Senior Gloriavale members may have acted illegally in operating the bank accounts of members without their knowledge – and a government investigation uncovered the activity but did not impose any penalties.
The Department of Internal Affairs’ Charities Services investigation did not impose any penalties against the charitable trust that runs Gloriavale after an 18-month investigation.
It instead raised 18 “actions” the Christian Church Community Trust needed to take to bring it up to standard to stay on the Charities Register.
Part of the report, released to Newsroom under the Official Information Act, focused on the opening and operation of personal BNZ bank accounts for members, and revealed that BNZ employees had travelled to the Gloriavale community in Haupaki to open a large number of bank accounts for those members.
Former members of the church told investigators they were not aware they even had personal bank accounts or that they were used to receive incomes and benefits, pay taxes and fund another religious community in India.
When they left the community and discovered the bank accounts in their names, the funds had since been removed, they said.
Bank records confirmed the allegations, the report found.
“Information obtained from bank records confirms the activity alleged by the former members interviewed.”
While no one at Gloriavale earns a direct salary, any income is paid into their individual bank account.
From there, signatories transfer the funds to the trust’s accounts as donations which are used to pay for food, clothing, laundry and medical costs.
Bank records confirmed the allegations, the report found.
Weekly living expenses are calculated at about $39 per person.
Money for those items is transferred into separate accounts called “sharing accounts” and money for the donations to India is transferred into an account named Gloriavale Christian Community Account.
However, the trustees are also signatories for these accounts and the members’ personal accounts.
“The three trustees maintain they are only signatories as they have the knowledge to deal with banking issues and that the accounts are independent of the trust,” said the report.
As part of the 18 “actions” the trust needs to take to bring it in line, it must now include financial information on all entities that are controlled by the trust.
In a letter from Charities Services, acting general manager Jane Pierard told the trust:
“Charities Services continues to hold concerns about the sharing accounts and the Gloriavale Christian Community Account not being included in the consolidated accounts of the trust and being considered independent of the trust.
“This is because we consider the trust may be in a position of control over the activities of the accounts, and … this would mean the trust would need to report on this activity.
“We consider this because the signatories to the account are the trustees of the trust and appear to operate for the benefit of the purposes of the trust.”
Pierard acknowledged the trust had taken advice from accountants and lawyers, but imposed the new requirements regardless.
Newsroom sought comment from banking regulators to see if any procedural or ethical standards had been breached in relation to Gloriavale members not knowing they had personal accounts, or by BNZ for travelling to Gloriavale to open them.
A Reserve Bank of New Zealand spokesman said the agency only regulates banks’ interactions with customers when it comes to identity verification.
In this case, the members did open bank accounts, but it is not clear if they understood the purpose of these.
“The way that banks (and indeed all businesses) in New Zealand interact with customers is governed by well-established consumer protection laws,” said the spokesman.
However, he said the New Zealand Police and Department of Internal Affairs could have grounds to take legal action over the operation of the members’ bank accounts.
Instead, the report and letter state Charities Services has chosen to work with the trust on this, and other matters, rather than impose a penalty.
If customers are unhappy with a bank they can complain to the Banking Ombudsman, which had not received any complaints about Gloriavale.
The Commerce Commission, which regulates consumer laws, also did not receive any complaints.
“The legislation we enforce governs those in trade (business transactions). The Gloriavale leaders aren’t in trade when they open bank accounts for members,” said a spokesman.
He said the issue was more fiduciary – if the members understood the meaning of giving their authority for the bank account to be operated in their name.
“This must breach every definition of basic bank ethics.”
The report found that: “Whether knowingly or not, each has signed their apparent consent on paper for a bank account to be opened in their name.”
Massey University religious expert Peter Lineham said he was surprised by this.
“I was really quite struck by the way in which the bank has operated. To me this is flagrant. A personal bank account means a personal bank account.
“This must breach every definition of basic bank ethics.”
Head of the trust board, Fervent Stedfast, told Newsroom the banking issues were private matters.
He said Gloriavale members opened their own bank accounts, but would not comment on if they operated them or not.
Stedfast would not say if the members knew what transactions are made to and from their personal bank accounts.
“It’s a personal matter, it’s not a matter for public discussion. I don’t ring you and ask about your personal bank account.”
He then hung up the phone.
A spokeswoman for BNZ said staff no longer travelled to Gloriavale to set up bank accounts,
“We can confirm that historically BNZ staff members may have visited Gloriavale at their request to set up bank accounts for its members. To the best of our knowledge, this has not happened for at least eight to 10 years.
“BNZ has refined its processes and now accounts must be set up in store, solely with the individual setting up the account.
“Members of the Gloriavale Community may set up an account operating authority which links their personal account with that of the Trust. Those individuals must read and sign an account operating authority form and provide it to BNZ.”
The trust’s return is due on April 30.
