Nothing Burns in Hell – On Delinquents and Respectable Citizens
September 23, 2012
AUSA – Ngā Tauira Māori
September 23, 2012

Death Bells Ringing?

Mismanagement and misunderstandings created by the current executive have put our students’ association in a precarious place. The buildings surrounding the quad are in danger of being lost to AUSA. This partly due not only to the actions of the present executive but also the university itself. The executive is the body of students elected to run AUSA, headed by the president, currently Arena Williams, they ensure that the institution runs smoothly, there have been hiccups it is true but mostly it has done its job. Yet now AUSA faces its destruction by the hands of its own executive. To understand the situation one must see how history has led us here.

In the 1960s, the Auckland University Students’ Association (AUSA) built the current student union building with a combination of government and student money, providing some 7000m2 of space. All was well until the early 2000s, when the University of Auckland suddenly decided that it owned the building. It argued that regardless of who had paid for the building, the fact that it was on university land meant the university owned it.

AUSA didn’t really put up a fight. Voluntary student membership (VSM) had just come through in 1999, following a referendum, resulting in a massive drop in membership, and that meant the university had the association by the balls. While in the past, AUSA’s activities had been funded via membership fees that were paid directly to the students’ association; the introduction of VSM meant that AUSA got cash through its Student Services Agreement with the university. As a result, the university held all the cards and could force the students to do what it wanted. (It’s worth noting here that the direct AUSA membership fees had been much cheaper than the university’s compulsory Student Services Levy which replaced them.)

In 2006, there was another major development. AUSA General Manager Tom O’Connor decided the university’s decision to claim ownership of the building wasn’t reasonable. After negotiations broke down, AUSA took the university to court. Over a period of about four years, a series of negotiations finally ended in an out-of-court settlement. At this point AUSA didn’t have enough money to keep on fighting, so it settled for paying a dollar for 30 years of occupancy in all its buildings. No costs for power, water, gas or maintenance.

The deal was estimated to be worth $100 million, and while some sacrifices were made, it was the best outcome under the circumstances – a cash-strapped students’ association against a University with very, very deep, taxpayer-funded pockets. The deal was split into occupancy buildings (AUSA House, etc.) and commercial buildings (Shadows, etc.), with the second group looked after by a trust.  What AUSA also got was $1 million in compensation for all the rent the university had received for the shops they had installed, e.g. the food court. This was to be paid as $500,000 up front with the remainder paid over five years.

But the university then decided that even though it was in the wrong – and had admitted it was in the wrong – it would rather not pay the money. So it set up a bunch of criteria in order for AUSA to access its compensation money. These criteria changed each year and it became harder and harder for AUSA to access the money it was owed – so hard that the association ceased budgeting it as income. What we had was an aggressive party admitting its wrongdoing, offering compensation, but then being the gatekeepers of that compensation.

So what can we learn from this history? Well, first of all it’s apparent that Tom O’Connor knows about dealing with business. Secondly, it’s clear that the university is desperate to take over the student associations’ buildings and muscle AUSA out. It wants to replace AUSA with its own version called Campus Life, a division of the university that receives over $30 million dollars a year in funding from your fees (compared to AUSA’s $400,000). As previously reported by Craccum, Campus Life has put on student events that have been financial disasters. The university does not want student control of student affairs, because it isn’t in the driving seat.

The reason this problem has become urgent at this point is that when AUSA settled its dispute with the university, a clause was put in saying that if any party became insolvent (AUSA and/or Bacchid, the catering company that owns Shadows and the Quad Cafe) the buildings it owned would become university property and  AUSA would lose them completely.

Bacchid is in trouble. The result of the university opening up shops in the food court (in space it stole from AUSA), breaking the student-owned monopoly on food as well as the introduction of a smoking ban imposed at Shadows (the whole campus is smoke-free), which has resulted in a decline in the number of patrons. So basically, if Bacchid goes we lose all that AUSA fought for.

To cover this up this state of affairs, the managers of Bacchid used money from the bus ticket station (null and void after Hop cards) to prop up the business; as a result, the board of Bacchid made different decisions than perhaps was wise.

When these managers left and the real story was revealed, things began to unravel. After Tom O’Connor became interim manager of Bacchid, he began to try to right the ship. But at the beginning of this year a letter from the university to members of the AUSA executive prompted them to go to the university’s accounting firm, Grant Thornton, to get an opinion on whether Bacchid was viable. It concluded that the answer was no and Bacchid should be shut down immediately, leading to the loss of all commercial lease buildings and a university takeover. This was, of course, at odds with Bacchid’s own audits, and the opinion of the board.

Tom O’Connor and the board needed some working capital to keep going and to smooth the ride while significant structural and operational changes were made. The bank was prepared to lend this money and the board was prepared to accept it, but could it only do so on one condition. AUSA’s Property Trust (a separate entity that invested many years of surpluses into commercial property) would have to give Bacchid a letter of comfort, a non-binding document which stated only that it had previously lent money and Bacchid was a part of the same “group”. The AUSA executive was required to ask the Property Trust for this letter by a formal motion of the executive. It was denied.

The executive believe, due to outdated “legal opinion” (opinion being used in the vaguest of terms), that they would be personally liable if Bacchid should fail and they had allowed the letter of comfort to a company that was trading “while insolvent”. This was a decision that went against the bank and the boards of both trusts as well as the general manager of AUSA. The executive are relying on a university-driven Grant Thornton report that has been proved wrong again and again, with Bacchid passing the milestones for its structural readjustment programmes set by the board – an achievement the report said was not possible.

Basically the university wants to take over AUSA and replace it with Campus Life; this would mean that the university gets far better access to students but that students have little or no voice or control of their own education or university lives (clubs etc.) Yet the executive is listening to a billion dollar organisation that does not have our best interests at heart, it has time and time again proven its self to be untrustworthy and a bad partner to have in a negotiation. They are listening to it rather than listen to the opinions of the boards of two trusts (who have proven record of business and looking out for students), their own GM and of several members of their own executive. The current executive is headed on a course that will lead to the destruction of the very organisation that it is in charge of. But first the students will lose shadows, quite possibly lose BFM (although this has only been discussed in “strict” nothing has been done about it) and lose control of all that makes AUSA matter.

A past member of the executive made the comment that the current members were: “not listening to the good advice they are being offered. They seem to have forgotten that they are in position of trust, a trust that they have broken. They need to stop playing businessman or women and listen to the boards that have experience in this sort of thing.”

Quite why they haven’t listened to the board has not really been answered. Remembering of course that if the executive continues with its plan to allow Baccid to go insolvent, Shadows will be shut down forever. We asked Arena Williams if she had any intention of allowing BFM or Shadow’s to slip out AUSA hands, she made it clear that she wouldn’t.

Yet this is in complete contrast to what Craccum has heard from several sources deep within the AUSA. These sources will not reveal themselves for fear of repercussions from what is becoming, with so much in “strict”, AUSA becomes a more and more secretive organisation. Strict is a bit like a confidentiality agreement, but it has no legal hold, it is simply an honour code whatever the executive seems to believe. It has none of the transparency that students on which it prides itself, but is in fact becoming somewhat tyrannical, as the censure of Sam Durbin proved. Sam was censured simply of speaking up about the executive “letting shadows go”.

If the executive if it is allowed to continue on its course it will alter AUSA beyond recognition. The same will continue with the executive of 2013 as the same people will be in charge. So make a choice if you believe that AUSA matter even a little bit, that student welfare, advocacy, clubs should be in student hands. Or that the student body deserves a voice then stand up and make that voice heard. Shout and yell because as we are now serving self-interest should replace serving students as the AUSA motto, as the latter is clearly not true.