College’s $ 5 Million Parnell Mansion Purchase Criticized by Watchdog

The controversial purchase by the University of Auckland of a $ 5 million Parnell mansion for its vice chancellor has been criticized by the government’s financial watchdog.

The university bought the four-bedroom property in November last year as a home for new Vice Chancellor Dawn Freshwater.

With manicured gardens, 338 square meters of usable floor space on three floors and a spa and lap pool, the purchase was later labeled “frivolous” and a “slap in the face” by student unions.

Now investigators from the Auditor General’s Office say the purchase clearly involved “sensible expenses.”

That meant the partly taxpayer-funded organization was at risk of being seen as providing a “disproportionate” benefit to Freshwater over and above the business needs of the university, the Auditor General said in a report released today.

“In my opinion, the university has not been able to show a justifiable business purpose for buying the house.

“Nor has the university been able to show that spending was moderate and conservative.”

The university’s purchase of the boutique home was discovered exclusively by the Herald in January.

However, concerns about the expensive purchase by the university grew as the Covid-19 pandemic struck.

The university now forecasts a $ 48 million drop in revenue for 2023 as it faces an unknown period without its lucrative foreign students.

The Auditor General’s Office confirmed in October that it was also “analyzing aspects of the purchase” in its role as the watchdog responsible for monitoring the finances of organizations that receive money from taxpayers.

“We had seen the media coverage and we were interested in establishing the facts,” an office spokesman told the Herald at the time.

He requested copies of the home’s purchase and sale agreements, rental appraisals and various internal emails, a response from the Official Information Act revealed.

He also reviewed Freshwater’s employment contract and interviewed university staff about how they made the purchase.

“It is difficult to accept that buying a home to provide accommodation for the incoming vice chancellor and host 14 anticipated events in two years is worth spending $ 5 million,” the Auditor General said today.

“Nor does that level of accommodation, in my opinion, justify a reduction of almost 50 percent in the rent of the property.”

A university spokeswoman previously told the Herald that the home was purchased as a rental for Freshwater, but also as a venue to host major food and beverage events.

“It will be rented at the university by the incoming rector for accommodation and will also be a venue for university-related events and lodging,” the spokeswoman said.

Documents released to the Herald under the Official Information Act showed that the university planned to host eight “donor dinners” in 2020/21 at the Parnell residence.

The names of the donors who attended were removed from the documents.

It also planned to host six “stakeholder dinners.”

Among those attending the planned stakeholder dinners were politicians and representatives of foreign universities.

However, in October, Freshwater told staff in a group email that it had recommended to the college board that it consider selling Parnell’s controversial home to help pay off the debt.

Due to restrictions on social gatherings during the Covid-19 pandemic, the house could not be used for fundraisers and other college events, he said.

The university paid $ 5.06 million for the house, located near Sir John Key’s home on St Stephens Ave, in December. That was $ 1.5 million above the council’s valuation.

A university spokeswoman denied that Freshwater’s decision was tied to the Auditor General’s review.

“It’s the right thing to do, not something the university has to do,” he said.

The Auditor General said the university had taken steps to review the home purchase after it was provided with a draft of today’s report.

This included a review of its sensitive spending policies and processes.

“The vice chancellor also told us that she recommended to the college council that the Parnell house be sold to help with the overall financial situation of the college,” he said.

The university said it accepted the Auditor General’s findings and acknowledged its shortcomings in its “handling of the purchasing process.”

“As noted in the report, we have already started working to rectify those problems,” he said.

This included commissioning independent advisers to review the university’s policies related to sensitive spending.

“The University of Auckland takes its responsibilities with regard to the use of public resources very seriously,” he said.