Part 8: Spending on international travel
8.1
In this Part, we discuss:
- TWOA’s approach to international travel;
- Rongo Wetere’s international travel; and
- 2 case studies – a trip in 2002, and one in 2004.
8.2
We began by identifying all international trips in the 3 years up to 31 December 2004, so we could decide what to look at in detail.
8.3
We identified 122 international trips by TWOA personnel during this period. The cost of international travel was at least $1.36 million. Senior managers or Council members made 39 of these trips. The value of their travel accounted for about half of the total amount.
8.4
We were unable to identify the total costs of TWOA’s international travel. For most personnel (the main exception being Rongo Wetere), the $1.36 million was just airfares. TWOA could not provide us with a complete reconciliation and analysis of total international travel costs, and we found it impossible to construct this from the documentation provided to us. For most of the travellers, the $1.36 million did not include accommodation, daily allowances, incidental expenditure, or reimbursement claims.
TWOA’s approach to international travel
8.5
The international travel costs incurred by TWOA increased steadily over the 3 years we looked at.
8.6
Overall, TWOA poorly documented and poorly accounted for international travel. TWOA had no separate reporting or accounting for international travel. This made it difficult for us to isolate international travel costs from domestic travel costs, and to accurately and completely identify and analyse costs for particular trips or particular personnel. We had to use raw data from travel agency invoices and credit card statements. Other supporting documentation was frequently not available. We cannot be certain that the list of trips we identified is complete. The state of the documentation provided to us raised concerns about how well TWOA’s international travel is monitored and controlled.
8.7
We were told that international trips required Rongo Wetere’s approval. This process did not appear to require trip budgets or written business cases to support travel requests. The approval process was largely oral. We expected documented business cases and trip budgets to be part of an international travel approval process.
8.8
In 2 cases, people had been granted international trips for non-business reasons. The first was a 10-day trip to Fiji in November 2002 by a manager and members of his family. We were told that this was a bonus payment for a high-performing manager. The second was a trip to the United States by Rongo Wetere and Marcia Krawll in November 2003, on the death of a close relative of Ms Krawll (we understand that some business activities were also undertaken on that trip, but were not what prompted the trip). The costs of the trips were at least $9,799 for the first, and $17,370 for the second.
8.9
Some people told us that TWOA has a practice of sometimes offering to meet the cost of employees travelling to tangi. However, TWOA’s Council told us that such a practice is acceptable only for travelling to tangi of employees, not travelling to tangi of relatives. In our view, regardless of whether such a policy is acceptable generally, extending such a policy to pay for international travel goes too far.
8.10
We question the appropriateness of TWOA meeting the cost of these trips. TWOA’s Council told us that it did not authorise the trips and is currently investigating them.
Relevant policies
8.11
TWOA had no travel policy in force for the period covered by our review, despite the growth in international travel during that time. Before late 2003, TWOA did not have a credit card policy, and our appointed auditor had expressed concerns about TWOA’s oversight of credit card use.
8.12
TWOA issued a credit card policy in October 2003. It was approved by Rongo Wetere, and covered all employees. The important aspects of the policy are that TWOA credit cards:
- must be used for business purposes only;
- can be used to pay for emergency travel expenditure and incidental travel expenses;
- must not be used to purchase goods or services for private use; and
- must not be used for cash advances or cash withdrawals.
8.13
The policy requires that the cardholder retain credit card receipts, suppliers’ invoices, and any other relevant supporting documentation to demonstrate that the expenses were incurred for a business purpose. The cardholder is required to complete a monthly transaction summary, which sets out details of the credit card charges and the cost code to which they should be allocated. This summary and the related supporting documentation must be certified by the cardholder and authorised by the cardholder’s manager. The policy states that –
The Tumuaki’s expenditure is authorised by the [sic] two members of the Council (the Chairman and one other Council member).
8.14
A draft expense reimbursement policy was prepared in late 2004, and a draft travel policy was prepared in early 2005. A draft revision of the credit card policy was also prepared in early 2005.
Rongo Wetere’s international travel
8.15
We focused specifically on the international travel undertaken by Rongo Wetere. He has undertaken the most trips, and our initial examination of credit card information identified some areas of concern with his travel expenses.
8.16
TWOA could not provide us with detailed reports for the costs of all of Rongo Wetere’s travel. We compiled the best possible summary and analysis that we could from statements, invoices, and receipts supplied by TWOA.
8.17
During 2002, 2003, and 2004, Rongo Wetere had 16 international trips, to Australia, Canada, Cuba, Malaysia, and the United States. Ms Krawll accompanied him on 13 of the 16 trips, at TWOA’s expense.
8.18
We were told that payments made by, or on behalf of, Rongo Wetere often included costs of other staff travelling with him, but we could neither identify nor verify the extent of this from the information provided to us. Consequently, it was impossible for us to determine the total cost of travel relating solely to Rongo Wetere.
Quality of documentation
8.19
The cost information and documentation that TWOA supplied to us about Rongo Wetere’s international travel was deficient in a number of respects.
8.20
We saw a budget for only one of the 16 trips, so in most cases we had nothing to compare the actual costs with. We were unable to confirm whether the costs were complete, and whether they were within TWOA’s expectations.
8.21
Most of Rongo Wetere’s travel expenses (other than airfares) were incurred on his business credit card. While credit card receipts often existed, in many cases they were not supported by reliable documentation (such as hotel invoices or itemised restaurant bills) that could adequately explain the nature of the transaction. It was frequently impossible for us to verify whether all of the unsupported costs were for a business purpose.
8.22
Rongo Wetere did not begin to submit expense reconciliation summaries for his trips until 2003, and did not submit monthly credit card transaction summaries until August 2004. Before then, his monthly credit card statement was processed and paid without specific authorisation and with incomplete documentation.
8.23
There are gaps in expenditure where we would have expected to see costs incurred (for example, some meals and local travel). This suggests that some costs were paid for personally.
8.24
While in Cuba, most business expenses were paid in cash. The cash was withdrawn using Rongo Wetere’s business credit card or, it seems, sometimes his private credit card. We found little reliable documentary evidence to explain how that cash was used. This made it impossible for us to determine whether all of the cash was used for business purposes, or whether Rongo Wetere owed money to TWOA. Equally, it is not clear whether he was entitled to claim money from TWOA for business expenses that he may have paid with his own money.
Purpose of travel
8.25
There were legitimate business purposes for Rongo Wetere’s trips (with the exception of the non-business trip in November 2003 discussed in paragraph 8.8).
8.26
Many of the trips were for networking and meeting with academics to discuss indigenous education and higher education issues,28 attending education conferences, and research and meetings about literacy and what became the Greenlight programme (see paragraphs 7.42 to 7.50).
8.27
At the end of this Part, we describe 2 of these trips, to show the sorts of matters that Rongo Wetere’s travel related to (see paragraph 8.72 onwards).
8.28
Ms Krawll went on many of these trips because of her roles as International Events Co-ordinator and Greenlight Programme Co-ordinator.
Business case and advance approval
8.29
It is good practice to prepare a business case and expected budget for international travel, and to get formal advance approval of the travel (in a chief executive’s case, by the chairperson or someone else on the governing body).
8.30
Documented business cases and trip budgets were not prepared for most of Rongo Wetere’s travel. Rongo Wetere told us that TWOA’s Council was told about his travel plans before he departed on a trip, and he usually reported to the Council after a trip. However, no written pre-approval from the Council or a Council member was obtained before any of his 16 trips.
First class flights
8.31
We found 6 trips where Rongo Wetere flew first class.
8.32
We were told that Rongo Wetere and Marcia Krawll had never been advised not to travel first class. Because there was no formal TWOA travel policy for the relevant period, we asked Rongo Wetere what his informal policy was on class of travel. He told us that in the early days he travelled economy class, because TWOA was a small, poor organisation. Rongo Wetere told us that his understanding was that travelling in business class was standard practice if the flight took more than 6 hours, and that, depending on health issues and a person’s status within the organisation, first class travel was often appropriate.
8.33
In November 2003, Rongo Wetere received a complimentary upgrade by Air New Zealand from business to first class. He found it was much more relaxing than his previous experience of travel. On all his subsequent trips to the United States and Cuba, he and Ms Krawll travelled first class.
8.34
Rongo Wetere told us he was concerned about health-related issues, such as deep vein thrombosis and an arthritic complaint that he suffered from. We were told that he always started work immediately after arriving at his destination, so it was important that he arrived fresh and alert.
8.35
In our view, first class air travel by public entity officials can be justified only under exceptional circumstances. If travel by first class is considered necessary, it must be supported by clear reasons and be independently approved beforehand. The reasons provided to us would justify business class travel, but we do not find them sufficiently compelling to warrant travelling first class.
Charging private purchases to TWOA’s business credit card
8.36
Good public sector practice requires that a business credit card is never used for private purchases. TWOA’s credit card policy instituted in October 2003 reflects this position.
8.37
Before this policy came into force, some transactions charged to Rongo Wetere’s business credit card appeared to be private. Some money has been repaid29 to TWOA. Nevertheless, we think this practice was inappropriate. We are not aware of any exceptional reasons why the business credit card needed to be used for those purchases.
8.38
We did not identify clearly private transactions by Rongo Wetere after TWOA introduced its credit card policy. However, because of the poor quality of supporting documentation for credit card expenses, we cannot be certain that no such transactions occurred.
Using cash in Cuba
8.39
About $42,000 in cash had been withdrawn on Rongo Wetere’s business credit card. Almost all of these transactions occurred during his 4 trips to Cuba.
8.40
Rongo Wetere told us that, because of restrictions that the United States has imposed on many banks, trying to transact business with TWOA’s business credit card while he was in Cuba was difficult. His business credit card was often not accepted for credit card purchases. (In addition, travellers’ cheques are often not cleared by banks based in the United States or their international affiliates.)
8.41
He resorted to withdrawing cash on his credit card so he could pay for local travel, accommodation, and meal expenses. We were told that making cash withdrawals was also difficult. We were told that, in one case, it took nearly a whole day, and long visits to several Cuban banks, to withdraw cash from the business credit card. Sometimes, we were told, he had to use his private credit card to obtain cash after the business credit card would not work.
8.42
We accept that the use of a credit card in Cuba may be problematic, and that cash may be the only way to cover daily travel expenses. However, the non-traceable nature of cash creates a need for extra care, to reduce the risk of misuse or theft, to ensure that the money can be fully accounted for, and to verify that it has been used for a proper purpose. There is a greater need to get and keep evidence of how the money has been used, and to reconcile the amounts withdrawn with the amounts spent. The use of pre-prepared trip budgets would have helped.
8.43
The costs paid in cash while in Cuba typically included hotel accounts, taxi charges, and restaurant bills. We could infer a business use for most of the cash. However, we cannot be certain that all of the cash was used for business purposes, because the documentation in support of cash spending was poor.
8.44
We asked Rongo Wetere why this was the case. He told us that he got hotel invoices at the time and brought them back to New Zealand, and would have given them to his personal assistant for action. However, we found very few such invoices.
8.45
Others told us that that record-keeping and retaining documentation were not matters that Rongo Wetere concerned himself with. We were also told it was not always possible to get receipts from some suppliers in Cuba. Ms Krawll took some responsibility for recording Rongo Wetere’s spending. Ms Krawll sometimes recorded transactions in a logbook, and provided her records and receipts to TWOA. Many of those receipts cannot now be found, and the records and receipts that we did see did not account for all of the cash withdrawn.
8.46
TWOA staff went back to Cuba more than once. We are disappointed that TWOA did not put better accounting procedures in place for subsequent trips.
8.47
We could not get a full and accurate understanding of how all the cash withdrawn by Rongo Wetere had been used. The lack of documentation in support of the use of cash in Cuba is highly unsatisfactory.
Reconciliation of cash withdrawals
8.48
Even working with the unsupported explanations that we were given, we could not reconcile the records of amounts spent with the amounts of cash that had been withdrawn.
8.49
For some trips, the cash withdrawn on the business credit card exceeded the cash expenses that we could identify. Rongo Wetere may owe some money to TWOA, or all of the trip expenses may not have been recorded. But for other trips, the expenses apparently paid in cash exceeded the cash withdrawn on the business credit card. Rongo Wetere did not receive any cash advances before those trips, so on those occasions he must have used cash drawn from private sources to help pay for business expenses. In those cases, TWOA may owe money to him. We cannot determine what amounts may be owing either way.
8.50
We were also told that money is likely to be owed to Rongo Wetere from a trip in 2005 (which was outside the period we looked at).
8.51
The practice of mixing public funds with private funds is fraught with danger. Unless carefully managed, it can be extremely difficult to account for business cash transactions – which is what happened concerning the trips to Cuba.
8.52
Given the passage of time and lack of documentation for these cash transactions, we doubt whether TWOA will be able to accurately determine how much money (if any) is owed to or by Rongo Wetere for the use of cash in Cuba.
8.53
TWOA has made little attempt to reconcile cash withdrawals made on the business credit card, and to properly account for any balances owing either way. This is highly unsatisfactory.
Cash donations
8.54
On separate trips to Cuba, Rongo Wetere made, on behalf of TWOA, 2 US$5,000 cash donations to Cuban agencies. These donations were made as gestures of goodwill, and we understand they were used by the agencies to purchase much-needed computer equipment.
8.55
The first donation was made to the Instituto Pedagógico Latinoamericano Y Caribeño30 (IPLAC) during a trip in March 2004. There was no cash withdrawal for this amount on Rongo Wetere’s business credit card. It seems that it was mostly cash withdrawn from his private credit card.
8.56
The second donation was made to the Instituto Cubano de Amistad con los Pueblos31 (ICAP) during a trip in July 2004. In this case, Rongo Wetere supplemented a cash withdrawal of US$3,000 from his business credit card with US$2,000 drawn from his own private credit card.
8.57
We were told that it was not possible to make these donations with foreign currency cheques, because of the risk that banks in the United States or their international affiliates would not honour them. We were also told it can be difficult to deposit funds into Cuban bank accounts by electronic transfer (although we note that it has subsequently been done for payments relating to the Greenlight programme). An electronic transfer would have been a more transparent option than handing over cash to officials.
8.58
Even though there was a receipt for both donations, in our view a public entity should not give donations in cash to foreign officials. This practice is unacceptable.
Rongo Wetere’s expense claims
8.59
It appears that Rongo Wetere may have sometimes used his own money to pay for business expenses while travelling. He has not usually claimed and been reimbursed for such payments. We expected a number of claims to have been made.
8.60
On the other hand, we located one payment to Rongo Wetere that should not have been made. A single payment of $13,643 was credited to his private bank account in July 2004. The payment was identified by TWOA staff who were collating information for our inquiry. The payment was based on a form entitled “Expense Claim”. Despite the title, it appears that the form was a summary of recent expenses for the finance department to post to its ledger accounts and not a request for reimbursement. Almost all of the expenses listed on the form were incurred on Rongo Wetere’s business credit card, and should not have been reimbursed to him.
8.61
However, presumably because of the misleading heading, someone has mistaken the form as a claim for payment to Rongo Wetere. We were told Rongo Wetere was not aware that a claim had been made on his behalf, and paid. He had not signed the form. The form was prepared and processed by others, and approved by the Council’s chairperson.
8.62
We accept that this incident was almost certainly the result of a genuine error. Nevertheless, it reflects poorly on TWOA’s accounting processes.
Concluding comments
8.63
Overall, we expected there to be sufficient information available to confirm that all expenditure on TWOA business was properly incurred and accounted for. This was not the case with Rongo Wetere’s international travel.
8.64
Individual trips were usually not budgeted for and were not approved in advance. There was nothing to compare actual costs with.
8.65
The supporting and explanatory documentation for many credit card transactions, and especially the withdrawal and use of cash, was inadequate. Post-trip reconciliation of amounts spent was also inadequate. Rongo Wetere told us he handed travel and credit card documentation to his personal assistant after each trip, and assumed it had been taken care of. In our view, he should have ensured that costs he incurred while on TWOA business were being properly accounted for.
8.66
Some air travel was first class. We are not persuaded that the expense was justifiable.
8.67
It appears that Rongo Wetere paid insufficient attention to keeping TWOA money and personal funds separate.
8.68
Rongo Wetere did not comply with TWOA’s credit card policy for travel taken after the policy came into effect in October 2003:
- He did not begin to have his credit card expenses approved, and submit regular monthly transaction returns, until August 2004.
- He made cash withdrawals from the business credit card.
8.69
In our view:
- Rongo Wetere should reimburse TWOA for the parts of the $13,643 payment that he was not entitled to claim.
- TWOA should consider seeking reimbursement from the staff who took international trips for non-business reasons.
- TWOA should consider seeking reimbursement from Rongo Wetere and Ms Krawll for the first-class component of air travel that TWOA paid for.
- If Rongo Wetere can produce clear evidence that he used his own money for proper TWOA purposes, he is entitled to be reimbursed.
8.70
It was suggested during the course of our inquiry (and apparently in response to our queries) that an exercise to determine what amounts may be owed by or to Rongo Wetere would be carried out shortly. We doubt whether, given the lack of documentation around cash withdrawals and other credit card charges, it will be possible to accurately determine all amounts that may be owed by or to Rongo Wetere. The exercise is likely to account for only some of the credit card and cash transactions. This is an unacceptable situation.
8.71
Based on what we saw, we found no evidence to indicate that cash was used fraudulently or was otherwise misappropriated. However, we are concerned about the absence of documentation. Rongo Wetere appeared to be unaware of the importance of taking personal accountability for the money he spent while travelling on behalf of a public entity. TWOA’s and Rongo Wetere’s conduct in controlling and accounting for international travel expenditure fall well short of what we expect of a public entity and senior public officials.
Case study – 2 of Rongo Wetere’s trips
8.72
Two of Rongo Wetere’s trips show the sorts of matters his travel related to. The first trip was in 2002, and the second in 2004.
Trip to Canada, the United States, and Cuba – July to September 2002
8.73
Rongo Wetere visited Canada, the United States, and Cuba from 26 July to 9 September 2002.
8.74
Ms Krawll accompanied Rongo Wetere, in her capacity as International Events Co-ordinator. They flew business class. When planning this trip, they were not in a personal relationship.
8.75
Other TWOA personnel joined them for part of the Canadian leg of the trip.
8.76
At the time of this travel, TWOA had no formal credit card or travel policies in place.
8.77
The main locations, dates, and business activities for this trip are presented in Figure 7. Figure 8 shows our summary of the costs incurred.
Figure 7
Rongo Wetere’s 2002 trip – locations, dates, and activities
| Locations | Dates | Business activity |
|---|---|---|
| In transit | 26 July | Travel to Canada via the United States. |
| Vancouver (Canada) | 27 to 30 July | Meetings about South American indigenous art exchanges and exhibitions in New Zealand. Initial meetings about establishing WINHEC.* |
| Kananaskis (Canada) | 31 July to 13 August | Attendance (with other TWOA employees) at a WIPCE** conference. At the conference it was agreed to officially launch WINHEC. TWOA was awarded the rights to host the next triennial WIPCE conference in Hamilton, New Zealand. |
| Albuquerque (United States) | 13 to 20 August | Visit to Institute of American Indian Arts. |
| Phoenix (United States) | 20 August | Visit to University of Phoenix in Arizona. |
| Rosebud (United States) | 21 to 24 August | Sinte Gleska University presented Rongo Wetere with an honorary doctorate. |
| Montreal (Canada) | 24 and 25 August | Visit to McGill University. |
| Havana (Cuba) | 25 August to 4 September | Investigation of literacy education initiatives. |
| In transit | 5 to 9 September | Travel back to New Zealand via Mexico and the United States. |
* WINHEC is the World Indigenous Nations Higher Education Consortium. It provides an international forum and support for indigenous peoples to pursue higher education. Rongo Wetere is the founding Co-Chair for the Consortium. Consortium members come from Alaska, Australia, Canada, Hawaii, New Zealand, the Saamiland region of northern Europe, and the continental United States.
** WIPCE is the World Indigenous Peoples Conference on Education. This is an international educational conference held every 3 years.
Figure 8
Rongo Wetere’s 2002 trip – identified costs
| Cost item | Amount (NZ$) |
|---|---|
| Flights | $24,426 |
| Credit card expenses – accommodation | $30,406 |
| Credit card expenses – restaurants and food | $3,525 |
| Credit card expenses – taxis and other transport | $3,381 |
| Credit card expenses – gifts | $1,063 |
| Credit card expenses – private* | $7,342 |
| Credit card expenses – other cash withdrawals | $3,117 |
| TOTAL COSTS | $73,260 |
* These expenses appeared to be personal. Rongo Wetere has repaid $5,211 to TWOA.
8.78
Figure 8 excludes the airfares of personnel other than Rongo Wetere and Ms Krawll. We were told that the accommodation costs that Rongo Wetere paid for on the Kananaskis leg of the journey include accommodation costs for other TWOA employees attending the WIPCE conference. We have not seen documentation to verify this.
8.79
Rongo Wetere told us that the Council was aware of his travel plans. However, there was no documented business case to support the trip. He did not seek formal pre-approval from the Council.
8.80
Rongo Wetere had past involvement with WIPCE, and had been involved in discussions to help found WINHEC. Ms Krawll had extensive experience with Canadian and American indigenous peoples and had previously been involved in WIPCE. She also had knowledge of Cuban literacy programmes. The latter part of this trip was when TWOA first investigated the possibility of adapting Cuban literacy initiatives.
8.81
Most of the travel, accommodation, and meal expenses in Cuba were paid in cash.
Trip to Cuba – June to July 2004
8.82
Rongo Wetere visited Cuba from 24 June to 7 July 2004. Ms Krawll accompanied him, in her capacity as Greenlight Programme Co-ordinator. They flew first class on the international legs of the trip. By the time of this trip, they were in a personal relationship.
8.83
Two other TWOA personnel joined them for the first part of the trip.
8.84
The main locations, dates, and business activities for this trip are presented in Figure 9. The costs of the trip are shown in Figure 10.
Figure 9
Rongo Wetere’s 2004 trip – locations, dates, and activities
| Locations | Dates | Business activity |
|---|---|---|
| In transit | 24 to 26 June | Travel to Cuba via the United States and Mexico. |
| Havana (Cuba) | 26 to 30 June | Attendance at the 11th International Literacy and Education Research Network Conference on Learning. |
| Havana (Cuba) | 1 July to 3 July | Meetings with Cuban Ministers and hosting of ICAP officials regarding Greenlight programme. |
| In transit | 4 July to 7 July | Travel back to New Zealand via Mexico and the United States. |
Figure 10
Rongo Wetere’s 2004 trip – identified costs
| Cost item | Amount (NZ$) |
|---|---|
| Flight, transfer, and United States accommodation package | $26,235 |
| Credit card expenses – Cuban accommodation | $5,360 |
| Credit card expenses – Cuban restaurants and food | $586 |
| Credit card expenses – Cuban taxis and other transport | $788 |
| Credit card expenses – telephone charges | $899 |
| Credit card expenses – medical costs | $150 |
| Credit card expenses – cash donation (part) | $4,687 |
| Credit card expenses – other cash withdrawals | $1,351 |
| TOTAL COSTS | $40,056 |
8.85
Again, the airfares of personnel other than Rongo Wetere and Ms Krawll are excluded from this summary. Again, it is possible that the accommodation costs may include some of the accommodation costs for the other personnel as well, but TWOA did not provide us with documentation to verify this.
8.86
As before, Rongo Wetere told us that the Council was aware of his travel plans. However, there was no documented business case to support the trip, he did not seek formal pre-approval from the Council, and no trip budget was prepared.
8.87
Ms Krawll and the 2 other TWOA personnel presented papers to the literacy conference. The trip was also taken when the Greenlight programme had identified some technical issues in the preparation of the literacy learning material. Rongo Wetere and Ms Krawll met with the Cuban Minister of Education and other officials to discuss what further technical assistance IPLAC could provide to TWOA for the Greenlight programme.
8.88
Most of the travel, accommodation, and meal expenses while in Cuba were paid in cash.
28: This included, but was not limited to, meetings relating to WINHEC, an international organisation that Rongo Wetere helped to found (see Figure 7 following paragraph 8.77).
29: We have seen evidence that Rongo Wetere has repaid $5,706.
30: The Instituto Pedagógico Latinoamericano Y Caribeño (Latin American and Caribbean Pedagogical Institute) is part of the Ministry of Education of Cuba. It provides postgraduate study and international education assistance to countries and international institutions.
31: The Instituto Cubano de Amistad con los Pueblos (Cuban Institute for Friendship with the People) is a Cuban agency that internationally promotes initiatives, exchanges, and friendship with other countries. One of these promotions involved TWOA's desire to use Cuba's literacy expertise.
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