Te Pataka Ohanga, the subsidiary of the Kohanga Reo National Trust which was at the centre of allegations of misspending including the purchase of a Trelise Cooper dress, has been warned that it faces deregistration as a charity unless it urgently addresses governance issues uncovered in a just completed investigation.

While the Serious Fraud Office (SFO) today said it found no criminal offending at Te Pataka Ohanga (TPO) following the completion of its investigation into the allegations, the Department of Internal Affairs this afternoon said it had given the body "an official warning" after its separate investigation under the Charities Act.

"In this case our investigation found that TPO has done work to comply with charities law and we have identified areas where further compliance is needed", general manager of charities services Lesa Kalapu said.

"We will actively monitor TPO's progress. Failure to comply with, or respond to, a warning can lead to deregistration, by the Charities Registration Board, and would result in the loss of the charity's tax-exempt status with Inland Revenue. If we find sufficient evidence of non-compliance or wrongdoing we would again investigate TPO."


TPO needed to take further action to bring it into line with the requirements of the Charities Act before July 21, Ms Kalapu said.

Internal Affairs' comments come just hours after the Serious Fraud Office announced the findings of the investigation into TPO's finances initiated in March by Education Minister Hekia Parata. Ms Parata called in the SFO after new allegations of improper spending came to light around the time an independent review by EY (Ernst &Young) effectively cleared the parent Kohanga Reo National Trust of any wrongdoing.

In a statement today the SFO said it had completed its investigation which "did not disclose any criminal offending and the SFO will not be taking any further action".

The SFO said its investigation specifically considered a number of loans made by TPO to staff and their whanau and the use of TPO credit cards.

"After considering the scope of any restrictions imposed upon TPO with regard to the use of funds, the SFO does not consider any further action is warranted with regard to the loans.

"While some expenditure on a TPO credit card related to personal items, the SFO is satisfied on the information available that the card was used in error and that repayments were made. This was the case in relation to expenditure at Trelise Cooper and in relation to the purchase of a wedding dress."

The SFO said other issues raised in its investigation appeared to be attributable to "failures in corporate governance".

"Some of the expenditure on the credit card fell into this category. The SFO understands that TPO has taken steps to address these corporate governance issues."


If any further information came to light, the SFO would reconsider its conclusions, it said.

Concerns by local kohanga reo about the national body came to a head last year when Maori Television's Native Affairs revealed dubious spending by the subsidiary company including on a wedding dress, a Trelise Cooper dress and a Kardashian collection handbag.

The subsequent EY review did not cover that expenditure because the company's income, while originating from the Ministry of Education, was deemed private money because it was paid by the trust to the company.

Before Internal Affairs gave its comments this afternoon, the Kahanga Reo National Trust's board said it and TPO had been cleared of the allegations levelled at them, and referred to the resolution made at an April hui calling for the Government "to stay out of the movement's business".

"After all the unfair and prejudicial criticism we have endured over the past few months we are greatly heartened by this result. It confirms what we have always known and frankly we are owed a few apologies."

The hui provided for "a working party to examine future governance arrangements for the movement and mandated the Trust to manage that process".

At the hui, the trust was instructed "to get on with negotiating a settlement with the Crown following the successful claim the Trust took to the Waitangi Tribunal".

The trust's board could "see no further obstacle to the Crown coming to the table to negotiate proper funding arrangements for Kohanga Reo, and other shortcomings the Tribunal identified in the Crown's dealings with the kohanga movement".