Bay link to fraud charges suggested

There are apparently other financial pressures on racing, including competing gambling outlets.

2Gaming officers are not saying whether a Hawke's Bay trust or any of its pokie machine operators are linked to charges which have led to four men being accused of an alleged multi-million dollar funding fraud.

But the investigation was reported yesterday to include grants made by the Hastings-based Infinity Foundation, along with the New Zealand Community Trust and the smaller Blenheim-based Bluegrass Trust.

It was also said to have included about 20 gaming venues, including two bars in Hawke's Bay.

The investigation has led to charges being laid by the Department of Internal Affairs against former Harness Racing NZ chairman Patrick O'Brien and son Mike O'Brien, of Blenheim, Nelson man Paul Max and a fourth person who has interim name suppression, but is not understood to be from Hawke's Bay.

DIA spokeswoman Sue Ingram said that as the matter was before the courts she could not comment on details, including the context in which any Hawke's Bay inquiries were staged.

The four men were charged as a result of Operation Chestnut, involving the Serious Fraud Office, the Department of Internal Affairs and police, which examined $30 million in grants dating back to 2006.

Between them, the four men face more than 30 charges of obtaining by deception, punishable by up to seven years' jail.

O'Brien, the former chairman, said he set up the pokies trust at the centre of the allegations to get cash for race stakes and other purposes after funding dried up.

"The taxes the government take out of it don't leave enough for the clubs to exist on," he said.

The previously unpublished interview with O'Brien was given two years ago after news emerged of interest in the funding arrangement from the Department of Internal Affairs. The investigation had already been running for at least a year with the NZ Herald tracing facts behind some charges back to 2009.

O'Brien said the Blue Grass Trust, which made grants to racing clubs, was created after complaints over gaming trusts giving racing "too much money".

Politicians speaking on the issue "frightened trusts off making grants to clubs", he said. "So I thought, after talking to a solicitor in Auckland, set up a trust for a pure, only purpose to derive funds for racing which was a legitimate purpose. [Gambling regulator] Department of Internal Affairs never liked it from the word go."

He said he believed the ability to use grant money to pay racing stakes - upheld in court - had set the industry against its regulator. He said officials had a "chip on their shoulder".

O'Brien said there were other financial pressures on racing, including competing gambling outlets.

"When I was growing up you went to the pictures on your push bike and on Saturday there was nothing else to do unless you played football. Now everyone goes to the beach or goes to the hills. They've got casinos to go to and pokie machines to go to. The pubs are open to midnight. A day at the races is no longer the attraction it used to be. They're not betting now what they were betting 30 years ago.

"The take for the clubs, particularly those with poor dates and country venues ... they're not getting enough to exist."