Council slammed over V8 races

The full cost of hosting the motoring event was not revealed to the council. Photo / Paul Estcourt

Hosting the V8 Supercars in Hamilton was fraught with problems from the beginning and the total cost of the event was buried, an official report has revealed.

Audit New Zealand yesterday issued a damning review of the processes involved in the V8 Supercars event, blaming council management - including former Hamilton City Council chief executive Michael Redman and his deputy Blair Bowcott - for poor reporting, spending millions of dollars without authorisation and keeping the council in the dark over significant issues.

But Mr Redman, who now heads Auckland's Tourism Events and Economic Development business, and was at the public meeting when the report was released, attacked its accuracy and fairness and said he was being made a scapegoat.

"This report has mistakes and wrong attributions in it that did not paint an accurate picture," he told the Herald.

The council-commissioned review found management had been in talks about hosting the event for 15 months before giving any details to councillors.

Audit NZ director Peter Davies and consultant Rod Titcombe told councillors they were "surprised and disappointed" about the inadequate processes, and said they had never seen anything like it before.

Council managers were criticised for spending $18 million on race infrastructure before the V8 Supercars contract was signed in 2008 and relying on figures provided by now-failed promoters Caleta Streetrace Management (CSM) that infrastructure would only cost $7 million.

"Right from the early days the V8 event was off on the wrong footing because the estimate wasn't very good," Mr Davies said.

He also said he could not find any business case to base the decision on and criticised inadequate processes.

The cost of the race infrastructure ballooned to $18 million and the investigation found staff knew of this from 2006.

The cost of the first three events was $37.4 million - even higher than revealed to the council last December and five times more than reported in the council's long-term plan. For two years councillors were never given the total cost of the event.

Management also paid host fees in advance to a struggling CSM which the auditor said was "very disappointing". The events didn't happen and the council would have to write off the debt.

The audit found Mr Redman had also breached his delegation authority by paying $3 million in compensation which paid off CSM's creditors after they collapsed.

The auditors said they found plenty of early warnings CSM was having financial difficulties before the contract was signed, but council management failed to realise this.

And when Mr Redman, Mr Bowcott and another councillor, Bob Simcock, found out in early 2009 they kept it from the council until April last year when they were asked to hand the deal over to V8 Supercars Australia.

Mr Davies also criticised the city's councillors, who he said should have challenged the number of public-excluded meetings held, demanded more information and asked to see copies of the contracts before making any decision.

After the meeting Mr Redman said he was "as surprised as anybody" when the costs were published last December.

He criticised the audit process and said he felt the auditors deliberately left interviewing him to last.

"It appears to me right from the beginning they always thought I had a case to answer and it was pre-determined."

Hamilton hosts its last V8 race in April, and the Whenuapai air base in West Auckland has been tipped as a possible venue.

THE FINDINGS

* Council management had been in talks for 15 months about hosting the event before the council was told in 2006.

* The council had spent $18 million on the event before signing the contract in 2008.

* By last December, the cost of hosting the three events was $36m - higher than revealed to the council at the time.

* Elected members agreed to the deals without seeing copies of the contract.

* The council made too many decisions in meetings closed to the public.