Exclusive: Auckland League CEO blows whistle on $7.2m spend

By David Fisher

Up to $7.2 million of spending is in the spotlight at Auckland Rugby League as an investigation at the sporting body turned up allegations of conflicts of interest and poor financial management at a board level as well as accusations of fraud against one employee.

One police inquiry is already underway into a former Auckland Rugby League (ARL) employee and further legal action is being considered by the sporting organisation.

ARL, which is in charge of amateur league clubs across the city, commissioned a year-long investigation from financial services giant PwC which uncovered alleged conflicts of interest, poor decision-making, and one instance of fraud. ARL says the inquiry painted a picture of an organisation with a 20-year history of slipshod management and governance.

The Herald has obtained key documents from the PwC inquiry.

Allegations in the PwC report include:

A staff member accused of having taken $183,798 through credit card and invoice fraud with much of the money spent at SkyCity casino;
Claims former long-serving chair Cameron McGregor, while a board member, invoiced tens of thousands of dollars of work by his own accounting company without any conflict of interest paperwork or board approval for the work;
Claims McGregor made huge strategic decisions - like entering into negotiations to buy the Warriors - without prior board approval;
Details of the disastrous purchase and sale of the Warriors which cost ARL $4m.
Details have also emerged of claims board members of ARL’s investment arm voted a huge pay rise for themselves without external approval.

McGregor - who PwC investigators say would not speak to them - told the Herald he would not comment until he received and read the report. He said the Herald’s questions suggested the report was “wrong on a number of levels”.

“Obviously I believe the PwC report is wrong on a number of accounts mainly because they have not had full access to all the information,” he said.

Three ARL directors - former chief executive Greg Whaiapu, long-standing administrator Sel Pearson, and football competitions manager Pat Carthy - were suspended from the board a year ago after an early PwC briefing.

ARL’s probe was sparked after Rebecca Russell became the organisation’s first female chief executive officer at the end of 2022, arriving with a blue-chip corporate background to find what she described as a lack of basic financial practices and systems.

Russell: “We walked into an organisation that had no processes, no procedures and no standards. We were looking at suppliers and things didn’t smell right.”

She said the alleged fraud by the employee happened in an environment that in her view did not have a structured financial or management system. If ARL had proper systems in place then basic office procedures would have caught the fraud early, she said.

She believes the fraud is an outcome of what she described as “an incredibly toxic, systemic failure of governance and financial management”.

Russell said the investigation expanded to study ARL’s decision-making processes along with management and governance oversight with results that led to the three board directors being stood down last year.

She said ARL needed to operate in an accountable and transparent fashion that was answerable to fans, the 10,000 players across 30 clubs and $15m in value it represented, along with the $78m held in its charitable investment arm, the Carlaw Heritage Trust.

The allegations have led to a power struggle in the rugby league community with those facing scrutiny over financial management turning to the national body, NZ Rugby League, for support.

Two of three ARL directors suspended last year - Carthy and Whaiapu - appealed their stand-down to NZRL which said it would over-turn the suspension if it could. Instead, as ARL pointed out to the national body, it had no power to do so and could only ask ARL to reconsider the suspension.

A further appeal to NZRL by McGregor is said to have led to a finding that the ARL board had been operating outside its constitution since October 2023 with the claim that any decisions since were not valid.

In a letter obtained by the Herald, NZRL chief executive Greg Peters last month took the extraordinary move of writing to Auckland league clubs saying the national body was “increasingly concerned” about changes at ARL. The letter said the situation was of “such a serious nature” it was organising a meeting to discuss issues of concern.

In Peters letter, those concerns included the “significant costs” of the PwC investigation which, at that stage, was not finished. He also referred to a “pattern of disputes” such as those seen in the NZRL appeals process and the claim that the ARL board was “currently not constitutionally compliant” because of those stood down.

The letter also raised the voting status of Auckland clubs that did not have audited accounts, signalling that they may not be able to cast a ballot in the board election this month. Some inside Auckland’s league community see NZRL’s reference to invalid voting status as a signal it may seek to fight ARL at the ballot box with its own favoured candidates.

The same issues were canvassed at a meeting NZRL organised with Auckland clubs - and rejected in a letter to club chairs by ARL chair Shane Price in which he warned against NZRL’s incursion.

Price alleged the national body was in financial difficulty and in his view was seeking a pathway to the $78m asset that is student accommodation built where Carlaw Park once stood.

In his letter, he claimed the directors on the trust controlling the investment - the Carlaw Heritage Trust - had just voted to increase their honorarium from $8000 a year to $24,000 and he believed they intended increasing it again to $45,000.

He said the ARL board had blocked the increase. Price said it was his opinion the “clear conflict of interest of a trust reviewing, approving and instructing their own pay increase is unsettling”.

NZRL chair Peters told the Herald that NZRL was not after ARL’s assets but was concerned that it was not being governed in a way that aligned with its constitution. He said the moves were not related to the PwC report “because we don’t know what’s in it”.

“Whatever is there is important but until we see it … that will be for Auckland to address.”

Whaiapu said he was unable to talk openly because of constraints as a suspended director.

Pearson, another suspended director, said “I feel sick” after the Herald summarised the PwC findings, particularly in relation to the alleged fraud by one ARL employee.

“I sort of trusted everybody in terms of what they were doing. I had no idea someone was (allegedly) putting money in their own account.”

Pearson said he had sent a text message to one of the PwC staff after he was interviewed saying they needed to look harder because what he heard from them didn’t sound right.

“Turns out I was wrong.”

Price, who took over as chair from McGregor in 2019, told the Herald there had been a deliberate choice to seek out a chief executive who would transform the way league had been managed in Auckland.

He said ARL had found that person in Russell and he supported the steps she had taken.

“This bold step has been nothing but a triumph from my perspective.”

League legend Sir Graham Lowe said he had great confidence in Russell and the direction she was taking ARL.

“Rebecca has taken on a big responsibility and a big job. She’s one of the best leaders in sport I have come across. She’s brought in professional thinking.

“Leadership is being prepared to make hard calls and she’s obviously prepared to make hard calls. If you want to be everyone’s friend, you give them icecreams - when you’re a leader, you’re not there to give icecreams away.”

This article was first published on nzherald.co.nz and is republished here with permission