Internal Affairs is demanding two poker machine trusts slash the "excessive" salaries of their chief executives, or lose their licences.
The two small South Island trusts, Mainland and Air Rescue Services, were both slammed in Internal Affairs audit reports released last week under the Official Information Act.
While Internal Affairs blacked out the numbers in the reports, it was clear both trusts were paying salaries well over $120,000 a year to their senior executives despite having only a handful of employees and pokies in just a few venues.
Trusts are meant to keep operating costs to an absolute minimum so they return the maximum amount of money to the community in grants.
Internal Affairs said Mainland chief executive Nick Kouloubrakis and directors were overpaid and a planned bonus for Kouloubrakis was "unjustified". Honoraria to directors were "excessive", with four directors and three members of a funds-distributing committee paid a total of $117,000 a year.
Kouloubrakis' salary was "among the top CEO packages in New Zealand [in monetary terms] for gaming machine societies", the audit said.
His pay was similar to that of chief executives of trusts with a $70 million turnover and 25 staff, yet Mainland had a $10m turnover, 10 venues, and only one fulltime employee and one part-time. Internal Affairs said he shouldn't have earned more than $90,000.
Trust chairman Bob Davison said it had Kouloubrakis' salary professionally reviewed and had been told it was appropriate.
Davison said he was "staggered" at criticism of directors' fees as they hadn't increased in six years. He pointed out that by returning 42 per cent of its income in grants, Mainland was one of the best-performing trusts around.
The Air Rescue Trust was told it could lose its licence if it didn't cut managing director Barry Stean's salary but chairman David Duns said employment law made it difficult. "We have problems either way."
Internal Affairs' report said Stean's salary was "not reasonable and must be reduced to a more acceptable level . . . [it is] unacceptably high". It quoted a report from financial adviser Mercer which recommended a salary between $81,000 and $122,000. Duns admitted Stean's salary exceeded $122,000.
The action is supported by the Problem Gambling Foundation which has campaigned against wastefulness in the sector.
- Sunday Star Times