[In this Special Two Part Investigation, Kryztoff examines the mess at the Zoo and the myths and mysteries surrounding last week’s bail out.]
Those Myths and Mysteries
To see Part 1 of this Investigation go to This Link
And so dear readers, the unanswerable out of the whole Zoo debacle and bail out.
The Myths
‘The Zoo’s problems can be sheeted home to the Federal Government reneging on their $7m commitment.’
Sure, a setback but first, remember Westpac has written off $17m and not this $7m shortfall. Further, why would any prudent organisation (eg the Zoo board or Westpac) commit to the expenditures unless the money was absolutely in the bag?
‘The Zoo’s problems can be sheeted home to a shortfall in corporate sponsorship.’
Well, first, the 2010 accounts state that the finances for the whole upgrade were ‘predicated on … increased admissions income and other revenue possibilities.’ No mention of sponsorship dollars.
But this shortfall of corporate sponsorship to explain its malaise does not hold too much water. In 2010, with the advent of the pandas, sponsorship income increased from $285,000 to over $1.1m and included all the usual and main suspects of the Adelaide business community with Santos, Westpac and ETSA the leaders. There were also, according to the 2010 Annual Report, AGL providing solar cells and Peats Soils producing and selling panda poo, with proceeds reinvested into conservation works.
So just how much extra did they expect to get from corporates that explains an $18m funding gap?
The Treasurer, Jack Snelling, keeps repeating he knew nothing of the problems until recently. Que?
The Government has three of its own representatives on the Zoo board, including two for the Treasurer. Even if you believe there was some corporate governance Chinese wall that precluded discussion between board members and their overseers (being the annual grant provider of 20-35% of their annual operating revenue), then once the 2010 accounts were signed off on just prior to Christmas last year, it was totally incumbent on someone in the Government, whether one of the board members or someone else, to advise the Treasurer that the Zoo was unable to meet its borrowing covenants and rolling over the Westpac facility had proven to be problematic.
The responses of the Treasurer become even more unbelievable when you consider that none of his appointees to the board has been sacked or resigned for failing to do their job to their boss.
Still the RZSSA CEO, Prof Chris West still holds his job, as does his wife as the Sponsorship Manager, supposedly the activity source of the financial woes.
So it seems, like the pandas, do nothing and people reward you.
The Mysteries
On what did the Zoo spend the other $18m in development costs over the past three years?
They won’t tell us.
So just why did Westpac lend the Zoo $24m?
In the Zoo’s application to the Development Assessment Commission for the upgrade, the Zoo stated it was the owner of the land on the Frome Terrace campus. But it isn’t. The Zoo is on Government Reserve land, originally hived off from Botanic Park.
It remains alienated Park Lands. In legislation (Regulations 2006 to the Adelaide Park Lands Act 2005), the Royal Zoological Society of SA Inc is referred to as a ‘State authority’.
We know Westpac knew this because there is no mortgage over that land recorded on the relevant certificate of title at the Lands Titles Office.
(The DAC application also stated no new car parks were required and yet when the construction happened scores of century-old trees cut down in Botanic Park for 200 parking spaces. But let’s leave that for another day.)
The 2010 accounts reveal the interest rate on the Westpac loan is 4% over the banks’ reference rate and secured by a charge over all the Zoo’s assets and undertakings. An interest margin on that scale suggests Westpac were basically making a loan without much useful / saleable collateral.
But given it provided the last of the funds required for the $50m in development work over the 2007-2010 period (ie the Government grant money was all gone by the time it started lending anything significant), why did it do it and, as posed earlier, on what?
Why did Westpac agree to write-off $17m?
The stated reason from the Government is that the bank realised it had lent to a public institution that could not be allowed to fail. Just when did any bank indulge in such community spirit? Are single parents with screaming and hungry kids shown compassion on this scale when they fall behind in their mortgage payments? I don’t think so. Why wasn’t the Zoo made to close down or sell off Monarto? Yeah, sad as it would be, but as they say money speaks.
Then there is this.
There is a surprising pattern in and around 2009 of Westpac making loans to ‘public institutions’, all with close financial links to the State Government for facilities, all of which loans have become problematic.
These include funds for the financial debacle of Ian McLachlan’s SACA Members’ stand, the Westpac ‘Player Facility’ at West Lakes for the Crows and the SANFL itself. Oddly, none of the facilities for which these loans were provided (other than the SANFL where collateral included $20m+ worth of land gifted to the SANFL by the Government for $1m) did the borrower own the land on which the developments were being built. Try doing that as an ordinary punk business going cap in hand to Westpac Head Office. More on this quaint bank behaviour another time.
Finally, dear readers, tell me this:
Why does a charitable organisation (RZSSA), that says ‘modern zoos must be powerful and ethical engines of conservation and genuinely green and educational and part of their communities’ build an otherwise small and nondescript function centre, knock down trees for a hideously paved entrance and spend $18m on buildings that it didn’t have any of its own funds to pay for when already revenues were plummeting and it was losing money?
It is a good thing the animals can’t read and that Wang Wang and Funi don’t much like each other or else there would be bedlam each night where Frome Road gets closest to the Torrens.
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