Australia West HQ allegedly gave cash to its own pet projects while ignoring needy local charities

23:13  05 august  2021
23:13  05 august  2021 Source:   msn.com

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All Chris Laurie wanted was enough money to buy some meat.

In 2019, the manager of the disability service Community Access Western Sydney (CAWS) put in an application to the NSW ClubGrants scheme to help fund her organisation's Soul Food Café, which provides free food and coffee for some of Sydney's most vulnerable people.

"The difference between a grant and not getting one? It's the difference between vegetable soup, and a meal with some meat on the plate. We rarely get meat donated," she said.

"We have people who have a chronic mental illness, people with disabilities, people who live in poverty and victims of domestic violence. The most vulnerable people in the community who don't have anyone else trying to help them. Through the café we try to give them a meal and a connection with other people."

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ClubGrants is the scheme where large NSW clubs are given a tax rebate if they give grants for "the provision of frontline services to their local communities; and to ensure that the disadvantaged in the community are better positioned to benefit from the substantial contributions made by those clubs."'

Laurie has worked in the community sector for 43 years and knows how much of a difference these kinds of grants can make. She set aside some time, filled out an application for $10,000 worth of funding and hoped for the best. The plan was for three-quarters of the money to go on meat, the rest would be used to spruce up the place.

"We wanted to make it seem more like a café, not a soup kitchen and give the people who come here their dignity. Make it a fun place to come too, a good café like one down at the shops," she said.

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She submitted her application and Blacktown City Council's ClubGrants committee assessed it along with another 145 submissions from local charities and programs. The successful applicants would be funded by the six large clubs in the Blacktown local government area, which make over $140 million combined from poker machines in a year. The area contains some of the most disadvantaged communities in the state.

The disability service Laurie works for missed out on funding. Her grant application was passed over and no reason was given. If the process was transparent she would have learnt that the committee that assessed her application had recommended that Soul Food Café should have been given the money.

ClubGrants is the system designed by the NSW government to use pokies profits to assist the most socially disadvantaged in our community and is worth an estimated $62 million per year. ABC Investigations can reveal how ClubGrants are allegedly being used to pay for corporate sponsorships and make mysterious payments to groups with lobbyist connections — all while cash-strapped charities and local community groups, desperately in need of assistance, are being looked over and kept in the dark.

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Documents obtained by ABC Investigations show the local ClubGrants committee gave Laurie's application the top ranking of "highly recommended". Yet none of the six large clubs in the area followed the committee's strong recommendation to fund her $10,000 grant.

In fact, the wealthiest club in that group, West HQ (formerly known as Rooty Hill RSL), did not fund any of the 33 applicants that had been rated "highly recommended" by the committee. Smaller clubs in the Blacktown area did fund a number of the top-rated projects.

West HQ ignored NSW government guidelines that recommend clubs should "allocate a minimum of 75 per cent of category 1 funds in accordance with the Local Committee's recommendations".

Instead, the mega club used the money to pay out over $500,000 in grants to organisations with close links to West HQ and its leadership, including to a think tank run by a lobbyist and a peak national sporting organisation run by a former Labor minister for sport.

In doing so, West HQ is not breaching the law but it has angered the small charities ABC Investigations has spoken to, that each year fill out ClubGrants applications and expect them to be awarded on merit.

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In NSW, registered clubs are treated with generous tax concessions as part of their not-for-profit status. They don't have to pay as much gaming tax as pubs with poker machines, and the NSW government gives clubs tax-free status for the first $1 million in pokies profits in a year.

Clubs can also claim a 1.85 per cent rebate for profits exceeding $1 million if they contribute to eligible community projects.

Kate da Costa from the Alliance for Gambling Reform says the clubs end up getting credit for handing out money that is forgone revenue from NSW Treasury.

"ClubGrants are essentially a taxpayer-funded PR exercise for the large clubs," she says.

"When it's explained to organisations that the grants they're getting are deferred poker machine taxes, not donations from the clubs, they're often aghast.

"There is a breathtaking lack of transparency around this system, which must be redressed. It's patently wrong that the gambling industry effectively choosing how to spend what should be taxpayer funds."

The largest club that ignored the smallest charities

West HQ is the largest licensed club in NSW and regularly ranks in the top ten highest-earning clubs in terms of gaming machine profit.

The scale of the club is immense. It has about 700 poker machines, a 34-lane bowling alley, a gymnasium and aquatic centre, a 4-star hotel and a 2,000-seat theatre. The club's CEO, Richard Errington, has previously made the case that the club is so big it should have its own postcode.

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When its Sydney Coliseum Theatre opened in 2019, the club boasted that its construction had been a part of a two-year $140 million infrastructure upgrade funded mostly by poker machine profits. It was a massive investment for a not-for-profit club.

West HQ has over $250 million in assets and last year made close to $60 million from poker machines, despite COVID-19 lockdowns.

Given the high turnover in poker machine profits, it would be expected that West HQ would give large amounts of money to local grassroots charities through what are called category 1 grants. Under the ClubGrants guidelines, category 1 grants "are aimed at improving the living standards of low income and disadvantaged people."

But West HQ has a history of ignoring applications from local charities and not-for-profits, and instead using the system to direct money to organisations with close ties to the club.

A former club insider, who requested anonymity, has told ABC Investigations that West HQ used ClubGrants to help itself rather than the most disadvantaged in its community.

"West HQ would divert funding to areas that they thought would drive as much revenue to the business as possible, as opposed to whether it was aligned with the funding requirements for ClubGrants," the person said. "It was a clear decision to manage it best to help generate revenue."

The CEO of West HQ disputes this. In a statement, Errington said:

"In my 15 years' tenure, we have consistently and methodically met the regulatory requirements for compliance and audit to the ClubGrants guidelines by the NSW government to ensure we carry out what we are permitted to do. If we were 'opposed to whether it was aligned with the funding requirements' we would be in breach of the regulations."

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Who's running the show?

ABC Investigations has uncovered evidence that more than a third of the programs and charities that were highly recommended by the Blacktown ClubGrants committee in 2019 did not receive a single cent.

Among the highly recommended ClubGrants applications that missed out were proposals to:

  • compile a directory of domestic and family violence services ($6,000);
  • run an animal rescue program for young refugees who had survived trauma ($8,784);
  • and for a drug and alcohol education program for South Sudanese youth struggling to integrate into Australian society ($7,707).

At least 12 highly recommended applicants missed out entirely. West HQ bypassed the ClubGrants committee's recommendations and funded who they liked, including one grant, for a peak athletics organisation, worth $270,000 — over twice the combined amount those 12 highly ranked applicants were asking for.

Mark Arbib is best known for being one of the Labor power brokers who helped bring down Kevin Rudd in the first term of his prime ministership. A former federal senator and minister for sport, Arbib continued to wield power after leaving politics in 2012, becoming a strategist for James Packer's Consolidated Press Holdings, the main shareholder in Crown's casino operations.

A keen runner, Arbib became president of Athletics Australia in 2015. In that role, he helped establish a community fun run called RunWest. Athletics Australia says the event "focuses on community participation and supports mental health and wellbeing benefits for the people of Western Sydney".

Corporate sponsors were needed and a meeting was arranged with West HQ's CEO. A deal was struck by the club to give $270,000 to Athletics Australia, but a condition of the deal was that the race had to finish at West HQ.

A former insider at West HQ has told ABC Investigations that the ClubGrants system was used to retrospectively fund that $270,000 corporate sponsorship.

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"Athletics Australia and West HQ had already entered a multi-year commercial agreement to sponsor the event before that grant was awarded. The ClubGrants form was sent out to Athletics Australia after the agreement was made," they said.

In a statement, Errington confirmed that Athletics Australia was paid in late August 2018, after entering an agreement for the RunWest event to be held the following year.

This payment was made before the local charities or community groups who went through the Blacktown City Council approval process could apply for the 2019 category 1 grants.

In a statement, Athletics Australia CEO Peter Bromley said the organisation "believes it did all things necessary to apply for ClubGrants funding. Contractual details are commercial in confidence."

By having heavy hitters like Arbib being able to open doors on its behalf, Athletics Australia was able to deal directly with the club and bypass the local ClubGrants committee's approval process. Disability advocate Chris Laurie doesn't understand why some organisations get special treatment and why West HQ couldn't find the money to meet her grant proposal as well.

"They could've done both. We asked for $10,000. [Athletics Australia] could've had $260,000 instead of $270,000. It's such a tiny amount, the money we were talking about," she says.

The event was able to raise money from other organisations as well. It had corporate sponsors, (NAB and Project Clothing) and government support (Blacktown City Council and the NSW Office of Sport).

Athletics Australia says RunWest delivered "extensive health, wellbeing and community benefits" and has never made a profit. A former West HQ insider has told ABC Investigations the fun run was more expensive than a normal community event because West HQ insisted the course finish at the club, meaning the run had to be diverted via a number of main roads.

"The course had to cross Parramatta Road to finish at the club," the insider says. "It was a nightmare for traffic and we had to pay to close the road to divert the traffic."

When Errington was asked why West HQ ignored the ClubGrants guidelines that 75 per cent of all category 1 ClubGrants should be based on recommendations of the local committee, he told ABC Investigations "because it's a recommendation."

The NSW regulator Liquor and Gaming confirmed to ABC Investigations that it audited West HQ's ClubGrants return in 2019. In a statement, the regulator said: "The audit found the club had failed to comply with requirements to provide certain documents."

The regulator stated that following the audit, "The club's explanation for the grant was accepted. The club was advised, however, that the guidelines were to be revised to ensure future grants awarded by clubs more clearly cater to local priorities and needs."

The mystery payment

There's a payment on West HQ's 2019 disclosure list of ClubGrants that on the surface makes no sense at all.

It says that $75,000 in cash was given to corporate lobbyist Taylor Street Advisory for "providing advocacy for local community services" by way of a category 1 grant.

On its website, Taylor Street Advisory says that it "brings to its work our deep experience in government relations, corporate advisory, marketing and brand, public policy, management consulting, strategic media engagement, stakeholder relations, event coordination, bid advisory and project management".

The NSW Lobbyist register shows that Taylor Street Advisory lobbies on behalf of 52 organisations and corporations, including West HQ, the casino giant Crown, property developers Walker Corporation and Lend Lease, and the Australian Turf Club.

In short, Taylor Street Advisory is a private company doing work that would not normally satisfy the requirements of the ClubGrants guidelines.

When ABC Investigations asked why West HQ gave a grant — designed for front-line services to benefit the most disadvantaged in the community — to a lobbyist firm, Errington denied it happened. He says the club made a mistake in its ClubsGrant disclosures.

"It was an error. If you look at the forms filled out it went to the Western Sydney Leadership Dialogue for regional engagement," he said.

The Western Sydney Leadership Dialogue is a not-for-profit think-tank that holds conferences and releases papers relevant to issues facing the future of Western Sydney. It was founded by Christopher Brown, who is also executive chair of lobbyist group Taylor Street Advisory. According to a comparison of the two groups' websites and company records, the think-tank and the lobby group share eight staff and leadership. Company extracts lodged with ASIC show they operate out of the same address in Balmain.

Brown's roles as both a lobbyist and as head of the not-for-profit Western Sydney Leadership Dialogue have overlapped with some controversy before, after it was revealed that in 2018 he directly emailed Premier Gladys Berejiklian a confidential letter on behalf of property developers and big business, urging her to seize ministerial control of the Greater Sydney Commission.

According to a former West HQ insider, Brown played a hands-on role in lobbying government for the not-for-profit club and CEO Errington had said in a meeting, "we were paying Chris Brown $160,000 a year to lobby on our behalf".

In response to the ABC, West HQ provided a copy of a remittance advice for $82,500 for the Western Sydney Leadership Dialogue dated September 2018.

Errington explained the $82,500 was for the $75,000 grant plus GST. However, ClubGrants don't require GST.

Brown confirmed that the think tank did not apply for a grant: "We didn't apply, we were the recipients." He says the funding helped with the research on publications about domestic violence and the impact of global warming on Western Sydney.

In 2019, Errington was given an award by the Western Sydney Leadership Dialogue for Innovation and Reputation, for "driving reputational change through the establishment of West HQ". The award acknowledged the role he played as a "key partner in the inaugural RunWest".

The Office of Liquor and Gaming told the ABC it was satisfied that payment was made to the Western Sydney Leadership Dialogue and not Taylor Street Advisory, however it did not scrutinise the eligibility of the grant that year because West HQ was calculated to be over its threshold limit for ClubGrants.

"Therefore, the grant was not reviewed for eligibility under ClubGrants guidelines," a spokesperson said.

Crucially, Western Sydney Leadership Dialogue, Athletics Australia nor any of the West HQ category 1 grant recipients applied through the local committee process.

Community worker Ivanka Pelikan did.

"To hear that somebody else got it that didn't put in a funding submission, it's quite sad and they're not working really with the community, with the most disadvantaged and disengaged, like we are," she said.

"I mean, are they going to do anything for the disadvantaged communities around the Blacktown LGA?"

For 14 years, Pelikan has worked at Graceades Community Cottage — a registered charity that provides a range of support to disadvantaged families in Mt Druitt and surrounding suburbs, including free food hampers, clothing, furniture and referrals to essential services.

In 2016, her efforts were recognised when she was awarded Mount Druitt's Local Woman of the Year.

"If you know that you're not going to give us the money, don't waste our time for us to write funding submissions," she says. "We don't just sit here and write funding submissions, we work with people, we get on."

When ABC Investigations contacted Pelikan she was unaware her unsuccessful ClubGrants application was considered "highly recommended" or that the grants handed out by the biggest club in her area, West HQ, didn't even go through the local committee process.

"Then why bother putting it out? Why bother putting it out to us? Why bother putting it out to people that are in the Blacktown LGA?"

Grant for CEO-linked company

The most generous ClubGrants that West HQ dished out in 2019 and 2020 were to a public company that Errington is both a director and secretary of.

In each year, West HQ gave $435,000 to the Sydney Gymnastics and Aquatic Centre Sports Academy to "promote health and fitness activities for youth".

West HQ is home to the Sydney Gymnastic Aquatic Centre, described by the club as "one of the largest purpose-built gymnastics facilities in the southern hemisphere with Olympic-standard equipment… as well as two 25m swimming pools".

Under category 2 guidelines, money can be gifted back to the club if the expenditure is "allocated to community development and support activities and projects not listed under category 1 and expenditure allocated to a club's core activities".

There are some forms of expenditure that are not allowed under category 2 guidelines, including expenditure on a club's commercial activities.

According to Errington, the grants were not used for commercial purposes.

"The Academy operates solely to distribute all funds received to athletes through Scholarship Policy, Subsidy Policy, and funding training programs. It is not a commercial entity," he said in a statement.

In 2020, West HQ generated $5.8 million in revenue from its aquatic and gymnastics centre and its fitness centre, which has left local charities and not-for-profits wondering why this kind of money could not have been freed up more for needy causes.

Errington denies any potential conflict of interest. "Applications made by the Academy are made in accordance with the ClubGrants guidelines and West HQ reviews and determines applications also in accordance with the ClubGrants guidelines. Both the independent board of West HQ and the Academy are aware of my role," he says.

Kate da Costa from the Alliance says the ClubGrants system is flawed and allows clubs to use regulations for their own benefit.

"The clubs use the system to their full advantage and 'grant' themselves money for club renovations and other upgrades, which are effectively being subsidised by taxpayers," she said.

'The Supreme Commander'

For several years, West HQ has also given $15,000 in cash to a small local group run by one of the club's own directors — the Australian Philippines Service League Inc (APSL).

According to a 2014 press release from the group, APSL Inc comprises Filipino veterans, former service personnel and descendants of veterans and military staff.

Wests HQ board member Chris Pilao is listed as a retired colonel and the group's 'Supreme Commander'.

In documents that show which groups West HQ gave ClubGrants to, the only detail that is listed each year is that the money going to APSL Inc is for 'Community Education Programs'.

Pilao did not respond to the ABC's request for further information.

Former West HQ director Richard Hoskins was expelled from the club after raising concerns about community grants being directed to organisations with links to board members.

In 2016 he attempted to run for re-election to the club's board, campaigning for the grants to be "distributed based on need, not association to a board member". He was unsuccessful.

Null Deng has also complained about the ClubGrants process to Blacktown City Council.

As a social worker and community organiser, he applied for a grant in 2019 to help educate people in the South Sudanese community about drug and alcohol use, and how to teach parents how to educate their children and access services if they were in trouble.

"We were not successful that year. And I was not sure why. Because we didn't ask for a lot of money," he said.

ABC Investigations confirmed that his grant was considered "highly recommended" by the local committee, but ultimately overlooked by the clubs.

"It was not very transparent," he said.

As an ordinary card-carrying member of West HQ, he was even further dismayed to learn where its grants had gone.

"It's eye-opening for me," he said.

"It's all about who you know, rather than the actual meaning of why that program was created."

Review on hold

In a letter obtained by ABC Investigations, responding to a complaint about how West HQ allocated its ClubGrants, a senior bureaucrat confirmed the NSW government was committed to reviewing the scheme's guidelines this year.

A spokesperson for the NSW Department of Customer Service said in a statement to ABC Investigations, "While it had been anticipated that the review would be undertaken in 2021, current circumstances have resulted in a resetting of priorities. A revised timeframe for the review is yet to be determined."

For years the NSW Government has been well aware that the ClubsGrant lacks transparency and may not be delivering grants to the vulnerable communities they were intended for.

A 2013 auditor-general's report found that "tax rebates are provided to clubs without assessing the validity and accuracy of the returns". And that, because "there is also limited public reporting on the benefits received by the local community" for category 1 grants, "there is limited assurance that category 1 is effectively managed".

Similarly, for category 2 grants, it found that, "in the absence of transparent processes for administering category 2, the public cannot have assurance that this category is effectively managed".

These grants reveal a feature that has attracted criticism in the scheme set up by the NSW government: who is best positioned to determine the needs of the local community, with tens of millions of dollars at stake?

On the one hand, the scheme was established to provide clubs with a high degree of autonomy with minimal intervention by government.

On the other, local committees with direct representation drawn from the community and relevant service make recommendations about the way much of that money should be allocated.

So what happens if a club ignores the local committee process?

The relevant legislation states that if the local committees have information that the clubs are not complying with the ClubGrants guidelines then the regulator (ILGA) can take away the tax rebate.

But the 2013 auditor-general's report found that the tax rebate approval process was not robust, and critically, that it also lacked a mechanism to allow feedback on claims that did not comply with the guidelines.

Disability advocate Chris Laurie still has faith in her local ClubGrants committee, but not in a system that allows big clubs to ignore their recommendations and the NSW government's guidelines.

"It's disappointing that clubs can make up their own minds," she says.

"It seems to me that putting hot food into someone's belly is something we have to make a high priority compared to a think-tank or a fun run."

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usr: 1
This is interesting!