20 Mar 2014

$6m lost on risky properties

8:58 pm on 20 March 2014

The Auditor-General has criticised a Dunedin City Council-owned company for losing over $6 million on risky property investments near Queenstown.

Auditor-General Lyn Provost.

Auditor-General Lyn Provost. Photo: OFFICE OF AUDITOR-GENERAL

Lyn Provost on Thursday released her report into land deals at Luggate near Wanaka and Jack's Point near Queenstown by infrastructure company Delta, following a 16-month investigation that began in November 2012.

Dunedin mayor Dave Cull called for the investigation after questions were raised about the deals and a possible conflict of interest with one of Delta's directors.

Ms Provost has found that after tax, the losses from the investments will be $6.4 million.

She said she found no evidence of impropriety or poorly-managed conflicts of interest, but Delta did not consider the risks properly, should have sought independent advice beforehand and used artificial business structures to avoid public scrutiny.

Ms Provost said Delta's directors regard the investments as learning experiences and they proved to be expensive lessons.

Mr Cull said on Thursday it was a very unsatisfactory situation, which is why he called for the inquiry. The council accepts the Auditor-General's findings and has addressed all problems she found.

The mayor said the $6 million lost was in assets, not income, but it has still hurt the council

The Jack's Point subdivision near Queenstown.

The Jack's Point subdivision near Queenstown. Photo: DELTA