2. Gang charities - should we be concerned?

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Introduction

If you’re registered as a charity you have to meet certain standards so the public can have confidence in your charity and the charitable sector as a whole.

A charity engaged in serious wrongdoing can be removed from the register by the regulator.  The serious wrongdoing definition includes engaging in an unlawful or corrupt use of funds or resources of the charity, as well as committing any act that constitutes an offence.  In addition, individuals can be disqualified as officers of a charity if they have been convicted of a crime involving dishonesty and sentenced for that crime within the last seven years.

It is worth bearing in mind that convicted criminals who have not been convicted of a dishonesty offence can still serve on a charity.  The reason given by Government at the time the legislation was passed was that some charities are established to assist current and former prisoners and the appointment of officers with past experience of prison would be of positive benefit to that charity (see p.10 of the Charities Bill commentary).

Recently there have been two reported incidences of the Mongrel Mob being behind registered charities.  No doubt other gangs are also involved with the charitable sector.   What do we know about them and should we be concerned?

We Against Violence

In May 2012 Otago Daily Times reported that a Mongrel Mob charitable trust called “We Against Violence” received government funding via Whanau Ora. A four-month investigation by Dunedin police had led to the arrest of 10 men, some with Mongrel Mob Notorious connections. Four Dunedin men were charged with dishonestly converting $20,000 of trust money.

We Against Violence is still a registered charity today, with purposes that include promoting philosophies of non-offensive, non-violent, pro-social behaviours.  No financial information is available for this charity yet – their 2011 return to the charities regulator is not required because they did not register until 8/7/2011. The charity is on the IRD website listed as an approved donee organisation.  So in addition to the Whanau Ora government funding, there may well be a flow of donation tax credits Inland Revenue paid out to assist this charitable trust.

Although gang charitable activity must be, by its nature, “high risk” for funders, as Tariana Turia noted, sometimes that is a risk worth taking.  In this case the Mongrel Mob charity did meet all their contracted outcomes.  However the problems arise when not all use of the funding is transparent.

Te Ara Tika o Te Whanau Trust

In 2006 there was a lot of publicity about the Notorious chapter of the Mongrel Mob starting a labour hire business called Rent a Bro and at the same time trying to see P eradicated by setting up a charitable trust called the Te Ara Tika o Te Whanau Trust.

In 2009 Rent a Bro came under the spotlight when director Mark Tipene (formally Mark Stephens, the convicted rapist also known as the Parnell Panther), was found guilty of intimidating a woman when collecting debts.  However it has also attracted positive publicity, such as carving the Bilingual School Marae at Sylvia Park.  Rent a Bro’s sole director is Roy Dunn, leader of the Notorious chapter.  The company is still active on the Companies Register today.

The related charitable trust Te Ara Tika registered as a charity in June 2008.  It filed its 2009 financial accounts showing income of about $11,000 and expenses of $23,000.   The three sources of income were donations ($2,920), Mangere East Family Service Centre youth plan ($6,667) and Tamaki Ki Raro Trust – now called Strive Community Trust ($1,778).  However no future returns were filed and the charity was deregistered in May 2011.  Despite this, the trust is still listed as a donee organisation on the IRD website.

Although no more information is available about the charity on the charities register, the JR McKenzie Trust website shows that in the year ending 31 March 2012 it made Te Ara Tika a grant of $181,600.  This is part of a 3-year commitment of grant funding, so the total funding will be approximately $545,000.  No doubt it is difficult for the Mongrel Mob to get government funding for its projects, which is probably why the JR McKenzie Trust has got involved.

Unfortunately, this is an example of how easy it is for registered charities to slip out of public view and outside the scrutiny of the charities regulator.   As soon as it doesn't file a return it is deregistered and no-one really knows what the entity is doing, how much money it is receiving or where it is going. 

By continuing to list the entity as having donee status, IRD lets the organisation’s donors continue claiming donation tax credits from the government.  That is the result of donee status not being linked to whether the entity is a registered charity, but instead whether IRD interprets the entity as being charitable, cultural, benevolent or philanthropic under its own legislation.

Conclusion

Gangs like the Mongrel Mob are involved with registered charities and this isn’t surprising.  When the charities legislation was passed there was an expectation that people convicted of crimes would be officers of registered charities.

The unfortunate aspect of NZ’s current system is that charities can easily be deregistered from the charities register without providing financial statements or information to show what they did when they were registered. 

Furthermore, this example shows that deregistration as a charity does not prevent the organisation from retaining IRD donee status, so donors can continue to claim back 1/3^rd of donations from the government.  This means, even though the government is put under the spotlight when it provides direct funding to these types of entities (for example, through Whanau Ora), the funding it provides to these types of entities through the donation tax credit system remains opaque. 

Perhaps the Mongrel Mob charities are doing good work – there’s no published evidence to suggest they don’t.  But we should be concerned about a system that allows these types of charities to easily slip off the charities register, and for donation tax credit support to continue after they are deregistered, with no public accountability or transparency whatsoever.