Transend secrets revealed

By ALISON HORWOOD

Former Transend boss Christine Du Fall spent $15,000 of taxpayers' money flying to New Zealand from Spain to pick up furniture.

She also spent seven days working in the West Indies, racking up $22,000 in hotel and airfare bills, but did not produce a full report, offering instead only a transcript of conversations.

Ms Du Fall's colleague at the NZ Post subsidiary, Jim Poynter, spent $18,500 on two airfares to Trinidad and Tobago, and the cost versus the benefits was later questioned.

Ms Du Fall and Mr Poynter are two of Transend's Europe-based lavish spenders whom New Zealand Post would not name this week.

Documents obtained under the Official Information Act have revealed the full extent of Transend's spending sprees and how its staff made key decisions.

As former managing director Drew Stein once explained to Transend staff in the in-house magazine Forefront, the decision to open an office in the Spanish capital of Madrid came to him "somewhere in midair during a marathon 33-hour plane journey home".

Asked later to explain how his staff ran the office without work visas, he told a Maltese newspaper: "It was a European office and no actual work was carried out in Spain."

The office - a split-level Spanish townhouse with a pool - opened in September 2000, closed less than a year later and cost $3 million.

It achieved little, says a PricewaterhouseCoopers report.

The Madrid office came in for heavy criticism in an Auditor-General's report issued this week, which cited "excessive and wasteful" spending and targeted Mr Stein.

The report showed some staff spent nearly $2000 a night at London's Hilton Park Lane hotel, flew business class for 45-minute trips across Europe and wined and dined one another on company credit cards.

Mr Stein quit in March because of a pneumonia-related illness.

He told Parliament's finance and expenditure committee that his doctor attributed the condition to "extensive international travel".

He now has an $80,000 contract with Transend that lasts until April.

National MP Murray McCully and Act MP Rodney Hide, who have pursued Transend for more than a year, urged NZ Post chief executive Elmar Toime to resign, saying he and Mr Stein sat on the two-person Transend board and should accept responsibility for the failures.

NZ Post chairman Jim Bolger announced yesterday that Mr Toime was leaving to become executive deputy chairman of Britain's Royal Mail.

The Auditor-General's report does not name the big-spenders, but documents given to the Herald under the Official Information Act name them as Ms Du Fall, 46, and Mr Poynter, 55.

Both terminated their contracts in August last year under a mutual "agreement" with Transend.

They were apparently given $20,000 payouts and signed confidentiality agreements.

PricewaterhouseCoopers issued a report on allegations of failure to follow processes and financial impropriety at Transend.

Until recently, Ms Du Fall was managing a retirement village in Lower Hutt. Mr Poynter is farming in the Wairarapa not far from where Mr Stein lives.

Documents show that both worked with Mr Stein before joining Transend.



In June 1998, Ms Du Fall was employed by Transend as international co-ordinator. The following year, she was promoted to international operations manager.

In May 2000, "performance issues" were raised during her review and she was asked to do a remedial training course.

That same month, she was relocated to the Madrid office as international operations director for Europe and the Americas.

Mr Poynter, who had been with Transend since 1998, also moved to Madrid as a regional director.

Other staff included two New Zealanders and a Spaniard.

The office aimed to expand into Europe and build on the good relationships that senior Transend managers had established with Spanish Post.

But PricewaterhouseCoopers said it could find "no evidence of a meaningful relationship" between the Madrid office and Spanish Post.



Transend did not compare the cost of Spain with other countries before opening the office, and ignored advice from Deloitte Touche Tohmatsu that tax rules made it an unattractive place to carry out business. Staff in the office did not have work permits.

Early last year, Transend decided to reduce its presence in Madrid and open an office in Britain.

It paid $143,000 for a real estate agent to find for three staff a 16-room building in Bray, 20 minutes from Heathrow Airport.

The total cost to open the office was $311,000, including $55,000 to move staff from Madrid and $32,000 in consultants fees.

The lease cost £75,000 ($232,540 at today's exchange rates) a year, which was recognised in Transend's financial statement in June this year as "onerous", or one which the obligation of meeting the cost exceeded the benefit expected.

Mr Stein and Mr Poynter signed a 10-year lease in June last year, although they did not have the authority to do so.



Documents show the total cost of operating the Bray branch for about a year was $1.8 million.

Other UK costs include a house near Bray, at £2580 ($8000) a month, and another in Henley-on-Thames, for £2700 ($8372) a month.

By July last year, Ms Du Fall was in Bray as international contracts specialist and Mr Poynter was general manager for Europe and the Americas.

A month before Ms Du Fall shifted to Bray, she flew from Madrid to New Zealand and back at a cost of $14,995 to select furniture that was held in storage.

Mr Poynter approved her travel, and she was gone less than 10 days.



Mr Stein was required to approve all travel and cash advances for staff reporting to him.

But the PriceWaterhouseCoopers report found 43 instances where approval had not been obtained.

A sample of 180 credit card purchases showed 49 did not meet policy for purchases and cash advances.

An analysis of Mr Poynter's travel between July 2000 and July last year showed he spent 30 days in New Zealand and 13 in Trinidad.

The report from the Auditor- General says "the amount of time spent in New Zealand and the lack of trips to South America [the territory for which he was responsible] is hard to understand".