For the past 12 years South Wairarapa District Council has been quietly filtering excessive amounts of cash out of what are known internally as the Pain Estate accounts – and has suddenly admitted its financial filching by returning $302,000 to the Martinborough Community Board.
New council Chief Executive Janice Smith turned up the financial finagling by council officials, noting in a report last month to Pain Estate’s governors, the Martinborough Community Board, that the excess funds transfers began in 2011-12 “where a significantly increased level of internal charges occurred.”
How it “occurred” was not mentioned.
“As the farm is leased as well as the dwellings, it is appropriate that some form of allocation of administrative costs occurs but the difference that occurred between 2010-11 and 2011-12 was significant at $14,384.
“This increased level of allocation continued and increased over time until the total allocation in 2023-24 became $59,237. This level of internal recovery is not appropriate,” Smith wrote in a three-page report to the Community Board.
The plot involving the council’s excessive cash transfers from Pain Estate’s income sources – the lease of farmland, the estate homestead, a cottage and the council’s rubbish transfer station – thickened in 2019.
Then, Smith advised Community Board’s members, “the level of detail provided in the accounts was also reduced, which made it difficult for the board to understand the work taking place on Pain Farm.
“This led to a number of questions from the board and a decreased level of trust in the information being presented,” she noted.
It was in 2019 that the then Community Board members submitted a range of questions on Pain Estate, its costs, income and internal charge levels – but got no answers.
Pain Estate was gifted to the Martinborough community in 1932 by owner George Pain, and formally entrusted to the community’s ownership after his wife Mary died in the 1960s, with its income dedicated to providing sports and youth playgrounds for the town.
The document does not mention it, but “the allocation of administrative costs” Smith alludes to suggests some of the cash was used for general council purposes – not just for Martinborough activities – as George Pain intended.
That helps explain why Smith has now asked “a specialist trust lawyer from Simpson Grierson to review all the information relating to Pain Farm, starting with the will itself and all of the subsequent changes, reports and consents that have led to the position as we know it today.”
“One of the considerations that the lawyer has been asked to consider is the ability of Council to be both sides of the Trust relationship and how this might be changed to give separation of decision making to ensure that the actions undertaken are inline with the guiding principles of the Trust,” she wrote in the report to the Board.
A recent public meeting which sought answers to the Pain Estate governance row was advised by a retired trust lawyer it was a breach of trust law for the council to be both the trust administrator and benefactor of Pain Farm Estate.
The $302,000 refund comes more than five years after the previous board asked SWDC to provide the financial records for the 85-hectare Pain Farm Estate.
Of this, Smith advised, $222,000 is “overhead allocation correction,” almost $54,000 is “personnel cost correction,” $14,000 is “expenses correction,” and almost $12,000 is “rates repaid by tenants correction.”
The amendment to the Pain Estate accounts will not result in any additional charge to ratepayers, Smith said. It was an accounting transaction between two reserves accounts. There was no indication that interest losses were included in the repayment.
Asked for comment, Martinborough Community Board said:
“The MCB feel that the successful return of the PE (Pain Estate) funds could not have happened without two things: the attendance and engagement of the community at the public meeting in May and the willingness of our new CE Janice Smith to act and do the right thing for Martinborough.”
