The last rest home in Rangitikei is closing its dementia unit, cutting staff and asking ratepayers for a loan after losing about $200,000 to alleged fraud.

Rangitikei District councillors have agreed to investigate giving an interest free loan to Edale Aged Care Centre in Marton.

Minutes from Edale Trust Board chair Dudley Brown's submission to council earlier this month said it had recently discovered fraudulent activity of around $200,000 of which $60,000 was related to wages.

Yesterday Mr Brown told the Chronicle he could not comment on the nature of the fraud as it was now before the courts.


But it had "certainly brought matters to a head".

The trust commissioned a report in January which suggested a restructure of the board and staffing roster, and closing Edale's dementia unit.

As a result "four or five" staff had taken voluntary redundancy.

On the dementia unit closing Mr Brown said it had become uneconomic, especially with new facilities opening in the wider region.

It was to close this Sunday but one resident still needs to be re-homed.

The beds will become part of the rest home increasing capacity from 23 to 30.

There were currently 22 rest home residents.

Mr Brown would not say how much Edale was asking council for but that it would come out in time.

"I think Edale and the council deserve the opportunity to discuss the submission further," he said.

"I don't think we need to go into that much detail at this point. The answer could well be no."

But Mr Brown said the survival of the rest home was not dependant on the loan.

"It's not a matter of us not operating but we want to grow the business."

The $2.2million centre has just under $300,000 debt and is now operating under a strategic plan through to 2020.

Rangitikei Mayor Andy Watson told councillors on Thursday the council had not done enough to support the now defunct Taihape and Bulls rest homes which have closed in recent years.

"I think we owe it to our community to a least consider the request that has been made to us," he said.

"They're a sizeable employer and they are our last rest home facility."

But councillor Angus Gordon said it was not the role of council to be propping up businesses.

"I can see people are really letting their hearts talks here," he said.

"I don't think we should ever be entertaining interest free loans for businesses. I think it's a slippery slope. There are many businesses in this district that have gone under for whatever reason. Where do you start and when do you finish?"

Councillor Dave Wilson said any loan should be secured against an asset.

"I don't believe the money would be given as a handout without some due diligence given. I think we should certainly be supporting an investigation."

Mr Watson said Edale would need to show it had a business case to support any loan.
Council staff will now consider the possibility of a loan and report to councillors at the end of May.

Meanwhile, Mr Brown said it was vital the district retained an aged care facility as it was the only one between Taumaranui, Whanganui and Feilding.

"It's terribly important and I mean it's no secret, the census tells us, that we are all getting older and obviously if we are getting older the need is going to grow."

Lancewood rest home in Bulls closed in January last year while Taihape's rest home closed in 2010.