Care group challenged on truth of declarations

Disabled care provider Focus 2000 is facing questions about false declarations to the Companies Office similar to those that forced David Parker to quit his ministerial roles, including Attorney-General.

The Ministry of Health-funded company, which is undergoing a Government audit of its finances and management, has failed to get shareholder approval to dispense with annual general meetings and to limit disclosure about other financial details.

The sole shareholder of Focus 2000 is the Cerebral Palsy Society, a tax- exempt charitable organisation.

Harvey Brunt, who was president of the society from 1992 to 2004, said Focus 2000 never asked the society to pass a resolution in lieu of an annual general meeting - a requirement of Section 122 of the Companies Act.

"No such resolution was ever proposed, let alone voted on," said Mr Brunt. "Focus supplied information to the Companies Office saying Focus' shareholders have had an AGM, and they haven't."

Focus's 2003 annual report also states shareholders exercised their right under Section 211 of the Companies Act not to disclose other financial details including directors' fees and the number of employees earning more than $100,000.

"The board of the society never did anything of the sort," Mr Brunt said. "There is no record in any of the society minutes showing these resolutions."

Current society president Karl Sangster said he recalled signing a resolution in lieu of an AGM in August 2005, but did not recall if it was put to a vote of the board. He pointed out his role on both the Society and Focus boards is an unpaid one.

The deputy director-general of health responsible for disability services, Geraldine Woods, said the ministry was aware of the Companies Office declarations and was confident the matter would be dealt with by the audit due to be completed at the end of next month.

Shareholders Association chairman Bruce Sheppard said such breaches were not good and carried a range of fines and penalties.

"You're breaching a statutory provision and you're depriving the owners the opportunity to discuss with the management and the board the affairs of the company," he said.

Mr Brunt, who battled Focus 2000 chief executive Anne Murphy to get access to the company's 2003 consolidated accounts, said the declarations came to light after getting the accounts and discovering that Focus was sitting on a cash pile of more than $9 million.

National Party disability spokesman Dr Paul Hutchison said he would be asking more questions in Parliament about Focus 2000.

"It's deeply concerning when there are irregularities within a Government-funded body that has been able to accumulate $9 million during a period when there have been concerns about deaths, maltreatment and abuse."

Focus 2000 has been under seige for some time. In February Health Minister Pete Hodgson ordered a review of the quality of its services after allegations of unsafe conditions and medical mistreatment in its residential homes.

That followed a 2004 financial audit resulting in Focus 2000 being forced to repay the ministry $2.5 million for overcharging for its services.

Since 2002 there have also been a series of quality audits prompted by complaints to the ministry and an internal memo which raised concerns about "extracting a level of overhead from the service fee that could be construed as abnormal profit-taking".

Brunt said he became worried that the Society was not publishing consolidated accounts covering Focus and its subsidiaries' activities - which in 2004 showed operating revenue of $18.3 million, cash assets of nearly $4 million and investments of $5.2 million. In 2003 he quashed a suggestion made by the Focus auditor, O'Halloran and Co, to set up a separate trust that would remove control of Focus from the Society and release Focus from divulging its assets to the Society.

The present board is considering a discussion document by Focus chief executive Anne Murphy to set up an endowment fund under a separate Trust. Brunt said while he wasn't opposed to such a fund generating interest to be used to help people with cerebral palsy he wanted to ensure the money remained in the Society's control. He said the Society board had been kept in the dark about many of Focus's activities and stymied by a governance structure that allows Murphy voting rights on both the Focus and Society boards.

Anne Murphy was unavailable for comment. Focus manager Sally Fisher refused to comment and advised that Focus board chairman Walt Beanland did not wish to comment either.

Focus facts

* Focus 2000, a multimillion-dollar company owned by the Cerebral Palsy Society, is one of the largest providers of physical disability services - made up of residential facilities and home-based support - in the Auckland region.

* The company provides care to more than 3500 people and has about 1000 staff. It also provides conductive education for children with cerebral palsy.

* The Ministry of Health is the largest funder of Focus and provided more than $38 million between 2001 and 2004.

* After claims of unsafe conditions and medical mistreatment, Focus is the subject of ministry-ordered audits.