Charity paid for phantom ads

By TONY WALL

The Auckland rescue operation at the centre of a Serious Fraud Office investigation paid hundreds of thousands of dollars for phantom advertising.

A Weekend Herald investigation has discovered that the New Zealand Child Flight Charitable Trust - the sister organisation of the Auckland Rescue Helicopter Trust - channelled at least $375,000 of charity money over two years to the Palace Tavern in Victoria St.

But no billboards advertising the service appeared on the pub until March this year, a few days after the Herald revealed that the SFO was investigating the payments.

A picture of Child Flight's fixed-wing aircraft, used to ferry sick children to hospital, was put up on the back of the pub in the days after the story broke and there is now also a Child Flight banner on the front of the building.

Investigators have photographic evidence of the change.

Pub owner Wayne Porter, also a helicopter trustee, declined to comment on the issue. It is understood that investigators have been told that there was "internal promotion" of Child Flight inside the pub during the time the payments were being made between 1999 and last year.

New details of the trusts' finances emerged this week as the SFO investigation entered its eighth month. The SFO refuses to say how much longer the inquiry will last.

The helicopter and Child Flight trusts paid millions of dollars over about five years in an arrangement which returned pokie Machine profits, meant to help run the rescue operation, to five Auckland pubs linked to the pub charity Goldtimes Foundation.

Each month a grant would come in from Goldtimes, and half the money would be sent back to the source pub - the Birdcage, Strand and Palace Taverns in central Auckland and Cazino Bar and Goldies Casino in Otahuhu.

The payments were listed in the twin trusts' accounts under "advertising", although the trusts' marketing managers had been given no advertising budgets.

The SFO has also seized documents which show an apparent attempt to direct investigators away from the payments.

In one email seen by the Herald this week, the prospect of extending the 50-50 split arrangement to other pubs in the Goldtimes stable is discussed.

The email reads: "Of the agreed distribution of grants to the ARHT/Childflight, advertising be paid on the 50-50 principle - e.g year 2004 if $2.2m is distributed from other sites, then $1.1m will go back as advertising.

"If our total grant available is $10m and all funds go to the ARHT, we have to justify an advertising payment of $5m.

"Even in the context of the helicopter and fixed-wing operations this is too much money to hide. We cannot bring third parties into this system."

The Herald has learned that Child Flight also paid at least $60,000 for advertising with Goldies Tavern over several months from 1999, and again it is alleged that no billboards were put up.

In the year to October 2000, $1.7m was spent on billboard advertising at the five sites. Billboard companies have told investigators that the maximum rental that could be charged for the billboards was $242,000 a year.

The trusts have told investigators their own assessors have put the figure at $888,000.

Mr Porter, also known as Wayne Porter-Field, and his business partner Peter Pharo, own the Strand and Palace Taverns and in March sold the Birdcage Tavern to Transit NZ for $3.8m. Mr Porter is listed as a shareholder of the Cazino Bar and Goldies has the same registered office as the Birdcage. The two men stood down as trustees of Goldtimes in March.

A High Court judge has now ordered that Malcolm Beattie, chairman of the two rescue trusts, and Tom Romley, the financial controller, also resign from Goldtimes. The judge also put a stop to the advertising payments.

Yesterday, the general manager of the rescue operation, Scotty Watson, said he was under instructions not to comment on the allegations, but he expected the SFO to clear the organisation of any wrongdoing.

Mr Beattie maintains that no money is missing and all individuals will be cleared.

Meanwhile, two former rescue operation staff members who were charged with fraudulent use of helicopter trust vouchers have both been discharged without conviction and been given permanent name suppression.

The charges were laid after trust management hired a private investigator to find the source of "leaks" to the media, and then laid a complaint with police.