A Dunedin-based gambling trust is going to the Gambling Commission over claims it has been unfairly targeted by the Department of Internal Affairs.
Caversham Foundation chairman Dr Wayne Morris, of Dunedin, said the trust had been dealt with unfairly by the department since 2006, and plans to seek costs and the reinstatement of its full licence to operate gaming machines without conditions.
At the height to its operation, the foundation was one of the fastest growing in the country, with 452 machines in 39 venues across the country, awarding more than $28 million in grants, he said.
In November 2007, the department refused to renew the foundation's licence, on the grounds it was not financially viable under section 52 (1) (c) of the Gambling Act, a claim Dr Morris and his board dispute.
The trust had bought machines with loans from Mascot Finance, totalling more than $5 million but the department "considered we were not financially viable because of the debt".
Dr Morris said the foundation was always able to meet its payments to the finance company, and employed the services of business advisers Polson Higgs, and auditors PricewaterhouseCoopers, who found it was financially viable, he said.
The department was still not satisfied, so the foundation went for a third opinion from Deloitte, which agreed it was viable.
Aware it might have ongoing problems with the department, the foundation decided to reduce its operation to 148 machines in 13 venues, and paid off its debt with Mascot Finance by April this year, Dr Morris said.
Despite favourable audit reports, the department decided not to issue the trust with a licence, based on its own independent advice.
On September 1, the trust appealed to the Gambling Commission, an independent statutory decision-making body, enabling it to continue operating while a decision was pending.
"We were waiting to see what they have on us but they withdrew - this is after two and a-half years of posturing."
Choosing not to file with the Gambling Commission, the department issued the trust with a conditional licence until the end of its financial year, March 31, 2009.
"We will reassess its performance after closely monitoring its cash flow management and compliance with the Gambling Act," Department of Internal Affairs gambling compliance director Mike Hill said.
"In terms of auditing standards, Caversham must now be considered a `going concern' and, while there are concerns about future cash flow, there are no grounds to deny a licence at this stage," Mr Hill said.
With zero debt, the trust has decided to take the department to the commission again, later this month, to fight for a full rather than conditional licence, and to seek costs.
"They have been unreasonable. They haven't been fair. They decided to cancel our licence and they used every means possible to prove it, flying in the face of independent audits.
"We think they are a department out of control," Dr Morris said.
Former venues have now committed with other trusts and it would "take years" for the Caversham Foundation to get back to its former position, he said.
Mr Hill said the department would respond to any submissions made by the trust.
