Since the Office of the Auditor General released its investigation into what happened at ARC, around the LA Galaxy/David Beckham event ARC's Mt Smart regional park, there has been a smattering of media. Some mroe investigative than others.
The Independent ran a major editorial in its 28th January issue, which I've read, and which drew my attention to various facts that I had not been aware of hitherto.
In particular: "...council officials weren't aware - and hadn't budgeted for - the Inland Revenue Department putting its hat out for 20 percent of the match fee through non-resident withholding tax...". This was on the Match Fee which was reported at the time in NZ Herald to be $1.71 million. LA Galaxy apparently wanted their fee net of tax. Obviously.
I didn't know about that.
Also: "...ARC policy meant its staff could not buy the US dollars needed to pay the match fee until the contract terms were agreed. In April, the kiwi was trading at US79 cents. By August 6, when the ARC was finally able to lock in US-dollar options, it paid an average price of just US71 cents. The ARC had estimated that for every centy the kiwi fell against the greenback would cost it $25,000. Based on this calculation, the delay in buying US dollars added about $200,000 to match costs, on top of paying Galaxy a fee 20% higher than planned...."
I didn't know about that either.
What is really interesting about these revelations - which are direct quotes from the Office of Auditor General's report which you can download from: http://www.oag.govt.nz/2010/la-galaxy/ - is that they are much more a reflection on ARC's Treasury Management policy and decision-making at the highest level, than they are on the abilities of ARC officers who had the job of actually delivering the event.
PS: Late last year ARC took ARTA to task because it did not appear to have an appropriate foreign exchange hedge arrangement in place, in respect of the Euro and US$ exposure that potentially existed for its Integrated Ticket project contracts. You'd think that what is good for the goose, should also be good for the gander.
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Wednesday, February 3, 2010
ARC's "own goal" via Beckham and LA Galaxy
Since the Office of the Auditor General released its investigation into what happened at ARC, around the LA Galaxy/David Beckham event ARC's Mt Smart regional park, there has been a smattering of media. Some mroe investigative than others.
The Independent ran a major editorial in its 28th January issue, which I've read, and which drew my attention to various facts that I had not been aware of hitherto.
In particular: "...council officials weren't aware - and hadn't budgeted for - the Inland Revenue Department putting its hat out for 20 percent of the match fee through non-resident withholding tax...". This was on the Match Fee which was reported at the time in NZ Herald to be $1.71 million. LA Galaxy apparently wanted their fee net of tax. Obviously.
I didn't know about that.
Also: "...ARC policy meant its staff could not buy the US dollars needed to pay the match fee until the contract terms were agreed. In April, the kiwi was trading at US79 cents. By August 6, when the ARC was finally able to lock in US-dollar options, it paid an average price of just US71 cents. The ARC had estimated that for every centy the kiwi fell against the greenback would cost it $25,000. Based on this calculation, the delay in buying US dollars added about $200,000 to match costs, on top of paying Galaxy a fee 20% higher than planned...."
I didn't know about that either.
What is really interesting about these revelations - which are direct quotes from the Office of Auditor General's report which you can download from: http://www.oag.govt.nz/2010/la-galaxy/ - is that they are much more a reflection on ARC's Treasury Management policy and decision-making at the highest level, than they are on the abilities of ARC officers who had the job of actually delivering the event.
PS: Late last year ARC took ARTA to task because it did not appear to have an appropriate foreign exchange hedge arrangement in place, in respect of the Euro and US$ exposure that potentially existed for its Integrated Ticket project contracts. You'd think that what is good for the goose, should also be good for the gander.
The Independent ran a major editorial in its 28th January issue, which I've read, and which drew my attention to various facts that I had not been aware of hitherto.
In particular: "...council officials weren't aware - and hadn't budgeted for - the Inland Revenue Department putting its hat out for 20 percent of the match fee through non-resident withholding tax...". This was on the Match Fee which was reported at the time in NZ Herald to be $1.71 million. LA Galaxy apparently wanted their fee net of tax. Obviously.
I didn't know about that.
Also: "...ARC policy meant its staff could not buy the US dollars needed to pay the match fee until the contract terms were agreed. In April, the kiwi was trading at US79 cents. By August 6, when the ARC was finally able to lock in US-dollar options, it paid an average price of just US71 cents. The ARC had estimated that for every centy the kiwi fell against the greenback would cost it $25,000. Based on this calculation, the delay in buying US dollars added about $200,000 to match costs, on top of paying Galaxy a fee 20% higher than planned...."
I didn't know about that either.
What is really interesting about these revelations - which are direct quotes from the Office of Auditor General's report which you can download from: http://www.oag.govt.nz/2010/la-galaxy/ - is that they are much more a reflection on ARC's Treasury Management policy and decision-making at the highest level, than they are on the abilities of ARC officers who had the job of actually delivering the event.
PS: Late last year ARC took ARTA to task because it did not appear to have an appropriate foreign exchange hedge arrangement in place, in respect of the Euro and US$ exposure that potentially existed for its Integrated Ticket project contracts. You'd think that what is good for the goose, should also be good for the gander.
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