A guest series from my husband and co-crusader in our quest for justice for Manaaki and We Are Indigo.

We’re nearly there now, just picking up the last few ‘rats and mice’ allegations before I close in the next episode, with what is one of the biggest claims against We Are Indigo and its associated companies and people.

A quick recap – these allegations are made in reports commissioned by Callaghan Innovation to support an RFP process.  They were written by a contracted private investigator John Borland, who had what appears to be undisclosed conflicts of interest.  These reports were distributed by Callaghan Innovation to a number of government departments and agencies.  Since then, redacted reports of the summaries have been widely distributed, including from an anonymous Gmail address. 

This is in breach of the expectation of the confidentiality clauses in the procurement agreements – though Callaghan’s public position is that they were entitled to share the reports.

The allegations in the redacted summaries are extremely serious, if they are true. And that is the real question, and the subject of my investigations.

So far, we’ve seen…

1. An allegation of ‘misappropriation of government funds’ that appears to be no more than a dispute over an unpaid invoice, which was subsequently paid.
2. An allegation of a serious privacy breach that appears to be quite minor, with only 3 people involved (all notified) and no harm done.
3. An allegation of failing to deliver a prize in a competition where the winner was in fact paid the $10,000 cash prize, and was unhappy with the free website provided (and the delay in its delivery).
4. An allegation of ‘unauthorised acquisition of company shares’ where the partners in a proposed company failed to reach agreement on the terms of the partnership, and the company was never actually formed and activated.

For today, the fourth episode in this series, with more allegations about failure to meet obligations.

Allegation:  Respondent provided inflated and false financial data for potential investment purposes.

It is believed this relates to capital raising activities to support the growth of We are Indigo and/or the Chooice platform.  Chooice, at that time, was a partnership between We Are Indigo and Sarah Colcord (one of the disaffected parties interviewed by the investigator). 

Raising capital for growing ventures is something that Andy Hamilton knows a lot about, as do Debra and I – all being active participants in the early stage / angel investment scene for more than a decade.  Andy has even more experience from his years of running The Icehouse.

It is the nature of investment pitches that they are shaped for each different type of investor, and that predictions are made as to where the business could be, typically at least 2 – 3 years out, with the injection of investor-provided capital.  Investors expect these projections to be aspirational, but not wildly unrealistic.  We know that in reality the outcomes will be different.

Projections generally come with relevant assumptions. For example, a pitch to a media organisation may include assumptions as to access to the organisation’s client base.  A pitch to a VC firm would not have this benefit, and Chooice/Indigo would undertake different activities to achieve growth. Indigo stands by the projections made, based on the facts at the time.

I find it extremely hard to believe a person of Andy Hamilton’s stature and experience would provide inflated and false financial data.  Andy has considerable experience as head of the Icehouse.  But I can understand that someone with no financial, company management and no capital raising experience might be uncomfortable with what are often “hockey-stick” projections.  For Andy, it was his reputation on the line with these projections, as it is for every founder pitching for investment.

I strongly doubt that John Borland, or indeed his informants (who do not appear to include the potential investors being pitched to) has sufficient experience to form a view on the projections in investment pitch documents in general, or indeed, this one in particular.

It is also interesting that this allegation featured prominently in the initial due diligence report, but appears to be somewhat down-played in the second more detailed report.  Is that perhaps an indication of a belated self-awareness on the part of the investigator, as to his lack of expertise in this area?

Allegation: Non Payment of Small Business Day Gift Cards by We Are Indigo

This next allegation was part of the first due diligence report, but not the second one.  It has been, however, the subject of considerable social media commentary and featured prominently in press reports – thus continuing the damage caused despite apparently having been dropped from the later report.

The Small Business Day initiative was created by We Are Indigo to support small businesses in New Zealand, with the funding provided by a third party. As part of the initiative, We Are Indigo arranged for vouchers and gift cards to be issued to consumers, that could be used to buy New Zealand made goods that were featured on the Chooice platform.  Indigo saw this as a significant value add to the Chooice vendors – an opportunity to get their products in the hands of consumers.

We Are Indigo reimbursed Chooice for the Small Business Day gift cards as they were claimed. (At this time, Indigo was also fully supporting and funding Chooice, including paying all wages of the team.)

As part of the break-up of the Chooice partnership, We Are Indigo became aware that the Chooice owner Sarah Colcord now wished to cancel the gift cards.  Indigo did not agree this was appropriate, and undertook to continue honouring the cards as they came in, despite no longer being a shareholder in Chooice.  Chooice management declined this offer, and cancelled the gift cards.

We Are Indigo immediately contacted the impacted gift card holders and issued them with a replacement gift card on another platform, so they were in no worse a position.

It appears that We Are Indigo reacted to circumstances outside their control with honour and integrity and at some financial cost to themselves..

Where to from here?

The reports were prepared by what appears to be a conflicted investigator, who did not declare his prior knowledge.  EY were engaged to review the due diligence process, but the scope was set to exclude conflicts of interest and report content.  They did NOT, as some are claiming, “independently validate and verify” the findings or conclusions of the report.  As well, EY stated that We Are Indigo should be given the opportunity to respond.

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 not true.

Callaghan – You are the only ones who can fix this.

• Admit that the investigator was conflicted.
• State unequivocally that the due diligence reports, commissioned under the confidentiality of a government procurement process, should never have been shared around.
• Make it clear that you are upset and angry (are you?) at the way the reports continue to be leaked.
• Clarify that the EY review did not verify any of the allegations.
• Officially withdraw the due diligence reports, and apologise for the harm they have caused.
• And clarify the rights that government organisations have to share confidential information about RFP respondents with other government bodies – given the serious implications this may have for those participating in future tenders.

It’s 2023.  A new year, time to wipe this dirty, conflicted saga off the board and move on to fresh and more meaningful pursuits.