Legal advice sought by Counties Manukau Sport in their ongoing battle with charitable trust Aktive has returned a view that the latter is a "high risk entity".
The advice, prepared by South Auckland firm Rice Craig, states that they do not believe Aktive is behaving as a Charitable Trust and should instead be "identifying itself as a Crown Entity Subsidiary".
It suggests that the concerns of CMS should be raised with the Auditor-General. Aktive and CMS have been engaged in a toxic relationship since Aktive's creation in 2012 and recently announced to stakeholders that they would no longer work together, potentially putting a number of South Auckland community sports programmes in peril.
The Herald highlighted the ugly separation this week and since then some Auckland councillors - who are in partnership with Aktive - have tried to broker a peace deal, without success.
However, one of the men responsible for the formation of Aktive, Sir John Wells, believes it would be a "stretch" for CMS to attack Aktive's organisational status. He also believes the time has come for Aktive to cut ties with CMS and look for an alternative source to contract to deliver their programmes.
Wells believed CMS was posturing and should be cut loose. The regional sports trusts were, he said, a "dog's breakfast" and a carry-over from Auckland's fractured council structure of the time.
"When the Super City came into being we needed to replicate that to some extent with an umbrella organisation. The RSTs had lost their relevance in terms of a political interface."
Wells, who left the organisation shortly after its creation, said there were obvious efficiencies to be gained from a one-Auckland approach and that funding sources, such as gaming trusts, were asking for a co-ordinated approach so they didn't have to deal with four separate RSTs.
Sir John Wells. Photo / Photosport
A lawyer engaged by CMS believes Aktive are essentially acting as conduit for Sport NZ, placing them in a legal grey area where they are not acting in accordance with the Charitable Trust Act or the Crown Entities Act.
The advice is based on Aktive's remit being closely aligned with Sport NZ, and investment that was previously channelled through regional sports trusts now flows through Aktive.
"The delegation by Sport NZ of its primary functions, namely overseeing the allocation and observation of the performance of those funds to Aktive is not itself a charitable purpose recognised at law," Neville Woods, partner at Rice Craig, wrote in a summary of his advice to CMS.
Woods told the Herald the essential issue is what the dominant purpose of Aktive is.
"The difficulty I see here, and this is triggered by their decision to ditch CMS, is they're actually acting as a pseudonym for a foreign entity (Sport New Zealand)."
Aktive chief executive Sarah Sandley believes Woods' legal assessment has "no substantive grounds".
"We're an independent charitable trust, we have multiple sources of other funding," she said.
"Our role is about taking a strategic approach and aligning people. The central thing is what is going to work in Auckland? And we planned the Auckland approach with the RSTs, the Auckland Council, with Sport NZ, with health, with education, with College Sport."
Meanwhile, CMS chief executive Russell Preston said his organisation was not looking for preferential treatment from Aktive.
"We're not trying to claim any rights of under-privilege status due to the demographics of our region," said Preston. "All we asking for is to be treated fairly and equitably alongside our greater Auckland colleagues and the offers table from Aktive are not in accordance with those principles."
After attempts to reach a resolution this week failed, both organisations have resolved to move on independently. Sandley said that around $880,000 of funding that had been earmarked for locally-led delivery in the Counties Manukau area will be fully allocated to another provider or providers and contracts will be issued in a matter of weeks.
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Aktive Auckland Sport and Recreation has the full backing of Sport New Zealand to terminate their partnership with Counties Manukau Sport.
Sport NZ chief executive Peter Miskimmin said three of the four Auckland regional sports had bought into the One Auckland strategic approach to delivering community sport.
"Counties Manukau haven't and while we're disappointed in that we have to respect their decision," Miskimmin said.
The continuing standoff has dismayed many in the South Auckland community. Former chair of CMS Frank Colson outlined this, saying that once again it would be the kids of South Auckland that would suffer.
"Aktive want to force a one-size-fits-all solution on everyone but hang on, one size doesn't fit all," he said. "I still see the same issues that were prevalent when I was at CMS: access to funding and clear pathways and transitions for our athletes."
Colson reserved his most withering blast for Sport New Zealand.
"Where is their leadership in this? Miskimmin could fix this with one stroke of his pen."
Miskimmin said there was always going to "people with questions and concerns" but he hasn't intervened or been involved because Aktive was an independent entity and he was comfortable with their response.
"Yes there has been a dispute but the key for us is how to get better at delivering sport and recreation at a local level."
Miskimmin also said the idea that Aktive was a Crown Entity Subsidiary rather than a Charitable Trust was a "nonsense". He described Sport NZ and Aktive as strategically aligned and an important supply partner, but said Aktive's remit was far broader than a funding agent.
