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Defunct budgeting service bone of contention

By Paul Titus

Methodist Mission Northern was in the uncomfortable glare of a media spotlight over the Christmas period.

In its December 18 issue NZ Listener published an article that alleged the Mission has tried to cover up fraud in its former budgeting service and avoid compensating victims of that fraud. In its January 22 issue the magazine printed a letter from Mission superintendent Rev Keith Taylor that refuted claims made in the article.

The Mission established its budgeting service in the early 1990s to provide advice and budgeting services to people who could otherwise not get access to bank accounts and thereby social welfare payments. At its peak the budgeting service had 650 clients. The client base included some of society’s most disadvantaged including the destitute and homeless.

In 2001 Methodist Mission Northern (MMN) launched a review of all its services. As part of the review in June, 2002 it engaged Carlton DFK, a firm of chartered accountants, to review the practices and procedures of the budgeting service.

During that review accountants discovered transactions involving some clients’ accounts for which there was inadequate documentation. It appeared some clients were loaned money that came out of others’ accounts and there were also questions about the nature of fees (known as koha) the Mission deducted to defray some of the costs of the budget service.

MMN co-general manager – finance and business support Jaclyn Green says on February 26th, 2003 the Mission laid a complaint with the police over the issue. In June, 2003 the budgeting service was closed along with several other programmes as the Mission attempted to eliminate deficits which at their worst reached $2.7m in the financial year ended 2003.

In February 2003 Nick Smith wrote an article for the National Business Review about the problems in the budget service (reprinted in the April 2003 issue of Touchstone along with Keith’s response). In his recent Listener article Nick claims Mission management has:

· made inadequate efforts to uncover the extent of the potential fraud in the budget service. He cites staff who say only one accountant was brought in to “clean up and close down” the service.

· failed to inform clients about problems with the budgeting service and resisted compensating those who were out of pocket.

· quashed efforts by current Mission staff to act on behalf of former clients of the service.

MMN management denies each of these claims. Jaclyn says in addition to the initial team of chartered accountants who uncovered the discrepancies, early in 2003 two other chartered accountants were brought in to follow up particular transactions, two people were hired to interview clients about their accounts, and another team was set up to suggest ways to make the budgeting service more transparent and efficient.

“In March 2003 we sent letters to all clients that said we were reviewing the records of past transactions and they should come in and help us update our records. In every case where there was no documentation for a deduction from an account we reversed the transaction.

“Some people are transient and we could not contact them but we have repaid every person we are aware of every cent we owed them. We still owe 154 ex-Budget Services clients a total of $8370. We owe less than $5 to 71 of them and less than $100 to 141.”

To the claim that management has told staff not to lobby on behalf of former clients, Jaclyn replies the Mission has an employee dedicated to investigating all claims as they arise. That person has the files related to the budgeting service and standardised steps for doing a proper investigation. All other staff have been asked and encouraged to refer any former clients to them.

Following the publication of the Mission’s response in the Listener Nick was standing by his article. He says testimony by Mission staff and documents he has seen support his case.

Greg Brand of the Auckland police’s company fraud squad says no one named in the article or any other former client of the budgeting service has laid a complaint with the police. He says the investigation of the Mission’s original complaint is a complex one and it is still underway.