting her apologises for not attending. It claims Nallapaneni the accountant attended and presented a budget for the year 2012/13. Nallapaneni says this is false, he attended a meeting 18 May 2012 but did not attend this meeting 2013. 192. The response to a s 51 notice issued 16 January 2014 falsely stated the 2013 Annual Return (16 months overdue) is delayed as board members and the auditor were holidaying overseas. The accountant states this is untrue and that he had been requesting the information to complete the AR for many months but the Society had failed to supply it. Having finally received it, he was concerned about a $10k loan repaid by Society money that did not appear to have benefitted the ffi Society and was awaiting further information from Palmer. s9(2)(ba)(i) O 193. 38 Appendix Page 40 194. The supplying of false or misleading information and documents in response to notices falls within the following definition (c) of serious wrongdoing: “…an act, omission, or course of conduct that constitutes an offence” 195. Together, all of these breaches are examples of the serious wrongdoing and the gross mismanagement, which has corrupted this Society and represents the R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . grounds for its removal from the register. 8. Recommendations 196. That the Society is removed from the Charities Register. A Charities Services Advisory Group (CAG) meeting was held to consider the issuance of a Notice of Intent to Remove (NOITR) to the Society. It was agreed a NOITR should be prepared and sent. 197. It is considered that the grounds for removal under s 32 (1) of the Charities Act 2005 are: a. S 32 (1) (b) there has been a significant or persistent failure by the entity to meet its obligations under this Act or any other enactment b. S 32 (1) (e) the entity has engaged in serious wrongdoing or any person has engaged in serious wrongdoing in connection with the entity 198. It is considered that the extensive serious wrongdoing, dishonesty and wilful disregard of the Charities Act that has been displayed by the Society, precludes ffi consideration of a section 54 Warning Notice. O 199. A further recommendation will be that the suspected Crimes Act offences of theft and forgery be referred to the Police. Liaison that has already occurred between s9(2)(ba)(i) , Ministry of Social Development, Ministry of Education and the Teachers Council shall continue with information that will assist those organisations being provided by Charities Services. 39 Appendix Page 41 9. Comments from Investigations Manager Comments by Investigations Manager File closure Date received Type Status El Source category A . El Information source ed CRM El Investigation category I 1 1 and in CRM Resolution action ed parties data in CRM . a my EIIRDreferralif. '1 Details: 5 9; 40 Appendix Page 42 Annex 1. Ranui Boys Incorporated Society Timeline. 17/09/2008 I Ranui Boys Inc first Registered 11/03/2010 Faavae (Fraser) Too aka Sui deleted (he resigned) as of?cer of the Society online. 15/06/2010 Failed to file AR. 19/01/2011 Complaint received Charities Commission (CC). (i 13/06/2012 Palmer Convicted and therefore 5 16 Disqualified. i 30/10/2012 Firsts 51 from Francesca Collins, Charities Servicesz?clu g: 0 rdue A"s part year 2010 and 2012, Reasons for IRD debt? 28/11/2012 Palmer responds to ?rsts 51: IRD debt due to . Ing extens'on . - 2012 will be posted by January 2013. a 30/01/2013 Request from Society for extension on ,4 -. .1/1 gra . until 10/03/2013 A 12/03/2013 AR for YE 31/03/2012 received. n_ 29/06/2013 Assigned to Paul Budd 24/07/2013 Second 5 51 requesting almJ I 25/07/2013 Third 51 sent to alterna' (may Palmer Disq. Of?cer) FAO Management. Respons .7 . 05/08/2013 Phone call and emai iv. nt ,4 ee to be alternative contact- 59(2)(ba 1 .5 16/10/2013 Fourth 51 re/Qrespons 0 Th' ?x if due 31/10/2013. 21/10/2013 Overdue A 1/03/201 31/10/2013 Respon 1 plete an nsatisfactory responses. 21/11/2013 Fifth 51 eki orm tion and supporting documents. Response 9 01 18/12/2013 on ateria ived dated 30/11/2013. 16/01/2014 seek' rdu YE 31/03/2013 earlier questions still to be answ iona ation, including Receipts and General Ledger of a nt 3/201}. Response due 06/02/2014. 02/02/2014 Email eeking extension for response to Sixth 51 and blaming acc nt? ay for delaying AR ?ling. 1 9/02/20 59(2)(ba)(i) mismanagement, uncontrolled spending, IRD de loans. Palmer in charge despite disquali?cation. AR overdue as failed to supply information. 27/02/ 14 onse to Sixth 51, failing to address some issues and giving apparently correct information. 12/03/2014 Seventh 51 re still unanswered questions from earlier 5 51. Response Due 25/03/2014 Not Received. 12/03/2014 Eighth 51 requesting to interview staff and of?cers. Response Due 25/03/2014 Not Received. 23/03/2014 Interview Palmer. Admits breaching Disquali?cation and Teaching Ban. Admits accessing bank account, use of cash and claims transfers to her own account in respect of a loan ($130k) she has made to school which is unrecorded. Gambles with own money. No money to family motel in Samoa. 41 Appendix Page 43 s9(2)(ba)(i) 30/09/2014 . Jobs created for family. Confirms Palmer’s gambling habit. No specific knowledge of Palmer links to Samoa Motel but confirms she took s9(2)(ba)(i) school funds to Samoa. . AR for YE 31/03/2014 was due. (YE 31/03/2013 still not filed). O ffi R ci el al ea In se fo d rm un at de io r n th A e ct 19 82 . 06/05/2014 42