Part 2: Background

Inquiry into certain aspects of Te Wānanga o Aotearoa.

2.1
In this Part we:

What is a wānanga?

2.2
A wānanga is a publicly funded tertiary education institution, alongside universities, colleges of education, and polytechnics. A wānanga is characterised by –

...teaching and research that maintains, advances, and disseminates knowledge and develops intellectual independence, and assists the application of knowledge regarding ahuatanga Maori (Maori tradition) according to tikanga Maori (Maori custom).³

2.3
A wānanga is formed and governed under Parts 14 and 15 of the Education Act 1989. It has the legal status of a Crown entity⁴ and a public entity,⁵ and is part of the state sector.

Te Wānanga o Aotearoa

2.4
On 1 July 1993 the Governor-General, by Order in Council, established TWOA as a wānanga under the Education Act 1989. The wānanga was first called Aotearoa Institute, but later changed to its present name. As with other tertiary education institutions, most of TWOA’s funding comes from the Crown, and is based on the number of equivalent full-time students enrolled.

2.5
In the last 5 years, TWOA has grown rapidly. From just over 1000 students in 1999, by 2003 it had 63,387 students enrolled (equating to 34,280 equivalent full-time students) and 1232 equivalent full-time staff. Measured in enrolments, TWOA had become the largest tertiary education institution in New Zealand. In 2004, it received $156 million in Crown funding.

2.6
TWOA has 13 campuses around New Zealand, and several other satellite sites. The head office of TWOA is in Te Awamutu.

2.7
TWOA offers about 100 courses in many different subjects, with some provided through distance learning. Compared with other tertiary education institutions, TWOA attracts a high proportion of mature students, Māori students, and students with no previous qualifications.⁶

2.8
TWOA’s charter⁷ places a strong emphasis on its Māori character. The charter also states that TWOA targets students:

who have not benefited from mainstream education;
who want a second chance in accessing formal education;
who have been unemployed for a long time;
who represent lower socio-economic groups; and
who wish to achieve excellence in a Māori learning environment.

2.9
Like all other tertiary education institutions, TWOA’s governing body is its Council. We note that there have been changes in the composition of the Council since some of the events and transactions discussed in this report.

2.10
Its Tumuaki, or chief executive, is Rongo Wetere. Rongo Wetere has led TWOA since it was established in 1993.

MO1 Limited

2.11
TWOA has one subsidiary, a wholly-owned company called MO1 Limited.

2.12
MO1 Limited was incorporated in late 2001. It manages the Mahi Ora course, and several other courses.

The AI Trust and the entities it controls

2.13
The AI Trust⁸ was created and incorporated as a charitable trust board in 1986 by a group of people who had been involved in building the Otawhao Marae and Waipa Kōkiri Centre in Te Awamutu. The AI Trust provided learning and employment opportunities for Māori who had few or no job skills or qualifications. It became a registered private training establishment, offering educational courses in, for example, Māori carving and weaving, catering, and secretarial skills. It ran campuses in Te Awamutu, Te Kuiti, Hamilton, and Manukau.

2.14
In the early 1990s, the AI Trust was instrumental in promoting the establishment of a wānanga.

2.15
After TWOA was established in 1993, the AI Trust remained active. It leased land and buildings to TWOA to provide TWOA’s first campuses, and provided TWOA with its first courses and members of staff.

2.16
The AI Trust controls 2 entities relevant to this report – the Mahi Ora Trust and Oma Investments Limited (see Figure 1).

Figure 1
Entities controlled by the AI Trust and TWOA

Figure 1.

2.17
People we spoke to consider that TWOA and the AI Trust are pursuing the same goals, in a mutually supportive manner. In our interviews, the AI Trust was often described as the “parent” of TWOA. Many people involved in TWOA consider that its roots lie with the AI Trust. We were told that, in its early days, TWOA had little government funding and would not have survived without financial support from the AI Trust and the voluntary efforts of the AI Trust’s founders. Rongo Wetere told us that the AI Trust exists solely to help TWOA achieve its goals. We have not inquired into the AI Trust or its activities.

2.18
Although TWOA and the AI Trust are separate entities – one a public entity and one a private organisation – they have worked closely together for a long time. For example, TWOA first set up one entity – the Mahi Ora Trust – but later transferred its control to the AI Trust. Another entity – Oma Investments Limited – has always been a subsidiary of the AI Trust, but only after those involved discussed whether to set it up under TWOA or the AI Trust. At least one major property purchase was the subject of discussion over which of the entities should purchase it.⁹ Most of the AI Trust’s revenue comes from its business with TWOA.

2.19
For much of TWOA’s history, most of its Council members were also trustees of the AI Trust (and the other way around). As recently as late 2003, their respective governing bodies still had 8 members in common. The extent of common membership has reduced in the last year or so, when TWOA began to recognise that a greater degree of separation and independence was needed between the 2 entities. By June 2005, only one member of TWOA’s Council was also a trustee of the AI Trust. However, 5 more trustees of the AI Trust still had other senior roles at TWOA. There was also much overlap in board membership between the subsidiaries of TWOA and the AI Trust. TWOA’s Council acknowledges that the relationship between the AI Trust and TWOA needs to be more transparent and conducted at arm’s length. We understand that TWOA’s Council and the AI Trust now have no members in common.

2.20
Rongo Wetere was a trustee and the managing director of the AI Trust for most of its existence, as well as being Tumuaki of TWOA. He resigned his positions in the AI Trust from 31 March 2005.

2.21
TWOA (and MO1 Limited) and the AI Trust (and its controlled entities) have a close business relationship, which covers many different transactions. Figure 2 shows continuing arrangements in place during 2004 (the most recent completed financial year). Figure 3 shows once-only past and proposed transactions.

Figure 2
Continuing arrangements between TWOA and the AI Trust, and the entities they control, in 2004

Nature of transaction	$ from	$ to	Value
Resource distribution services	TWOA	Oma Investments Limited	$8.4m
Lease of laptop computers*	TWOA	AI Trust	$2.1m
Leases of land and buildings	TWOA	AI Trust	$1.7m
Resource distribution services	MO1 Limited	Oma Investments Limited	$416,000
Lease of land and buildings	MO1 Limited	AI Trust	$58,000
Management and administration services	AI Trust	TWOA	$40,000
Koha	MO1 Limited	Mahi Ora Trust	Unknown
Informal lease of part of the Glenview hotel complex	Unclear	Unclear	Unknown

* The computers were for students’ use. If a student completed the course, the AI Trust then gave the computer to the student.

Figure 3
Other selected transactions and proposed transactions between TWOA and the AI Trust, and the entities they control

Nature of transaction	$ from	$ to	Year	Value
Trade rebate	Oma Investments Limited	TWOA	2004	$3.2m
Loan	TWOA	AI Trust	2001	$3.1m
Sale of inventory	Oma Investments Limited	TWOA	2002	$2.0m
Sale of inventory	TWOA	Oma Investments Limited	2003	$1.7m
Funding of major leasehold improvements by TWOA	TWOA	AI Trust	Various	Unknown
Intellectual property contingent liability	TWOA	AI Trust	Proposed	About $12m
Proposed sale or swap of the Glenview hotel complex, possibly in exchange for TWOA buying the land it currently leases from the AI Trust	Proposed	About $25m
Proposed swap between the AI Trust and a third party* of 2 properties, both of which TWOA (or MO1 Limited) is the lessee of	Proposed	Unknown

* Wairau Property Developments Limited.

2.22
We looked at some of these transactions in detail. The leases of land and buildings, leasehold improvements, the loan, and matters relating to the Glenview hotel complex are discussed in Part 5. The intellectual property contingent liability is discussed in Part 7.

Rongo Wetere’s whānau and their connections with TWOA

2.23
Our report focuses heavily on Rongo Wetere and members of his whānau. The fact that we name them does not mean that they are solely responsible for governing and managing TWOA. TWOA is a large organisation and many other individuals play important roles in its governance and management, but it has not been necessary to name them.

Rongo Wetere

2.24
Rongo Wetere is the Tumuaki, or chief executive, of TWOA, and has led TWOA since it was established in 1993. He was also a director of MO1 Limited until 30 August 2005.

2.25
Until 31 March 2005, he was a trustee and the managing director of the AI Trust. Until 15 April 2005, he was a director of Oma Investments Limited. He remains a director of other non-trading subsidiary companies of the AI Trust.¹⁰

2.26
Rongo Wetere has no private companies or businesses of his own.

Susan Cullen

2.27
Susan Cullen is the daughter of Rongo Wetere. She is neither an employee of TWOA nor a paid consultant, but she has worked voluntarily for TWOA over many years. Her work has included drafting strategic documents, managing special projects, and rewriting educational course material. We were told that she has never charged for her time, even though some of this work has been extensive.

2.28
Ms Cullen has been granted the designation “adjunct professor” by TWOA. This is not a paid position, but an honorary title recognising her long-standing support for TWOA.

2.29
Ms Cullen is an owner¹¹ and director of many companies that have done business with TWOA in recent years (see Figure 4).

Figure 4
Business transactions between Ms Cullen’s companies and TWOA

Company	Nature of transaction	Year	Amount paid to company
Ora Limited	Joint venture with TWOA over the Kiwi Ora course	2004	$26.7m
Ora Limited	Joint venture with TWOA over the Kiwi Ora course	2003	$12.0m
Mahi Ora Limited	Sale of Mahi Ora course to MO1 Limited in 2001	2001	$7.0m
Awarua Limited	Payment by MO1 Limited for Lifeworks course	2003	$1.7m
Awarua Limited	Reimbursement for direct costs incurred in undertaking various TWOA special projects	2004	$376,000
Wairau Property Developments Limited	Lease of 2 properties to TWOA	2004	$81,000
Global Origins Limited	Printing contract	2004	$15,000
Life Works International Limited	Joint venture with TWOA over the Mahi Ora course	2000-01	Unknown

Kingi Wetere

2.30
Kingi Wetere is a son of Rongo Wetere. He was employed as General Manager of MO1 Limited from its inception in 2001 until 2004 (although this includes a leave of absence, and a time when the role was part-time and shared). He was also a director of MO1 Limited from its inception in 2001 until 2005. Immediately before his employment with MO1 Limited, he was working for Ms Cullen’s company Mahi Ora Limited.

2.31
Kingi Wetere was a director of Oma Investments Limited from 2003 to 2004. He became General Manager of Oma Investments Limited in 2005, and remains in that role.

2.32
He was employed as one of 2 Pouhere at TWOA from 2004 to 2005 (see paragraph 4.27 for a discussion of Pouhere).

2.33
Kingi Wetere has a significant ownership interest¹² in Power Chill NZ Limited – an air-conditioning business that has undertaken work for TWOA and MO1 Limited. Kingi Wetere is also a director of this company (and until late 2004 was the sole director).

2.34
Kingi Wetere is no longer employed by TWOA.

William Wetere

2.35
William Wetere is also a son of Rongo Wetere. He was employed as the Information Officer and Marketing Manager of TWOA from 1997 until 2000.

2.36
He was employed by MO1 Limited from its inception in 2001 until 2003. For some of this time he was General Manager (and sometimes part-time, sharing the job with his brother, Kingi Wetere). He was also a director of MO1 Limited from 2002 to 2003.

2.37
William Wetere was a trustee of the AI Trust until March 2005. He was General Manager, and a director, of Oma Investments Limited from 2003 to 2005.

2.38
William Wetere is a shareholder¹³ and director of Masterfibre South Pacific (2004) Limited. The company sold a small quantity of rubber matting to TWOA in 2004.

2.39
William Wetere’s family trust, the Te Whatu Family Trust, leased a residential property to TWOA from 2004 to 2005.

2.40
William Wetere, like his brother Kingi, has a significant ownership interest in Power Chill NZ Limited (see paragraph 2.33 above).

2.41
William Wetere is no longer employed by TWOA.

Marcia Krawll

2.42
Marcia Krawll is Rongo Wetere’s fiancée. She is an independent contractor to TWOA, as International Events Co-ordinator and Greenlight Programme Co-ordinator.

Ara Wetere

2.43
Ara Wetere is a brother of Rongo Wetere. He owns¹⁴ and directs Aranui (2003) Limited, a company that provides landscaping, grounds maintenance, drainage, tar-sealing, and fencing services to TWOA.

Transactions and arrangements discussed in this report

2.44
We discuss:

the appointments to TWOA and MO1 Limited in Part 4;
the lease arrangements with members of Rongo Wetere’s whānau in Part 5;
Power Chill NZ Limited, Aranui (2003) Limited, and Oma Investments Limited in Part 6; and
the Mahi Ora, Lifeworks and Kiwi Ora courses, and the Greenlight programme, in Part 7.

Diagrammatic overview of the transactions

2.45
Figure 5 shows the gross value of the business transactions described in this Part between TWOA and Rongo Wetere’s whānau entities. The dollar amounts do not represent any profit that might have been made by the other entities involved. Figure 6 shows the involvement of members of Rongo Wetere’s whānau in those entities.

Figure 5
TWOA’s business transactions with Rongo Wetere’s whānau entities

[link to Figure 5, 710x435 pixels, 25x15 cm]

Figure 6
How Rongo Wetere, his children and his brother are linked to the entities in Figure 5

[link to Figure 6, 710x435 pixels, 25x15 cm]

3: Section 162(4)(b)(iv), Education Act 1989.

4: Under the Crown Entities Act 2004 and, before that, the Public Finance Act 1989.

5: Under the Public Audit Act 2001. The Auditor-General is the auditor of all public entities.

6: See TWOA's draft profile, 2005-07 (November 2004).

7: Every tertiary education institution is required to have a charter, which sets out the institution's mission and role in the tertiary education system: see sections 159L-159V, Education Act 1989.

8: This entity was first known as the Waipa Kōkiri and Arts Centre Trust Board, but by 1990 had changed its name to the Aotearoa Institute Te Kuratini o Ngā Waka Trust Board. In this report, we refer to it as the AI Trust.

9: The Porirua campus - see Part 5.

10: University of New Zealand Limited and The University of Aotearoa (NZ) Limited.

11: Susan Cullen is a 25% shareholder in Global Origins Limited, and the sole shareholder of all of the other companies listed in Figure 4.

12: Kingi Wetere and William Wetere have an indirect interest (through family trusts and another company) in a 60% shareholding

13: William Wetere has an interest in a 33% shareholding.

14: Ara Wetere is the sole shareholder.

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