Part 1: Background

Christchurch Polytechnic Institute of Technology's management of conflicts of interest regarding the Computing Offered On-Line (COOL) programme.


In October 2003, the Christchurch Polytechnic Institute of Technology (CPIT) entered into a joint venture arrangement with Brylton Software Limited (BSL). Before the Joint Venture was formally established, the parties designed and began to deliver3 a programme of 4 free short courses on computing skills.

This programme – Computing Offered On-Line (COOL) – was delivered by the Joint Venture in the 2003 and 2004 academic years. The Joint Venture ceased promotion of the COOL programme on 31 December 2003 and completed the delivery of the programme in March 2004. In that time, the programme drew $13,874,767 of public funding.

Some concerns were raised in the first half of 2004 that certain CPIT representatives had conflicts of interest by virtue of their relationships with both CPIT and BSL.

In this Part we provide background information about:

  • CPIT and BSL, and their relationship;
  • BSL’s computing skills courses – the TIME and COOL programmes;
  • two individuals with connections to both CPIT and BSL – Mr Richard Belton and Ms Vicki Buck; and
  • how our inquiry came about, the scope of our inquiry, and what we did.

Christchurch Polytechnic Institute of Technology

CPIT was established in 1965 as the Christchurch Technical Institute. As a “polytechnic” – as defined in the Education Act 1989 – CPIT is a public entity under the Public Audit Act 20014.

CPIT has stated that it seeks to be a preferred choice for students, through offering a wide range of programmes that contribute to the success of every student5. It provides applied and vocational programmes and professional studies up to postgraduate level – in subjects such as hairdressing, travel and tourism, nursing, carpentry, and quantity surveying.

In addition, CPIT sees itself as strengthening New Zealand and international society and as a leader within the tertiary education sector. CPIT’s key strategic goals are:

  • student focus;
  • work relevance;
  • productive alliances;
  • flexible delivery;
  • international education;
  • sustained viability; and
  • managed quality.

According to CPIT, its strategic goal of “flexible delivery” has been a key driver for its interest in improving access to tertiary education and e-learning. It has identified both e-learning and commercial activities as key themes6, and notes that its “for free” courses in the trades, languages and computing in particular have assisted to attract those who do not usually participate in tertiary education.

CPIT has stated that it is prepared to pursue joint venture and franchise models when the commercial activity is consistent with its Charter 2004-2008 and has identifiable educational outcomes.

CPIT has a number of campuses within Christchurch city, and 1 campus in Auckland. In 2003, CPIT employed 808 full time equivalent staff and enrolled 50,333 students, which equates to 7724 Equivalent Full Time Students (EFTS). The chief executive of CPIT is Mr John Scott.

Brylton Software Limited

BSL is a private Christchurch-based education software company. Its Managing Director, Mr Adrian McGrath, has been developing an information technology platform to assist with education and learning since 1996. The directors of the company are: Mr Adrian McGrath, Mr David Stock, Ms Vicki Buck, and Mr Dennis Chapman.

Relationship between CPIT and BSL

During 2003, senior CPIT representatives were introduced to BSL personnel. After several meetings (the details of which are discussed in Part 3 of this report), the parties entered into an unincorporated joint venture business relationship.

The Joint Venture Agreement that confirmed the nature of the business relationship between CPIT and BSL was signed on 7 October 2003. Broadly speaking, the purpose of the Joint Venture is to enable the parties to market and deliver existing BSL products, and to develop new products. This would support CPIT’s e-learning goals. An amendment to the Joint Venture Agreement was signed by both parties in April 2004.

A Joint Venture Committee governs the Joint Venture. The first meeting of this committee was held on 26 September 2003. Both parties to the Joint Venture have 3 representatives each on the committee. For CPIT, the representatives are the Chief Executive, the Director of Finance, and the Dean of the Faculty of Commerce. Until November 2004, BSL was represented by 3 of its company directors: Mr McGrath, Ms Buck, and Mr Stock. Ms Buck resigned her membership of the committee on 5 November 2004.

The Joint Venture currently has 2 employees and is focusing on new product development. The joint venture relationship between CPIT and BSL is illustrated in Figure 1 below.

Figure 1
Joint venture relationship between CPIT and BSL until 5/11/04

Figure 1.

The TIME programme

BSL created the Teachers Integrating Microsoft Efficiently (TIME) programme, which consists of a suite of 4 courses. The TIME programme was specifically designed for Years 9-13 secondary school teachers in State and integrated schools who were leasing laptops under the Government’s Laptops for Secondary Teachers Scheme. BSL created the TIME programme well before the company became associated with CPIT, and had already sold the TIME programme to other parties.

CPIT bought the “right” from BSL to deliver the TIME programme. The CPIT Faculty of Commerce granted academic approval for two TIME courses in June 2003 and for the full programme in early-September 2003. These approvals meant that CPIT could claim funding from the Tertiary Education Commission for each TIME programme enrolment. This was done through a specific class of tertiary education funding, often known as “5.1 funding” – but more formally known as Student Component Classification 5.1 - Community Education, Non-Formal Education7.

Consistent with the intent of the TIME programme, CPIT told us that only secondary school teachers leasing laptops under the government scheme were accepted for enrolment.

In 2003, the TIME programme attracted 62.21 EFTS – and 5.32 in 2004 – to CPIT. This equates to $375,108 (GST-inclusive) in funding from the Government in 2003 and 2004. CPIT ceased to deliver the TIME programme in March 2004.

The COOL programme

The TIME programme “sparked” the idea within CPIT that similar basic computing courses could be developed and offered on-line to a wider potential student market and to the general public.

The result was the COOL programme, which was created by BSL specifically for CPIT, using the information technology platform that BSL had already developed. The COOL programme comprised a suite of 4 courses designed to enhance students’ basic skills in using 4 Microsoft® software products: Word, Excel, Powerpoint, and Access.

The CPIT Faculty of Commerce granted the academic course approvals for the COOL programme at the beginning of September 2003. It was delivered between September 2003 and March 2004.

The COOL programme was provided in CD-Rom format, with additional support provided through the BSL website8. Students undertook the programme on a computer, by themselves. No classroom or face-to-face teaching was involved.

CPIT designed a marketing approach unique to the COOL programme. This involved the use of external entities (known as Partners in Education) and the commissioning of Agents to enrol students on behalf of the Joint Venture. Overall, 85 Partners in Education and 8 Agents were contracted by the Joint Venture.

When the COOL programme ceased in March 2004, it had generated $13,874,767 income for CPIT.9 A total of 18,502 individual students enrolled in the COOL programme (equating to 2775 EFTS).

Tertiary education institutions that receive “5.1 funding” (see paragraph 1.17) for courses such as COOL and TIME are not required by the Government to collect information on completion rates; nor are there any assessment requirements or formal qualifications for students.

Individuals with connections to both CPIT and BSL

Our inquiry found that there are two individuals who have interests in both CPIT and BSL. They are:

  • Mr Richard Belton; and
  • Ms Vicki Buck.

Mr Richard Belton

CPIT’s Chief Executive Mr John Scott approached Mr Richard Belton in late-2002 about an employment opportunity. Mr Scott considered that Mr Belton, a former secondary school principal, could help align CPIT’s curriculum with that taught in secondary schools. Mr Belton is employed on a fixed-term agreement as the Curriculum Alignment Project Director at CPIT, and reports to the Director - Development and Community Education.

The primary objectives of Mr Belton’s role are to oversee curriculum alignment between CPIT and Canterbury secondary schools, and to facilitate the relationship between CPIT and schools (including providing Canterbury secondary school principals with an overview of what CPIT can offer their schools).

Mr Belton is a shareholder in BSL. He has 4300 shares of a total of 1,059,300 shares, which equates to a shareholding of about 0.41%. Mr Belton expressed an interest in investing in the company after Ms Buck showed him the capabilities of the BSL information technology platform at her house in 2002 at a meeting in relation to the Unlimited Paenga Tawhiti School.10 At that meeting, Ms Buck advised Mr Belton that she had invested some money in the company.

The exact timing of Mr Belton acquiring his shareholding is not recorded with the Companies Office. However, we were told that his investment was made in late-September 2002. In his initial fixed-term employment agreement with CPIT dated 18 November 2002, Mr Belton declared his shareholding in BSL.

Mr Belton has little interaction with Ms Buck in the context of their CPIT roles. He has only limited contact with BSL’s company directors; meeting occasionally with the Managing Director of BSL to discuss company progress.

Ms Vicki Buck

Ms Vicki Buck is a well-known identity in the Canterbury region. She became a Christchurch City Councillor in 1975, and was Mayor of the city from 1989 to 1998. As well as having a high profile as a former local body politician, Ms Buck performs a number of roles within the Christchurch community. Of some relevance to this inquiry are her governance roles on the boards of two State schools in Christchurch – Unlimited Paenga Tawhiti and Discovery One – and as a trustee of a charitable trust called Young Inventionz.

While she was still Mayor of Christchurch, Ms Buck was approached by CPIT’s Chief Executive about an employment opportunity. Mr Scott considered that Ms Buck had a very high profile and good relationships that would help CPIT initiate commercial opportunities. Ms Buck was contracted as a part-time Development Advisor for CPIT through her private company, Think Inc Limited, in August 1998.

Ms Buck is an independent contractor to CPIT, not an employee. She is not expected to work regular hours, and the nature of her work means that she does not spend a lot of time in the office. She does not receive all CPIT staff entitlements (for example, discounted educational courses).

Nevertheless, in many respects we consider that the nature of the arrangement is effectively like a part-time employment relationship (rather than like, say, a consultant engaged to provide a specific service in an arm’s-length manner). For example, Ms Buck is required to perform the contract personally. She is publicly associated with CPIT, and has been for more than 6 years. The contract requires her to be identified with CPIT, and to be seen as a representative of CPIT. CPIT provides her with an office, phone expenses, computer, corporate business cards, and an expenses budget. CPIT management told us that they expect her to comply with staff policies.

In our view, in a practical sense Ms Buck can be said to be “working for” CPIT. On this basis, we consider that it is reasonable for public sector expectations to apply to her.

The general goals of Ms Buck’s contract include:

  • to improve and enhance the profile and image of CPIT; and
  • to identify entrepreneurial developments which provide potential for income, and to help make these happen.

Ms Buck’s contract has not changed significantly since she began working for CPIT, although her job title is now Development Manager. Her role is varied and includes tasks such as facilitating the sponsorship of events by CPIT, and presenting new business opportunities and ideas to CPIT management. Her remuneration is fixed.

While Ms Buck does have annual performance goals set for her, she is not paid a bonus; nor is she provided with any other contractual incentives to excel in performing her role. We were informed that one of her performance goals is a revenue target. In 2003, this revenue target was $536,000. CPIT expects such revenue to be generated through new courses, programmes, scholarships and/or the establishment of joint venture arrangements.

While there was no Development Advisor or Development Manager position before Ms Buck was contracted to CPIT in 1998, a team focused on this type of activity now exists at CPIT. This “Development Centre” team is managed by the Director - Development and Community Education. Ms Buck is now directly responsible to the person filling this position, but initially reported to the Chief Executive, Mr Scott.

Ms Buck also has a connection with BSL. She invested in the company in 2002, quite soon after being shown the capabilities of the BSL information technology platform. Ms Buck was particularly impressed with the multilingual and learning assessment capabilities of the software.

Ms Buck is currently both a shareholder and director of BSL. She acted as a director of the company from later in 2002, but the official registration of her directorship did not occur until 25 September 2003. Ms Buck invested in BSL in May 2002. Initially, her investment was a mixture of shares and convertible notes, but in February 2004 the convertible notes were converted into shares. She holds 50,000 out of a total 1,059,300 shares, which equates to a shareholding of about 4.7%.

How our inquiry came about

In early- to mid-2004, a number of questions were asked in Parliament about CPIT’s COOL programme, which had drawn a significant amount of public funding during 2003 and early 2004. There was considerable media interest about the issues raised in Parliament in regard to:

  • the appropriateness of the fact of, and level of, public funding drawn for the COOL programme;
  • an alleged breach of the tertiary education sector funding guidelines, as “inducements” were offered to potential COOL programme students;
  • the academic quality of the COOL programme; and
  • allegations of conflicts of interest between certain CPIT representatives who also had interests in BSL.

In May 2004, the Tertiary Education Commission (TEC) engaged an independent contractor to undertake a review11 of matters in regard to the COOL programme. The TEC review sought to:

  • establish that CPIT had acted in accordance with current Government policy;
  • ensure that CPIT complied with current funding provisions in relation to the COOL programme;
  • ensure that CPIT had acted appropriately in attracting students to the COOL programme; and
  • identify the impact that the COOL programme had on the financial performance of CPIT.

In addition, in June 2004, both CPIT and the Hon. Bill English MP asked the Auditor-General to inquire into allegations that conflicts of interest existed for certain CPIT representatives who also held shareholding interests in BSL.

On 21 June 2004 the Auditor-General announced the terms of reference for an inquiry to:

  1. Examine the CPIT’s policies and procedures for identifying and managing conflicts of interest including but not limited to whether these were adequate to both identify and then manage situations involving CPIT representatives’ private business interests.
  2. Examine, in the context of the concerns raised about conflicts of interest emerging from the joint venture arrangement between CPIT and Brylton Software Limited:
    • whether there were any potential or actual conflicts of interest, leading up to and at the time of CPIT’s decision to enter into the COOL IT arrangement with Brylton Software Limited and, during the establishment phase and operation of the joint venture arrangement between Brylton Software Limited and CPIT;
    • whether the CPIT’s policies and procedures were adequately followed;
    • whether CPIT and any of its representatives acted properly; and
    • whether any CPIT representatives continue to have any actual or potential conflicts of interest in the context of the joint venture arrangements with Brylton Software Limited.
  3. Identify whether any improvements should be made to CPIT’s policies and procedures as they relate to conflicts of interest, with the objective of addressing any concerns identified as a consequence of the findings in 1 and 2 above.
  4. Examine any other issues that the Auditor-General considers relate to or arise out of the above matters.

Scope of our inquiry

Our inquiry was undertaken under sections 16 and 18 of the Public Audit Act 2001.

We decided that the conflict of interest area was where we could undertake work that would be of most use to the parties involved – Parliament, and the public. However, our inquiry has not sought to determine the size or value of any financial benefit that may have resulted to any individual.

We did not attempt to address the full range of issues raised in the public domain about the COOL programme. We decided not to duplicate work on the matters that were the focus of the TEC review. Further, we have not assessed the educational or technical quality or value of the COOL programme.

We have not inquired into the affairs of BSL. It is a privately owned company.

The broad timeframe under consideration for our inquiry is from 2003 to the date of publication of this report. Most of the inquiry’s findings relate to the period from April 2003 to October 2003.

What we did

We began our inquiry by requesting extensive written documentation from CPIT. This documentation was analysed to assess what meetings and interviews were required. A series of meetings and interviews was held in August 2004 with CPIT (councillors and senior management), BSL, Mr Richard Belton, and Ms Vicki Buck.

Structure of this report

In Part 2, we discuss the subject of conflicts of interest and expectations for the public sector, to provide context for the remainder of the report.

In Part 3, we look at the chronology of events relating to the formation of the CPIT and BSL business relationship, and the COOL programme.

Part 4 presents our findings about identification and management of conflicts of interest in regard to Mr Belton and Ms Buck.

Part 5 examines Mr Belton’s and Ms Buck’s contractual obligations and CPIT’s relevant policies and procedures. It also includes our recommendations for improvement.

Part 6 considers the involvement of the CPIT Council in the COOL programme and the Joint Venture.

Appendix 1 provides sources of guidance on the subject of conflicts of interest, and Appendix 2 contains the 3 CPIT policies relevant to conflicts of interest.

3: CPIT, as the educational institution, was responsible for delivery of the COOL programme. However, BSL, CPIT and the Joint Venture were all involved in various ways, including marketing the programme. The income from the programme was shared between these 3 parties, in accordance with the Joint Venture Agreement.

4: This means that the Auditor-General is the auditor of CPIT.

5: CPIT, Charter 2004-2008, see

6: CPIT, Learn to Prosper, Interim Profile for 2004-6.

7: External bodies such as NZQA are not required to approve community education short courses funded through “5.1 funding”. Some changes to this class of funding were announced as part of Budget 2004. For more details, see

8: We understand that the website support was disabled when the COOL programme ceased in March 2004.

9: Only tertiary education institutions can claim "5.1 funding" from the Government. CPIT drew the $13,874,767 for the COOL programme during the 2003 and 2004 academic years. A Tertiary Education Commission review in May 2004 (see paragraph 1.45 on page 20) reported that the COOL programme revenue was then distributed to the Joint Venture (20%), and the Joint Venture partners (40% each).

10: Mr Belton is a member of the Board of Trustees of that school, as is Ms Buck.

11: The review report is published on the TEC website at

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