Investigation completed of a complaint against Mr David Braithwaite, Mayor of Hamilton City

The Auditor-General Kevin Brady has completed a lengthy investigation of a complaint against the Mayor of Hamilton City, Mr David Braithwaite, about an alleged financial conflict of interest in the project to redevelop the Waikato Stadium and other sports facilities.

The complaint arose from a meeting of the Council, which took place on 19 February 2002. At that time:

• Responsibility for the stadium redevelopment lay with the Waikato Regional Sports and Events Centre Trust Board.
• As well as being the Mayor, Mr Braithwaite was a member of the Trust Board and principal shareholder in a finance company, Sterling Mortgage and Finance Co Ltd.
• The Trust Board had a contract with Holman Construction Ltd for the main part of the redevelopment project.
• Sterling Mortgage and Finance Co Ltd was a financial underwriter of that contract.
• The Trust Board was responsible for raising funds for the redevelopment project.
• The Council owned the naming rights for the Waikato Stadium.

In mid February 2002, the Trust received an offer from Genesis Energy to contribute $2 million to the redevelopment project, in return for the name of the Waikato Stadium being changed to the genesis Stadium. The proposal was contingent on the Council's agreement, as the owner of the naming rights. Also, a $6.1 million financial contribution by the WEL Energy Trust to the redevelopment was conditional on the name of Waikato Stadium remaining unchanged.

The meeting on 19 February 2002 was called to enable the Council to consider approving the proposal and seeking WEL Energy Trust's agreement to a name change for the Stadium.

Mr Braithwaite chaired and took part in the meeting. It was alleged, both during the meeting and afterwards, that Mr Braithwaite had a pecuniary interest in the matter because of his finance company's role as an underwriter of the project.

Mr Braithwaite denied the allegation.

Under the Local Authorities (Members' Interests) Act 1968, it is an offence for a member of a local authority to vote or take part in discussion of any matter before the authority where the member has, directly or indirectly, a pecuniary interest other than one in common with the public.

The Audit Office has sole responsibility for investigating and, if it considers the circumstances warrant it, instituting proceedings for an offence under the Act.

In the Auditor-General's opinion, it is clear that Mr Braithwaite had a broad financial interest in the redevelopment project. That interest arose from the fact that his finance company had underwritten the Trust's ability to meet certain costs of the main construction contract. Any significant fundraising proposal had the potential to reduce the risk of the underwriting liability being realised.

However, having taken legal advice, the Auditor-General is not satisfied that the evidence shows with sufficient certainty that Mr Braithwaite committed an offence by not declaring an interest in the Genesis matter at the 19 February 2002 meeting. The proposal clearly had the potential to result in funds being made available to the Trust, which could have reduced the financial risk to the underwriters. However, such a result was far from certain at that stage, and was contingent on a number of future decisions by the Council and other parties, including the WEL Energy Trust.

For this reason, although the Auditor-General takes the view that Mr Braithwaite was unwise not to have declared an interest and withdrawn from the meeting, the evidence does not in his view justify the matter being referred to a Court by way of criminal prosecution.

The Auditor-General intends to report the opinions set out in this statement to the Council, but will take no other action on the complaint.

Contact for enquiries

Robert Buchanan, Assistant Auditor-General
tel: (04) 917 1500
e-mail: Robert.Buchanan@oag.govt.nz