Shining the light on the Callaghan Due Diligence reports on Manaaki.
A guest series from my husband and co-crusader in our quest for justice for Manaaki and We Are Indigo.
This episode continues my analysis of the allegations made by investigator John Borland, in the Due Diligence Reports about We Are Indigo / Manaaki, commissioned by Callaghan Innovation as part of a procurement process. A reminder that these reports have been very widely shared / leaked, both by the then Callaghan CEO and then by various others, doing significant business and reputation damage to the companies and people involved.
In previous episodes, I investigated the first two allegations, finding that
- The allegation of “misappropriation of government funds” appears to be a dispute over an unpaid invoice, which was subsequently paid. (HERE(
- The allegation of an inappropriately managed data breach related to a minor breach, in which the three parties affected were notified, and from what we know no harm was caused. (HERE) The breach was not notifiable as there was no serious damage done.
In both these cases, there are the facts – an unpaid invoice, a minor data breach – and then there is the sensational interpretation of these facts, in the allegations being made in John Borland’s due diligence reports.
Moving on today to allegations 3 and 4, we again see a similar pattern. Small facts, big allegations – a failure to honour obligations.
Allegation: Failing to honour grant initiatives as advertised:
Evidence has been obtained by a recipient of one of the Respondents grants that relates to failure to honour multiple aspects of the grant they received. This resulted in financial hardship and serious mental health problems to the small business owner. (Quoted from DD report)
What actually happened here?
This is believed to relate to a Manaaki funded campaign offering a prize to one small business owner of $10,000 cash, and a new website. The winner was identified, and the cash was paid over. There were, however, delivery challenges on the timeline for the website delivery, though it was eventually delivered. The winner was not happy with his free website, but has continued to be connected with Manaaki team members and its community.
A more benign view of this series of events is that there was a mismatch of expectations vs reality. While I have no knowledge of what was promised, I suspect the delivery could have been a very basic ‘starter’ site, one befitting a business that had not previously been online, and did not have the capability to run a sophisticated site.
In any event, it’s hard to see how winning a $10,000 cash grant would have resulted in financial hardship for the unhappy winner, notwithstanding his discontent at the website, and the delay in delivering it.
Allegation 4: Unauthorised acquisition of company shares to gain majority control:
Evidence has been obtained showing the Respondent without approval or authority of a former business partner gave themselves one (1) extra share to place them as a majority shareholder over the victim business.
The “victim business” in question is a venture called Mosaique Ltd, owned by three people, who partnered with We Are Indigo to create a subscription entertainment and content business called MosaiqueTV.
As is often the case with entrepreneurial people, they launched into the ‘doing’ (in January 2021), without any formal documentation of the partnership. It was, after all, Covid times. Later in the year, the parties agreed that more formal documentation, including a shareholders’ agreement, should be put in place.
A 50/50 partnership structure was originally proposed. We Are Indigo indicated that it would be a condition of their participation that they had ultimate control, via the issue of ONE additional share (giving them 50,001 shares to the 50,000 shares proposed for the three Mosaique partners). This is a common mechanism to provide a break in any key decision deadlock. I have been advised that additionally, the appointment of an independent director was also discussed.
No agreement was ever reached; no paperwork ever signed. We Are Indigo’s condition of a 50%+1 share was the major sticking point. When it became clear that the parties could not agree, the MosaiqueTV partnership was wound down with the income, less expenses, being paid to the three partners in Mosaique Ltd.
The allegation of “unauthorised acquisition of company shares” appears to relate to the fact that, while the terms were being discussed, a shell company was registered (by Indigo’s financial controller) with Indigo and the partners as shareholders, in which Indigo was intended to hold 50,001 shares and the Mosaique partners, 50,000 shares. This shelf company that was never activated as the parties could not reach agreement.
There was no “unauthorised acquisition of company shares” as there were no shares to acquire. None were ever actually issued. The disagreement as to company structure resulted in the company not being formed. The statement that [Indigo] “gave themselves one (1) extra share to place them as a majority shareholder over the “victim business” is a serious misrepresentation of the events.
“So what?”, I hear you say (those of you who’ve navigated your boredom to get this far)!
None of this would really matter – it’s just the ‘spin’ that a small group of disaffected people have chosen to put on a series of business disputes – but for the fact that the allegations have been made public, and distributed by a trusted government organisation, and then by bad actors in the ecosystem. And these allegations are doing the real damage.
The reports were prepared by a conflicted investigator, who had worked for / with at least some of the “victims” in the past, who has presented a series of very serious allegations, which were NOT verified in the EY review of his process (because Callaghan Innovation scoped the review to exclude the actual allegations).
There are so many question marks over these reports and their conclusions. Are they fair and accurate? Sometimes when something seems so unbelievable, it’s because it is simply not true.
The only real solution at this point is for Callaghan Innovation to officially and publicly withdraw the reports, acknowledge that the process was flawed, and that the reports should never have been shared around. An apology for the harm caused by them is the very least I would expect.
Callaghan Innovation – you are the only ones who can fix this.
As I see it, there are three possible courses of action.
- Commission a new review of the allegations (not just the process) with a genuine, well qualified investigator. Probably too late for this;
- Withdraw the reports, apologise for the harm caused by their distribution, retract the allegations (based on work to date there is considerable evidence to question the validity of the allegations), admit that the investigator was conflicted, and take learnings into your next procurement process;
- Or if you truly believe that there is no problem to fix here, then at least tell us that you, the Directors, are completely happy with the way things happened here. Tell us that you believe that the damage caused to Manaaki and its directors is a just and desirable outcome. (And please, tell us why you believe that!).
It’s a new year. Let’s get this sorted so we can all move on.