Why Māori organisations need more accountability

Today’s Māori organisations are the result of decades of Māori being forced into corporate structures that don’t fit. It’s time to rethink them, writes Joshua Hitchcock.

The accountability of Māori organisations to their members was back in the news in April, with several stories highlighting unjustified spending and unaccountable governance structures. It is always disheartening to read about Māori organisations that have wasted or lost collective assets, or misapplied their pūtea on counter-productive activities. Our collective asset base is small, yet our mistakes are writ large across the pages of our newspapers. And so while more attention is shown towards mismanaged Māori organisations than it is to general organisations, this is one of those situations where sunlight is required. I have seen first hand the misuse of funds by Māori organisations and the anger, frustration, and distrust between whānau that this generates.

Critical to the success of Māori organisations is the establishment of strong, culturally appropriate structures with clear accountability mechanisms to ensure that they are meeting the aspirations of their members and beneficiaries. We need measures to ensure that our Māori organisations are being run appropriately. That funds meant for advancing Māori aspirations are not misappropriated. That they are not used for frivolous or personal means. That is why the story in the Weekend Herald last month discussing the investigations into spending by Te Ururangi, the trust set up to manage the Kīngitanga and funded out of the Waikato-Tainui annual budget, was incredibly concerning – it was another in a long line of mismanaged Māori organisations to make the papers. There are many more that do not.

Image: NZ Herald, 1 April, 2018

Funded by Waikato-Tainui, Te Ururangi receives around $1.6 million per annum to manage the affairs of the Kīngitanga. The Trust was previously investigated and warned by Internal Affairs in 2015 following spending beyond its charitable purposes remit – a lesson it apparently did not learn from. Expenditure highlighted by the initial investigation included $120,000 on jewellery, clothing, and beauty treatments and a further $90,000 in cash withdrawals over a three year period between 2012 and 2014. The Charities Service within Internal Affairs chose not to de-register the Trust’s charitable status based on representation made by the board that they had learned their lesson and were cleaning up their act. In any event, de-registration as a charity would mean very little to the members of Waikato-Tainui who have seen their money used in such a manner.

Three years later and the Trust is once again under investigation. Last month’s investigations by the Weekend Herald discovered unexplained expenditure of $46,000 for weight-loss surgery and $80,000 for a related-party loan for travel expenditure at below-market interest rates. It should not have to be said but Māori organisations have no business spending on frivolous items to such a blatant extent or be in the business of extending related party loans to directors or family members. This is not a one-off occurrence. Allegations of misspending by Māori organisations can be found up and down the country.

Where is the accountability for Māori? There are often very minimal accountability structures, or none at all, built into our systems of governance. Traditional audits do not work as these are not designed to look at the nature of the spending, only the ability of the organisation to prove that such spending actually took place. Where an organisation is charitable, we rely on the Charities Service of Internal Affairs to monitor and investigate on our behalf. But even then, its largest sanction – the removal of charitable status – does little to hold those responsible accountable. In practice, it further exacerbates the harm felt by members of that organisation as the requirement to pay tax further reduces the pūtea available to support their aspirations. In other situations, Māori looking to hold their organisations and their leaders to account have to fund this activity themselves. Yet, all to often, demands for accountability descend into age-old arguments based more on history and ego than on the facts of the matter.

What we need is an independent Ombudsman who can investigate allegations of poor financial management. A body run by Māori, in accordance with Māori values, supported by Māori organisations, that is tasked with upholding the integrity of our collectively-held assets on behalf of the membership that the assets are meant to be supporting. A body that has the power to investigate not just the accuracy of the recording of the spending but also the appropriateness of that spending in line with the aspirations of the members.

Alongside this, we need to rethink our organisational structures. Consider the non-exhaustive list of structures that govern Māori land and assets: ahu whenua trusts, whenua tōpu trusts, kai tiaki trusts, whānau trusts, pūtea trusts, Māori incorporations, Māori authorities, Māori trust boards, rūnanga, statutory trusts, general trusts, charitable trusts, limited liability companies, joint ventures, limited partnerships. Some entities are charitable, others are not. Some are taxed at 17%, others at 28%. Many iwi have a number of these entities within their structure. I’ve managed such a structure. It was an unworkable mess of entities where governance lines were blurred and no one within the organisation could really define how it worked or how we ended up in that situation in the first place. This is the net result of decades of government paternalism in how we manage our structures and decades of forcing Māori into convoluted corporate structures that simply do not suit.

A new model of governance for Māori organisations was proposed in 2006 by the New Zealand Law Commission. Known as a Waka Umanga, the Law Commission proposed a structure that was designed to meet the needs of Māori communities managing communal assets which was flexible enough to suit the particular needs of the community while ensuring good governance standards are in place alongside appropriate dispute resolution methods. Waka Umanga was flawed, but it was a step in the right direction and it is time that the proposals are put back on the table. We need stronger, better governed, more accountable Māori organisations. Organisations designed by Māori, run by Māori, for the benefit of all Māori.

Joshua Hitchcock is a business advisor, accountant, and writer on Māori law, policy and economic development. 

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