The entity formerly known as the NZ Venture Investment Fund (NZVIF) has been pulled up for past shoddy disclosure practices, poor oversight of spending and “workplace culture” issues in the latest annual parliamentary review of the government-owned organisation.
Rebranded as NZ Growth Capital Partners (NZGCP), the state-controlled venture investment outfit now runs two vehicles: the start-up specialist Aspire Fund; and, the $300 million Elevate fund-of-funds overseen by the NZ Superannuation Fund (NZS).
Last year NZVIF chief, Richard Dellabarca, resigned amid the restructure while his replacement, Daria Murray, “dropped out before serving in the role”, the just-published report of the Economic Development, Science and Innovation Committee notes.
James Fletcher took over as interim NZGCP this January.
“Two members of the NZGCP board stepped down in the year under review, and a further three members stepped down after 30 June 2020, including the acting chair. A new chair was announced in December 2020, and the Ministry of Business, Innovation and Employment announced it had appointed four new board members in January 2021,” the parliamentary report says.
But the committee was “concerned” about several historical issues picked up in an independent review of the NZGCP carried out by the Auditor-General.
The anomalies highlighted in the Auditor-General report include poorly documented short-term incentive payments totaling $306,000 that “were paid out to the investment team and the former chief executive at year-end”.
“The payments represented 100 percent of the eligible bonus level set out in the incentive component of the employees’ agreements,” the committee report says. “The former chief executive recommended the payments to the investment team members, and the board at the time approved the payments to the former chief executive and investment team members.”
As well, the Auditor-General pinged the NZGCP for COVID-era “valuation inputs for investment valuations being less reliable than is normally the case” and “sensitive expenditure” that lacked appropriate evidence.
However, the NZGCP had implemented reforms to address the problems cited by the Auditor-General, the parliamentary report says.
The committee, chaired by Labour MP Jamie Strange, also noted the NZGCP “workplace culture” was subject to a review by former employment court judge, Graeme Colgan,
“We understand that the outcome of the review, and NZGCP’s response to it, will be released soon,” the report says.
“NZGCP told us that it is in the process of overhauling its people-related policies in anticipation of the review’s findings. To do this, it is being guided on good practice by the Guardians of New Zealand Superannuation and the Public Service Association. It explained that since the review was announced it has completed ‘a lot of work’ on initiatives that it expects will align with the review’s recommendations, including changes to the way it attracts, retains, and supports staff. It has also agreed on a new strategic plan with its board, and it believes this will provide the company with an important sense of direction and guidance.”
Notwithstanding the historical baggage that has racked up considerable administration time and expenses, the NZGCP had met its core investment goals for the new Elevate fund with almost $73 million allocated to three venture capital funds to date.
“Funds to receive investment were Blackbird NZ ($22.75 million), Movac Fund 5 ($30 million), and Pacific Channel Fund 2 (a conditional allocation of $20 million),” the committee report says. “These investments have been matched by private investments totalling $290 million, and the underlying funds have already begun deploying capital into start-ups.”
The Elevate fund has been seeded by $300 million of government money, including $240 million previously earmarked for NZS contributions.
Combined with matching private investment, the NZGCP is hoping “to stimulate $1 billion into New Zealand entities over the next 15 years”, the report says.