Friday, 12 July 2013

A time for change


Kia ora koutou,
Firstly sorry that it has been awhile since my last post but sometimes life just gets in the way, particularly in the middle of winter.

Hei aha, I have finally found some space and I wanted to use this post to discuss the role of the Te Runanga o Ngati Awa (TRONA) board representative.

I believe, with the upcoming election, it is important that we all understand the responsibilities of the board. After all, we are the power behind them.

To start I would like to discuss the most recent TRONA board meeting, which  was held two weeks ago, to highlight a particular issue.

The point I would like to concentrate on was the passing of a resolution to increase the dividend paid to the runanga by the tribe’s financial arm.
Since its inception Ngati Awa Group Holdings has paid the runanga $1.5 million each year so that social initiatives can be provided to tribal members.

Chief financial officer Murray Haines said NAGHL was set to record a net cash surplus of $2.2m this year.
He noted key performers were Ngati Awa Asset Holdings with $6 million in shares, Ngati Awa Forest Ltd with $1.1m and Tumurau’s year-end profit of $630,000.

“That provides plenty of room to pay the $1.5 million to the runanga,” he said.
Following the financial report Ngati Wharepaia representative Materoa Dodd suggested the board could ask the financial arm to increase the dividend paid to the runanga  from $1.5m to $1.8m.

She said the board could discuss whether runanga chairman Te Kei Merito should ask NAGHL chair Wira Gardiner to increase the dividend.
“Or even $2m, given that some of investments are doing so well. It doesn’t hurt to ask.”

The suggestion was discussed and a resolution was put forward to increase the dividend to $1.8m. It was supported by 11 members with Nga Maihi not participating because Rihi Vercoe was standing in for the absent Regina O’Brien and four representatives voted against.
Those who did not support the motion were Joe Mason, Tani Wharewera, Stephen Haua and Manu Glen.

However, according to the tribe’s charter, the board does not have the right to increase the dividend.
“For the avoidance of doubt, and except as expressly provided by this Charter, all companies (including The Company) and other entities within the Ngati Awa Group shall be governed by their respective boards and the role of the runanga in respect of those companies and other entities shall be limited to the exercise of the rights conferred on the Runanga as shareholder, or (as applicable) appointor, and beneficiary of the relevant entity.”

In other words the runanga’s board is responsible for the governance of the organisation. Governance is the act of governing and relates to decisions that define expectations, grant power, or verify performance.
Therefore the board only has the rights to set performance measures and elect members to NAGHL or stand a director down, it cannot make operational decisions.

Except for Stanley Ratahi, who replaced his sister Enid Ratahi-Pryor as the Ngati Hikakino representative when she became chief executive, the board has been in place for three years.

By now they should understand what their role is however the point that this situation raises is most of them don’t.
Mrs Ratahi-Pryor, in her role as chief executive, has organised for several members of the current board to participate in governance training through the business coaching organisation, Icehouse.

However this did not offer me much reassurance and I am left to wonder why it has taken so long to look at the board’s skill.
The board’s term is almost complete and later this year each Ngati Awa hapu will elect a representative to the board.

There is every chance that the current stock could change and it is my firm belief that every hapu should at least discuss the options.
Let us remember that under this current board the organisation has lost at least $5.2 million in failed investments, ensured several redundancies, forced good contributors to leave because they didn’t toe the party line, scaled back the social initiatives offered to tribal members, overspent to the point where cost-cutting has had to become a way of life and developed a culture that can only be described as toxic.

The board may not have made the poor decisions directly but many of them have failed to ensure accountability and transparency. As a board they have not been clear about their expectations, they have had been told who has the power and when performance should have been verified they put their head in the sand instead.
There are those who have done a good job, they will know who they are and will be backed by their people. However there are others who no longer deserve to be there.

Our tribe is in a crisis.
What we need are strong leaders with proven skills who have fresh ideas. Leaders that will hold those who make bad decisions to account and ensure those who are making positive contributions have the support to continue doing so.

If you believe, as I do, that now is the time for change make sure you are registered to vote by going to this webpage and have your say at the elections later this year.

Even better, make a stand for your people and put your hat in the ring to be a hapu representative.
Ma te wa

6 comments:

  1. Leaders don't have romantic relationships with the staff. Leaders don't make decisions for personal gain. Leaders don't choose to do nothing. Leaders don't get prosecuted. Leaders make decisions based on facts not friendships.

    Leaders review their performance and commit to improve it. Leaders make gains for everyone, not a select few. Leaders empower people to act. Leaders are accountable.

    Leaders enjoy their position through the collective will of the people who support them. One vote could make the difference.

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    1. They do actually. And have done since time began. Where do you think Tau Henare came from? The first family? Don't think so. His tipuna Tau had an affair with his cook and that's where Tau junior comes from, not the line of Sir James. Ngata was given young females whenever he went into certain tribal areas as was the custom for traditional leaders. You don't think the former general manager didn't have an affair with his sister in law? Why do you think she was kept on the Runanga payroll when whatever shred of competence she might have once had was long gone many years ago? The head of FOMA (a female) had an affair with the office boy. Two years ago. The head of a major iwi had an affair, longstanding, with the manager of the League. Everyone knew. Even his wife. It happens. It's not necessarily good but it happens. That's the reality of the reeling world we're in.

      Selling drugs to rangatahi, peddling in the psychosis and misery of generations now that's serious. Abusing defence-less women and children, that's serious. Until the dealers and wife bashers and child bashers are booted out and hung out to dry, all of the rest of this is trash.


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  2. As you can see by the ever dwindling posts, most of the tiny handful of an equally tiny minority of the iwi who put stuff up on this are over it, the novelty value has worn off. What was mildly amusing is now pretty mundane and boring. No more high profile exposes or scandal. And when a real scandal erupts a la carbon nothing changes.

    As it was always going to be.

    Just look at Eraka blog. More like the remnants of a tribal The New Zealand Truth magazine, minus the prostitutes. Although when you look a little closer....Erakablog is now left to about half a dozen cynical and poisonous individuals with obvious mental health issues who have actually assisted in accelerating the road to final impotence of the iwi authority.

    Hopefully your skills as a writer will now be put to more productive and positive use. You have a good writing style and it should be utilised by the iwi and the wider community.

    As for the point of this post of yours, yes, it seems pretty wacky that the board having approved the budget then immediately go to try and destroy its content and integrity by a resolution that is outside of their powers to pass. Good on the members who voted against it. At least they understand the charter.

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  3. Yes, it is important to understand the difference between governance and management. NAGHL reports to the Runanga. Therefore the Runanga is the only entity that can seek an increase in the dividend from its commercial entity, NAGHL. I understand the same request was made to NAGHL a few years back but the status quo prevailed. An increase would hopefully be used to build capacity and strengthen, nga uri o nga hapu o Ngati Awa. I am pleased that there are people on the Runanga Board who seek rightful entitlements for the Iwi, otherwise who else would do it?

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  4. If you are trustee for $1000 you are required to do two things. First you must act to ensure that the value of the $1000 today retains that value in 5, 10 or 20 years. You do that by investing the capital in sensible and low to moderate risk investments and then adding some of the profit from the investment to the original $1000. So if you invest your $1000 in a term deposit at 5% you will get $50 less tax on the income. As the Runanga pays no tax on its income you receive the whole $50. You then add part of that $50 to the original $1000. You decide to add $30.

    The second thing you must do is provide for the beneficiaries in some way. So the remaining $20 you then use for the benefit of the trust beneficiaries. You spend $13 on running the Runanga and the other $7 you pay out in marae and education grants.

    So you disperse $20 and add $30 to your $1,000.

    The following year you receive 5% on your $1,030. You do the same again year after year so that in 10 years the capital has increased to over $1,700. This then means you have both ensured the value of the capital has retained its value and not eroded and you have provided for the beneficiaries in some way.

    However, if you do not reinvest the $30 each year then the value of your original $1,000 in 10 years time will have eroded to much less than $1,000 and you will be in breach of your duties as a trustee. The beneficiaries can then sue you and you may be required to make up the difference personally.

    The Runanga can continue to request increases and NAGHL can continue to decline those requests. The Runanga can then decide to remove the directors and replace them.

    If NAGHL does not reinvest to maintain the value of the settlement assets then they are likely to be in breach of their own duties to the Runanga and its beneficiaries. If the Runanga permits the NAGHL directors to wilfully and negligently fail to reinvest or requires NAGHL to increase the dividend to the Runanga then the beneficiaries can sue the Runanga members personally to recover the difference.

    This is all basic really.

    The reason that NAGHL and the Runanga are separate is to ensure the long term sustainability of the settlement assets so that the political body, the Runanga, does not interfere with the investment decision making of NAGHL.

    While it is correct that NAGHL has lost money on some poor investments it has for the most part since 2005 made profits that far exceed its losses at a time when many larger entities on a national and global scale either made huge losses and required government bailouts or failed and went bankrupt.

    Not sure what you mean by "rightful entitlements".

    A more relevant question might be - is paying the Runanga a dividend of $1.5 million each year the best use of our money? Personally I would prefer to see the Runanga downsized to a core of 5 full-time staff with a focus on educational outcomes, RMA responsibilities, maintaining the register, dealing with communications and media to keep the people informed. That should only cost $600,000. The other $1.1 million I would pay 50% to each marae and 50% to each hapu. Let the marae and their hapu decide how to build their own capacity. That way all hapu get something substantial each year that they can then mortgage to reinvest in their own futures and the hapu with functioning marae also get the due recognition that they deserve. With the rising costs of insurance it is not cheap to run and maintain a marae.

    The other 15,000 or so beneficiaries who never participate or contribute to the iwi, they can find their way without the iwi. They've never been that interested before. I would rather invest in the marae and those who keep those fires burning. Chasing the vast majority of the iwi who do not participate, in the forlorn hope that one day they might become interested is like chasing rainbows - totally unrealistic and a waste of scarce resources. Tipping more out of the bucket is not the solution. We need better bang for our buck.

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  5. I am not Ngati Awa. I know a number of people discussed personally. But I do not take any of this korero to heart as I believe in the right of free and frank discussion, particularly when it comes down to iwi governance and funding and Treaty rights.

    I take the comments on here as part of the debate, although I recognise this is for Ngati Awa to have.

    I would like to thank the writer/anonymous for what I consider to be one of the better most practical discussions of the role of trusts and trustees.

    Could I suggest the following additions:

    Runanga Trustee 101
    If you are Runanga trustee for the amount of a Treaty settlement, say $1000, then you are required to do three things.

    First you must act to ensure that at the least, the value of the $1000 today retains that value in 5, 10 or 20 years.

    Secondly, you must provide for the beneficiaries in some way.

    Thirdly, you should allow some room to grow the value of that asset. This should be strictly regulated.

    Goal 1 - Retain the Value of the Asset: Trusts should invest their capital in sensible and low to moderate risk investments and then adding some of the profit from the investment to the original $1000.

    So if you invest your $1000 in a term deposit at 5% you will get $50 less tax on the income.

    As the Runanga pays no tax on its income you receive the whole $50.
    You then add part of that $50 to the original $1000.
    You decide to add $30.

    Goal 2 - Providing for Beneficiaries: With $20 of the $30 profit, you spend for the benefit of the trust beneficiaries.

    You spend $13 on running the Runanga and the other $7 you pay out in marae and education grants.

    Goal 3 - Growing the Value of the Asset: You might decide to use $10 of the $30 to invest in medium to high risk investments. The aim here is to allow for extraordinary growth. This should be strictly regulated.
    You may or may not get a return here. Whatever return you do get, you add the profit from the investment to the original $1000.

    Upshot
    So you disperse $20, add $20 to your $1,000, and speculate with $10.
    The following year you receive 5% on your $1,020. You do the same again year after year so that in 10 years the capital has increased to over $1,500.

    Moreover, hopefully, you would have seen some return from your medium to high risk investments.

    This then means you have at least ensured the value of the capital has retained its value and not eroded and you have provided for the beneficiaries in some way. Any extra returns on other investments is a bonus. But even if there is a loss, your Iwi is no worse off, and is still better off than 10 years earlier.

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