Wintec Investigations
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Wintec Investigations

Wintec Investigations

Wintec released two reports today on investigations into allegations about their CE Mark Flowers, and expenses associated with international education and staffing. There were no smoking guns, but financial recordkeeping was sloppy, especially for international education trips.

Relevance: high relevance to TEIs with international education operations.

Our Take

  • The QC’s review found no major problems, at least in the detail supplied in the brief overview. He did recommend two issues should be addressed.
  • Wintec appeared to have quite sloppy recordkeeping for expenses incurred overseas, according to Audit NZ. It had some policies in place, but did not appear to implement them consistently. It also failed to apply some basic recordkeeping practices, such as having receipts backing expense claims, and having expenses incurred on behalf of a staff member approved by a person in a superior position. The ITP, and those in the executive team, deserve criticism for sloppy financial management.
  • That said, Audit NZ found no smoking guns and their report had a finger-wagging tone. We do wonder how many international marketing missions in the tertiary education sector haven’t paid for some drinks after dinner, or had the most senior staff member staying in a more expensive room. Of course, if the financial records weren’t so sloppy, Audit NZ wouldn’t have had a pulpit to sermonise from.
  • Pay-outs for redundancy and severance were also messy, as records often did not back the decisions made. Payments were also not made according to approved delegations, although that appeared to be a matter of formal documentation not being reviewed as practice changed.
  • Audit NZ did not reflect much on the fact that they audited the accounts throughout the period that irregularities occurred (there is a paragraph at the bottom of p.6 on the issue).
  • If you want to see an example of public sector rorts in Hamilton, check out this story from today on the former Waikato DHB CE. Flying mystery women across the Pacific and skipping a work trip to go to Las Vegas are in a different league from sloppy records.

Key Facts

  • Wintec released two reports today: one by QC Simon Mount into 2010-2014 allegations about CE Mark Flowers; and a second by Audit NZ looking into spending on travel expenses, redundancy and severance payments. Wintec’s Council Chair Barry Harris and CE Mark Flowers also released their own statements on the matters.
  • Wintec said that they would be reviewing policies, outlined the costs of the investigations ($282k), acknowledged Flowers’ contribution, and noted that they would organise a farewell for Flowers (he is on sick leave, but will resign as at the end of this month).
  • Flowers noted the successes of his 16 years as Wintec CE (including the thriving international education operations), the 2 issues raised by the QC, and the lack of wrongdoing found in Audit NZ’s report. He thanked his staff and supporters.
  • The QC’s report was just over a page.
    • Most complaints were not “established on the balance of probabilities”, but two problems were found. The QC believed that the CE should have better dealt with a conflict of interest in relation to one employee, and that Wintec did not deal appropriately with a serious complaint.
    • The QC noted Flowers’ successes in the role and the high regard in which he was held by many, but also noted that the right balance was not always struck between flexibility and due process. The QC recommended a strong HR function and the review of some processes.
  • Audit NZ’s report was 29 pages long. It looked at: spending in China and Hong Kong from 2009-2017 by the executive team; and all redundancy and severance payments from 2013-2017. It found poor systems, but no evidence of wrongdoing.
    • Audit NZ found that travel expenses:
      • weren’t approved beforehand, as a policy required;
      • weren’t fully documented (eg some receipts were in Mandarin, receipts for other expenses were not found in the records, and costs were often charged to one room for the whole party, leaving the purposes of each charge unclear);
      • were sometimes approved by the person partially incurring them (ie a junior term member may have paid for costs that also related to their superior, who then approved the bill);
      • were above a “moderate or conservative” level – that level was within a good practice guide set by the Auditor-General, and was qualified by “having regard to the circumstances” (eg the most senior staff member often stayed in a more expensive hotel room, some minibar expenses were incurred in early years, and money was spent on alcohol “for more than reasonable dinner costs”); and
      • included some cash advances that did not have clear reconciliations of how they were used (in 2009 and 2010).
    • There were also inconsistent policies over gifts, and some potential personal expenses were not reimbursed to Wintec or adequately explained. The Auditor-General wanted a process set in place to record when hospitality was received from others. A policy over the receipt of gifts did not appear to have been complied with.
    • Looking at severances and redundancies, there were several cases where the payments were not fully documented or approved according to delegations. There was some improvement in processes in later years.
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