Govt was told all non-essential spending halted in midst of Unitec fraud by ex-manager Kimberley Gupwell

Former Unitec senior manager Kimberley Gupwell spent taxpayer money on fashion, food, and home renovations. Photo / Sam Hurley

A more than $100,000 fraud by a former senior manager at a financially distressed tertiary institute occurred while Government was being told all non-essential spending had stopped and teaching staff were losing their jobs.

Last week the Herald revealed the crimes of Kimberley Gupwell while working at the Unitec Institute of Technology as its head of international market development.

After she was hired in May 2016, Gupwell was given a purchasing card from the institution for marketing-related costs with a daily transaction limit of $5000 and monthly credit limit of $10,000.

However, a little more than two months into her new job, Gupwell began splurging thousands of dollars of taxpayer money on hair and beauty products, fashion, holiday accommodation, home renovations and Uber Eats.

As Gupwell's fraud remained undetected, those at Unitec and in Wellington were working on ways to save the struggling institute, which faced shortfalls of $19 million in 2018 and $27m last year if no changes were made.

Unitec had posted large deficits in 2016 and 2017, with borrowing increasing to over $100m at its peak. It had sold land to the Crown for housing development of housing, through the Ministry for Business, Innovation and Employment, for $134m, which cleared its debt.

Despite this, and as a result of declining enrolments, a failure to resize its operations and its bank being unwilling to lend further, Unitec was forecast to run out of cash in September 2018.

Gupwell was the head of international market development at Unitec Institute of Technology. Photo / Sam Hurley

In a May 2018 briefing to Education Minister Chris Hipkins, obtained by the Herald, Tertiary Education Commission (TEC) chief executive Tim Fowler said Unitec had already taken some significant steps to reduce costs.

"Since the gravity of the situation was identified, Unitec's senior leadership team has responded rapidly to reduce costs," Fowler said.

"Unitec has halted all non-essential spending, shelved plans for building development, and is moving to rationalise non-essential teaching staff. Vacancies created through senior staff recently departing are not being filled, complementing the general sinking lid that has been applied to recruitment since the start of the year."

John Fisk, a partner at PwC, was also appointed by agreement between Unitec and the TEC as an independent financial adviser and confirmed the urgent need for support.

Fowler also added "a large number" of short-term professional staff had their arrangements terminated, unless their work was essential to academic outcomes.

And no short-term incentive or bonus payments were made to the executive leadership team or senior management for work completed in the 2017 year.

At Gupwell's sentencing last week, Unitec's executive director of people and infrastructure Mary Johnston said "people were losing their jobs" and their families and communities were deeply affected.

In July 2018, Hipkins announced he was dissolving the Unitec council and appointing a commissioner, Murray Strong, to address the institute's difficulties.

A month later he said Unitec would receive a $50m loan.

In the midst of Gupwell's fraud Education Minister Chris Hipkins announced Unitec would receive a $50m Government loan. Photo / Mark Mitchell

Ultimately, Unitec's financial management team discovered anomalies in Gupwell's spending.

Following a series of questions by the Herald, a Unitec spokeswoman said the inconsistencies were discovered in late January 2019 when Gupwell failed to meet the purchasing card policy reconciliation deadlines and requirements.

After weeks of investigating they found between July 16, 2016, and March 29, 2019, she used the card for her own personal use 1461 times - totalling $110,188.

It was also discovered Gupwell entered false reasons 733 times in a financial management program in an effort to hide her lavish lunches and online shopping. On at least 15 occasions she created a falsified receipt and provided it as proof of a legitimate purchase.

Gupwell was then fired in May 2019, Unitec's communications manager Taiha Molyneux said.

"In accordance with our policies and procedures all appropriate authorities were notified including the commissioner, our external auditors and the New Zealand Police."

Criminal charges were laid in December last year by police.

Molyneux told the Herald that Unitec undertook a thorough review of its financial systems and did not identify other anomalies.

"Safeguarding our funding and ensuring it's used appropriately is of the utmost importance to us. We had robust systems and processes in place and have subsequently strengthened them further."

Unitec is recovering from its money woes, with its 2019 annual report showing an improved financial position, academic quality, staff engagement and student satisfaction.

"Our staff and students have achieved amazing things in a very short span of time and it's unfortunate that one individual's actions could distract from the efforts of this group of people," Molyneux said.

Gupwell was convicted and sentenced to 10 months' home detention on three representative charges of dishonestly using a document, altering a document with intent to deceive, and accessing a computer system for a dishonest purpose.

She did not wish to comment on her case when approached by the Herald.