Report blames management

Press, 14 December 1985, Page 12

Report blames management

PA Auckland

An accountant’s report blames poor management for the $1.4 million accumulated losses on the National Party’s headquarters building in Wellington. The report, commissioned by the former Tamaki electorate chairman, Dr lan Shearer, says the company controlling the building was insolvent and the building should have been sold four years ago.

Dr Shearer yesterday denied any part in the anonymous release of the report to the “Auckland Star” newspaper. He also refused to name the accountant, who prepared the fivepage document. Dr Shearer, a reinstated party member, asked the accountant to analyse financial statements filed with the Justice Department in Wellington after rows in recent months over the building’s financial performance.

The latest accounts showed the 10-storey building in Victoria Street had accumulated losses of $1.4 million by last December. The National Party sold the building last month for an undisclosed sum to an unnamed buyer. However, the accountant’s report, dated December 2, says the National Party Centre Inc. had been insolvent since 1979.

Losses totalling $900,000 in 1980 and 1981 could have been accepted as commercial risk. But without firm evidence

of profitability after 1981 the venture should have been abandoned, the report said.

The National Party financed the venture, “therefore it can be assumed the National Party was fully aware of the situation of the centre as regards to trading results and the balance sheets.”

During 1983, the National Party injected $1.3 million into the centre, which the report said should appear in the party’s balance sheets as shares in the centre. For these shares to be capable of realising their book value, the building’s valuation would have needed to be $4.3 million.

The building’s Government valuation as at July, 1984, was $4 million.