Manager resigns over $300,000 debt
The Nelson Suburban Club general manager who failed to inform the club's board of a $300,000 debt has resigned, with the board chair saying his actions were the result of him being "a nice guy".
The club recently discovered the debt, to the Inland Revenue Department and other creditors, and sent a letter asking for money to its 4800 members.
It invoiced each member $100, asking for a one-off donation and offering them a chance to win two $2000 travel vouchers, and also sought investment in a VIP scheme allowing the pre-payment of future subscriptions.
It also informed them that one member had donated more than $128,000 towards paying the IRD debt.
General manager Neil Ross resigned on Monday, after being in the job for 18 months. He has been temporarily replaced by his predecessor Glen Beattie.
The club's board has undertaken to repay all its major creditors by September 30.
The Nelson Mail made repeated attempts to contact Mr Ross and visited his Mapua home yesterday, but received no response.
Board chairman Ross Strawbridge said Mr Ross had resigned to pursue other interests.
He said the debt came to light when he spotted an anomaly in the club's monthly reports, and was further highlighted when the club received an overdue bill from a creditor which was not shown in those reports.
From there, he investigated further, going directly to the creditors to find out the club's position.
The monthly reports to the board had not revealed the true picture of the debt, Mr Strawbridge said.
"We knew there was some debt there, but we didn't believe it was substantial, and we thought we were managing our way through that debt."
The debt was to the club's normal creditors, he said, and the goal now was to pay all existing trading creditors, most of whose bills were not overdue.
Mr Strawbridge said that as far as he could determine, there were no funds missing.
"If we had known about [the debt], we could have dealt with the situation as it arose, not after it arose. We could have put measures in place to avoid the situation."
He declined to go into detail about why Mr Ross did not tell the board of the debt. "He's resigned; he did that voluntarily."
No-one else was involved, and Mr Ross took sole responsibility, he said.
Mr Strawbridge said Mr Ross had been paying some of the club's bills out of his own personal accounts, and had bought small items such as a laptop for the club with his own money, because he knew its financial position.
"He felt an absolute sense of responsibility. It's admirable, in that he took it on his shoulders, but unfortunate that he didn't tell us."
The club recorded a loss at its latest AGM, he said, and had been putting strategies in place to reduce it, including increasing the prices of its services and food and cutting back on expenses.
However, Mr Ross had not implemented the strategies in the time frame required by the board.
"To be honest, he's such a nice guy he didn't want club members to have to pay more for things, and he didn't want to offend suppliers by not buying from them."
"I've talked to him about it, and he's said he just couldn't do it to the members and to the staff and to the suppliers," Mr Strawbridge said.
"He's such a nice guy. It's an unusual situation."
He said Mr Ross had done nothing illegal - he simply failed to inform the board or implement its policies as directed.
The situation would lead to a change in procedures for the club, with the board given direct access to the computer system storing the financial data to make regular reviews, Mr Strawbridge said.
"Historically, we didn't need it; that's why we have a manager.
"The problem is, we don't know what we don't know until something untoward happens or appears to be inconsistent."
He was also conducting a detailed review of the club's finances.
The club was generally profitable and had achieved its budget for August, and the debt did not represent a large sum compared with its annual revenue, he said.
The club's bank, ANZ, has requested a review of the club's finances, and the club has reduced its overdraft in a previously scheduled move.
Mr Strawbridge could not say what the club would do if it was unable to pay the debt.
"We will, there's no issue. It will happen, because the members are behind it completely."
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