Another Rodney column

Rodney is on fire at the moment. His NBR column on the Meatworker Union accounts is excellent:

 I was recently told about some serious spending by the New Zealand Meat Workers Union that surprised me. It was so surprising that I thought I should check it out. No problem. I would just look up their audited accounts that the Registrar of Incorporated Societies would hold. That way I could determine if the story I was told was true. I was shocked to learn the accounts aren’t there. The meatworkers have four branches and for the past seven years have only been disclosing the capitation fees paid by the four branches to the national body. For the year ended September 2010 the disclosed income was $712,370. The total income to the union is several million dollars a year. That’s a failure over the years to disclose tens of millions of dollars

Whale has blogged extensively on this in the past. The union thinks it can hide the income and expenditure of its branches by pretending they are not part of the incorporated society. But this is clearly wrong. The law states a union must be an incorporated society.

The law is clear. To be a union, an organisation must be incorporated. And incorporated societies must file annual financial statements that members of the public can inspect. The advantage of incorporation is that it gives a legal personality separate from the society’s members. In return, members of the public can inspect the society’s accounts. But I can’t for the Meat Workers Union. Neither can you. And that’s been the case for seven years.

Sadly, the authorities are not exactly holding the union to account

Parliament has provided the registrar with the power to require records. So I wrote to the registrar pointing out the meatworkers’ failure. I suggested he use his power to get the branch records for the last seven years and make them publicly available. That was back in May. The registrar is Neville Harris, deputy secretary of the Ministry of Economic Development, which is part of a new super ministry. He advised me that he had been aware of the meatworkers’ failure to disclose their accounts since November 2011.  My information was not news to him. He explained he had been in contact with the union and was following up with the objective of having it file a “revised financial statement” that includes information relating to the activities of its branches. I have had no explanation why he doesn’t just demand the branch records and why he is speaking of just one financial statement singular when there are several years missing. It’s a complete mystery to me why the registrar just doesn’t demand the branch records and made them publicly available. After all, that’s the law’s requirement of unions and incorporated societies. Mr Harris and I now have had quite a correspondence. I can report that I am no further ahead than when I started. This month he advised me that he has decided the way forward is to obtain an opinion from an external accounting expert and to endeavour to resolve this matter on the basis of that advice. I have no idea why the registrar is seeking that advice. The problem is not an accounting one. It’s a legal one. The simple requirement is that the Meat Workers Union and its branches are required to disclose to the public their income and their expenditure and they aren’t. The person in charge of making sure they do is Mr Harris. Parliament has granted him the power to ensure they do. He is refusing to use that power. Instead, he’s working with the union to get them to file and is seeking accounting advice. Heaven only knows why.

I agree it is simple. The Registrar states you have until x date to file corrected accounts and a failure to do so will result in deregistration. Companies get automatically degregistered for late annual returns, so why does a union get away with seven years of inadequate returns?