Complaint lodged against the Dunedin-based national body of the Independent Order of Odd Fellows regarding a shortfall of more than $240,000 in bereavement fund payouts has prompted the Securities Commission and Registrar of Friendly Societies and Credit Unions to request financial information from the organisation.
When contacted, the order's Dunedin-based national office manager Allen Mackle admitted there was a recent $244,804 shortfall from closure of the bereavement fund, which is being wound up as financially unsustainable.
The wind-up payments, to about 750 of its nationwide 2000 members, were short because of a "miscalculation".
However, all the money owed had been paid out to members this week.
The money was repaid from "general funds", and Mr Mackle said that "in no way" was the order placed in any financial stress, although it had closed the bereavement fund and a long term savings Lifestyle Fund out of "financial prudence" and in the face of dwindling membership.
"The order remains financially viable, and this [payout] will make no difference to our overall profitability," Mr Mackle said.
From about 19,000 members in the early 1940s, the order, which is 146 years old, has steadily declined to 2000 around the country in 57 lodges, with many facing closure, although the order is understood to have extensive historical property holdings around New Zealand.
Confirmation of the "miscalculation" on the bereavement fund came to light following an anonymous tip to the Otago Daily Times.
Mr Mackle, who believes the complainant is a former order member, confirmed both the Securities Commission and Registrar of Friendly Societies had requested information from the order in recent weeks, following the complaints made to each agency, and the order had responded to both.
"Neither the Registrar nor the Securities Commission has expressed any concern about the affairs of the order, with each simply asking for information to enable it to respond to the matters raised," Mr Mackle said.
The bereavement fund was not sustainable and after surrender values were worked out and payments made to members, "the actuary [an investment risk specialist] advised of some calculation errors he made", Mr Mackle said.
Because of the complexity of the value, time span and number of bereavement policies held, he could not give an "average" payout figure, other than to say the entire miscalculation of $244,804 had been paid.
The actuary had not faced censure over the miscalculation.
However, Mr Mackle said the order was looking at "considering recovery options", but he declined to give further details.
The anonymous allegations said some bereavement values were 50% down on valuations from 2006 to members, but Mr Mackle said the policy value at the time of the person's death was different from, and higherthan the policy's surrender value when the person was still alive.
Another allegation surrounded the recent sale of the order's Glasgow St property, and questioned why the property was not included in the bereavement calculations and entitlements.
Mr Mackle said the June property settlement would be booked in accounts for the financial year to June 27, which were still with the auditor.
Last year's financial report received an "unqualified" (no questions or concerns) declaration by the auditors.
When the house sale proceeds appear on the present year's financial accounts they would go to the order's general funds, and not any separate financial fund operated by the order, Mr Mackle said.
Another claim was that the order was exposed to investments with Geneva Finance and Hanover Finance, which have become embroiled in the widespread crashes and fund freezing of more than 25 companies during the past two years, tying up more than $3.5 billion of investor funds.
Mr Mackle confirmed there were investments in Hanover and Geneva which would affect the order's overall financial performance.
"However, it creates no problems for the order in meeting its ongoing obligations," Mr Mackle said.
Ministry of Economic Development lawyer Sheree McDonald, acting for the Friendly Societies, confirmed two Dunedin people had made complaints against the order regarding payments from the society and the closure of the bereavement fund.
The order was registered as a friendly society in April 1879, its company office records say.
It offered a range of financial assistance, including medical cover, bereavement benefits, a Credit Union with savings plans, and small loans and mortgages through its friendly society.
Ms McDonald said information had "recently" been requested from the order because of the complaints, and while there was no deadline set for delivery she would be following up the request.
She declined to give any further details.
"All I can say is that we expect to receive the information requested," she said.
A spokesman for the Securities Commission declined to comment on the matter when contacted, making a "neither deny not confirm" statement as to whether it was investigating the order.
The order was the first formed in New Zealand in August 1862 in Dunedin, to provide workers and their families with financial and other assistance at a time when there was no government welfare.
Its website offers Credit Union savings plans and small loans and mortgages as a friendly society.
