Thursday, 17 January 2013

Golf courses, housing developments and four letter words


So starting from where we left off in the last post - Birnie Capital.
Founded by a man named Bill Birnie, Birne Capital Property Partnership (BCPP) was described in an article in the National Business Review as “an investment vehicle for several large-scale property developments in Northland”.

More specifically it was the company with which the executive board of Ngati Awa’s financial arm, Ngati Awa Group Holdings Ltd (NAGHL), decided to invest $3.3 million in to develop an international-standard golf course.

Ngati Awa was joined in the investment by other interests including Auckland businessman Allen Peters for a total of $17.25m while Mr Birnie borrowed a further $6.5m from BNZ. The plan was to buy land on Kawau Island to develop the luxury golf course and a housing development.

The property assets included the purchase of Lion Rock Golf Course and Lion Rock Development, both owned by Mr Birnie, which were the two companies that had gained consent to build the development.
An agreement between the investors and Mr Birnie contained an option for BCPP to transfer back the Lion Rock assets if a further conditional agreement between John Paterson & Co and Mr Birnie for the sale and purchase of certain land didn't eventuate.

In September 2009, Paterson & Co decided not to sell. At about the same time a valuation report on Lion Rock development considered the development of the project would require an additional investment estimated at between $61 million and $70.115 million plus GST.

The project was abandoned and Ngati Awa wrote the $3.3m investment down to nil.

In 2010 Ngati Awa and Mr Peters went before the High Court seeking to invoke the right to “put back” the assets purchased by BCPP from Lion Rock.
The two parties claimed Mr Birnie and his associate Stephen Norrie breached fiduciary duty by voting against the exercise of a put option that would force the return of $19m.

However before the hearing was heard in the High Court an offer of settlement was made by Mr Birnie to pay NAGHL and Mr Peters $3.55m in three instalments over four years.
Ngati Awa accepted the deal but at the AGM last year runanga accountant Murray Haines admitted that to-date no money had been received from Mr Birnie.

He said legal action against Mr Birnie would continue but a $1.57m doubtful debt provision had been set up because of the uncertainty about receiving any money from him.
The facts, to which I have laid out for you here as best as I know, highlight the NAGHL executive board chaired by former civil servant Sir Wira Gardiner appears to have done very little research when deciding to invest $3.3m of the tribe’s money into the development.

Again I am left to ask what sort of due-diligence was completed before the investment was made?

Surely, if the project needed a further $40-$50m to be realised then the investment was flawed from the beginning. And why did the executive board decide to invest in a development in Northland when Ngati Awa’s traditional tribal boundaries are in the eastern Bay of Plenty?
In my opinion, the investment just doesn’t seem to make any sense at all retrospectively. 

Perhaps that is why Sir Gardiner chose to use that four-letter word at the AGM last year after several questions about NAGHL’s performance were asked.

Sir Gardiner also said the iwi shouldn’t be surprised about the $3.3m write-off because it has been in the tribe’s annual reports since 2009. But personally I think that it shouldn't be swept under the carpet because it is  historical. Surely there are lessons to be learnt. What do you reckon?

Next time I will discuss the statement made by Te Runanga o Ngati Awa chief executive, Enid Rātahi-Pryor, that NAGHL’s role is not to create jobs it is to create wealth.

5 comments:

  1. Kia ora Karla,

    An interesting article indeed, however some points you make I believe require further depth of investigation. Just to touch on one historical fact - you write that Ngati Awa's traditional boundaries are in the Eastern Bay - actually, from a historical sense, they stretch way further than that...consider the journey of the Mataatua waka, you may find that Ngati Awa whakapapa indeed has very strong traditional links to the north....the brother of Toroa, the eponymous ancestor of Ngati Awa and the Mataatua waka begat the largest iwi of the north. I'm sure you know who he is. I hope this is of interest to you.

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    1. Kia ora,

      Thank you very much for your comment.
      I wanted to take the time to respond to some of the points you have raised. Indeed Mataatua waka, and therefore Ngati Awa, have strong tribal ties to northland and particularly Nga Puhi but there are few that would consider this section of the motu part of Ngati Awa's tribal boundary. Also Toroa is not the eponymous ancestor of Ngati Awa. Eponymous is defined as named after a particular person or group, therefore the eponymous ancestor of Ngati Awa is Awanuiarangi (the second).

      Nga mihi

      Karla

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  2. Kia ora Karla,

    Outstanding work. This sort of lazy investment practices are unacceptable. After all, it's not their (as in NAGHL) money to waste.

    Enid is a little confused too. Jobs and wealth are one in the same. Jobs create wealth, wealth feeds further jobs. In any event, restricting the role of iwi to a limited definition of wealth creation is - I think - inconsistent with our values.

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  3. i think what your saying is true n i like your perspective on things. maybe the question is what is the wealth we want as an iwi. Just somthing to ponder.

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  4. Outstanding post, you have pointed out some great details, I likewise believe this s a very superb website.

    ReplyDelete