A controversial pokie trust paid out nearly $100,000 to a racing group to buy a small piece of racetrack from one of its own club members.
The grant made to Gallop South - thoroughbred racing's umbrella body for Southland and Otago - was then paid to the Oamaru Jockey Club to buy a section of the Oamaru racecourse.
The move has been slammed by industry sources as "pure naked greed" and a "desperate way" to grab pokie funds.
The $97,000 payment bought a section of the Oamaru race course, which hosts fewer than than 10 meetings a year, with Gallop South arguing the sale protected the future of racing after the club threatened to sell it for housing.
The grant was made by The Trusts Community Foundation (formerly the Trusts Charitable Foundation), subject of several critical stories by the Sunday Star-Times, including its close relationships and multimillion-dollar grant funding of the racing industry.
The Star-Times has learned a former Internal Affairs analyst, Dave Bermingham, studied the grant as part of work done to analyse TTCF's pattern of making huge grants to racing.
Bermingham confirmed he submitted a report to Internal Affairs about the grant before he left, but wouldn't discuss the contents.
TTCF records show the grant was paid in November 2011 "towards the purchase of a piece of land known as ‘the Mile Shute' at Oamaru Racecourse, belonging to the Oamaru Jockey Club Inc. Oamaru Jockey Club wish to sell this land and it is in the interest of all racing clubs in Otago and Southland that Gallop South Inc purchase this to preserve the future of racing at Oamaru Racecourse. It would be a disaster if it was sold to a non-racing interest".
The piece of land, an extension that joins on to the main track, is surrounded by farmland and used only for races of 1600m.
Oamaru Jockey Club's records show the $118,000 it made for "sale of assets" was by far the biggest income on its 2012 balance sheet, on which it recorded a $248,000 surplus. Oamaru is "under the jurisdiction" of Gallop South, according to Gallop South's constitution.
Gaming industry sources said the big question was surrounding community benefit for the deal, which effectively just placed the money in Oamaru's bank account and allowed business to continue as usual.
One said it might be legal, but questioned if it was moral, adding: "The greed of racing interests keeps taking big chunks out of community funding. Hardly community benefit, is it?"
One source close to TTCF said it was a clear case of racing interests "coming up with desperate ways to rort gaming funds with the tacit aproval of an ineffective regulator".
Gallop South general manager Malcolm Little said the Star-Times' interest in the grant was "the last thing we need after the SFO", referring to an ongoing Serious Fraud Office inquiry into racing grants called "Operation Chestnut". He said the Oamaru club had said it no longer wanted the land, which was never put on the market.
Little said Gallop South paid "current market value" and denied Oamaru held them to ransom. He understood the money had been used to pay down debt.
Asked if it was in the community interest, he said: "That's probably not for me to answer. I can't answer that. It is in the interests of the racing industry and there is a wider community involved in the racing industry, not just horses and jockeys, but trucking businesses and people who sell feed."
The DIA said it had no record of any investigation into the grant and would not comment specifically, but said: "If there was a complaint about a particular grant, or an audit picks up an issue we will follow that up."
- © Fairfax NZ News
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