The sheer hide of some people when it comes to accounting for public money can be breathtaking. A company known as America's Cup Village Ltd was responsible for about $85 million of public funds invested in the Viaduct Basin.
No doubt it has properly accounted for that money to Infrastructure Auckland, the body which set up and wholly owns America's Cup Village Ltd. But the company has done one deal that looks highly disadvantageous to the public interest and which, according to its chairman, Lindsay Fergusson, was made on terms of confidentiality that even now preclude him from explaining it publicly.
If so, he should never have entered into it. Confidentiality, where public funds are involved, may be justified when negotiations are under way and it might be against the public interest for its representatives to declare their hand. There might also be a case for confidentiality during the life of an agreement if public knowledge of the terms could put either party at a disadvantage in associated commercial dealings. But when the event is over and the contract finished, it is hard to see any valid purpose served by continued secrecy.
People entrusted with public money ought to be conscious always that sooner or later they owe the public a full disclosure. Private companies negotiating with a public body should expect that eventually the body will have to make public the terms of any agreement. It should not need to be said. Somehow, in the corporate styling of publicly owned services, we have run away with the idea that a public body can act as though commercial arrangements were entirely its own business. It is time that idea was firmly knocked on the head.
Scratch the most glittering public investment and you are liable to find a financial morass. That should be no surprise. Public investments, almost by definition, involve projects that are unprofitable in a strictly commercial sense; otherwise the private sector would provide the capital. When the discipline of profitability is absent, some strange deals are likely to be made. So it seems happened at the Viaduct Basin.
All told, the public of Auckland provided well over $120 million to provide a yacht harbour for the event - more than twice as much as private enterprise contributed in sponsorship of Team New Zealand. And most Aucklanders do not appear to resent it. When Infrastructure Auckland estimated that it could recover $48 million of the public outlay if it were to sell some of the syndicate berths, citizens would not hear of it.
They want this glittering facility kept in public ownership. But that does not mean they are content to see it lose money with no questions asked. The Herald's Bernard Orsman has been asking some questions and discovered, among other things, that American Express paid a paltry $200,000 for exclusive use of a $2.8 million pavilion in the centre of the harbour and the right, valued at $2.2 million, to attach its name to the village.
Mr Fergusson denies that the naming rights were given away so lightly. It is a question of how the deal was "structured," he says. But he will not elaborate and, furthermore, he chastises his former chief executive, Rob Sutherland, for talking about it.
Nobody expected the Viaduct development to be profitable but America's Cup Village Ltd earned only half the revenue expected from the event. Aucklanders would like to know why, and we will continue to seek the answers.
Keep public away from yacht base
The legal fun begins
America's Cup feature
Team NZ: who's in, who's out
<i>Editorial:</i> Strange ways to use public money
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