EPMU and their financials – Observation by the Owl

It looks like we are not the only people who have been analyzing the EPMU accounts. We received a detailed spreadsheet from a former Chartered Accountant who has been following the stories on here and decided to do his own analysis since 2003.

The information he provided was unsolicited and anyone who follows the Owl’s writing knows I only use information freely available in the public domain. This is the first time the Owl has used someone else’s research so I spent time verifying their information.

Because it came from a former Chartered Accountant you can appreciate the detail provided is quite magnificent and a very interesting read. He made a number of notations which he has followed up with a letter to the lawyers at the Companies Office which we have seen.

Owl’s Observation

If you make a submission to Parliament you need to be very accurate with your information. A submission provided to Parliament by the EPMU said they represent nearly 50,000 workers (Electoral Finance Bill submission).

Their website says they represent 43,000 workers.

Their Department of Labour return says they have 37,000 members.

As they wrote to Parliament (the highest law in the land) and said they had 50,000 members and their membership fee is $7.30 per week this totals $18,980,000.00 in annual subscriptions but only $11,000,000.00 has been filed in their financial returns.

Which number is correct – 50,000 or 43,000 or 37,000?

If 37,000 then the parliamentary submission and website is incorrect.

If 43,000 then the parliamentary submission and Department of Labour file and financials are incorrect.

If 50,000 then website, DOL file and the revenue in financials are incorrect.

More to come on this analysis.


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  • kohibruce

    I assume the “nearly” of “nearly 50,000 workers” is there to cover the hyperbole.

  • Bafacu

    If their return of $11m is correct it equates to around 29,000 members (11,000,000 / (7.30 * 52) – still another figure to use for them when it suits their purposes!!

    • Pete George

      Yes, 37,000 members at 7.30 is $14 million, still well over the $11m filed.

    • owl

      you should allow for casuals (no jokes please) so if you say 20% and associates or casual you end up more likely to be $12M – still a variation

    • guest2


  • A trade union fudging its membership figures? Surely not.

    Still, at least they pay IRD the PAYE that they deduct from their employees, unlike some…

  • thor42

    *Really* good work, Owl and WO!

  • Time For Accountability

    Curiouser and Curiouser said Alice.

    Don’t forget the life members and student members who pay a token amount.

    Also in fairness the union dues per week may have been lower in prior years.
    is clear is that this is an organization that holds investments in
    related parties outside the main parent union. It is also a Union in decline.

    The moment these type of questions arise – i think related parties.
    When I saw this question arise I thought lets see what is in the related parties.

    The Engineering Training and Education Foundation Incorporated Society no. 532976 is a registered charity CC357723. All good we can see four years figures. They don’t look good but at least we can see them. As OWL pointed out in an earlier post this organization is insolvent. Which begs the question why the auditors do not insist the investment in the subsidiary show as impaired in the parent accounts, especially from a related party.

    Here is a wee reader challenge.
    This other related party appears as a charitable trust on the Incorporated societies register. Hint search “Other registers” and tick charitable trusts.
    632250 Journalists Union Jubilee Prizes Trust.
    The challenge is to find it in the Charities commission web site.

    They also are related to The NZ Amalgamated Engineering and Related Trades Industrial Union of workers Welfare fund.
    The second challenge is to find it anywhere.

    I hope for the Unions sake that all is above board and nothing has been slipped out of the published accounts somewhere.

    • Guest2

      do they pay capitation fees like MUNZ and Meat company did? what is this barganing agent company they are involved in? How is thet funded?

      • Time For Accountability

        Good Questions I shall have a wee look.

        The first question with the side related parties especially education and training is training subsidies from the Government. I hope if there are they don’t have a similar elastic ruler they use for counting attendees.

        The second question is – are these mechanisms to pay cronies outside the main organization.

        To be fair though the related parties Financial Statements are incorporated in the consolidated accounts. Except that they are missing a whole year of those for the 12 months ended 31 March 2006 where they only filed a spreadsheet of the parent accounts.

        Lets hope there is nothing dodgy in that period. I just find the whole procedure of filing unaudited partial accounts puzzling.

        Examining these Union Financial Statements is like putting the hand in the cookie jar where each time a new surprise is pulled out. Lets hope there is no one caught inside the union with their hand in the cookie jar.

        I have glanced at a few of the accounts for the various unions as people have raised queries and are staggered at how NZICA auditors simply don’t apply the accounting standards they are supposed to nor do the follow the audit guidelines. the EPMU audit appears to be better than the pack but how can an error of $1.3m shown in the 2011 accounts slip through the system. Also how can the auditor not insist that a complete set of accounts be filed and how can the auditor tolerate no audited accounts being filed for 31 March 2006 and 31 December 2006. Imagine for example if there was an error in the home grown accounts or they were deliberately different than the audited set.

        I know of a fraud case where the director of a company altered the Financial Statements prepared by the accountant before supplying them to a financial. He did time.

        I know NZICA were questioned about the supply of accounts to third parties and they have refused to answer. My view is the CA should supply them direct electronically where possible. NZICA also refused to answer how the Electronic Transactions Act applies to the supply such as this. Quite simply i would argue the Quality Assurance of NZICA needs some fresh faces that actually understand the questions and do reply.

        • blokeintakapuna

          Great work. Any idea on how to get an official investigation on these matters started? Cactus Kate – can you help please? Anyone?

          • blokeintakapuna

            We could always ask the Greens if they would support an Inquiry on this?

            Seriously though… how do we get the authorities to put on their rubber gloves that go to the shoulder, break out the microscope and investigate all the various unions financials?

            So even the Auditor’s Auditors are asleep at the wheel not ensuring NZICA standards are met?

            Maybe the Auditor General and SFO should be getting together a special task force??

        • guest2

          Another thought. I looked at the 2003 accounts and they paid around 2m in capitation fees as an expense but seems to be gone after that. If the fees got paid into the bargaining company as I see they spent some 700k on restructuring over two years did the members know their funds were being transferred? Did they vote on it and if not does the money need to be repaid back to the members EMPU that is? Also why would you want to set up a limited liability company?

          • blokeintakapuna

            seems really dodgy doesn’t it?
            … and they’re the main funders of the Labour Party… no surprises there then…

          • Time For Accountability

            Guest 2 have a closer look at capitation fees.
            Hint – look at cash flow statements.

          • guest2

            all confusing I will need your help look at the 2003 accounts they had $5M in the Bargaining Company and next year it is gone of the balance sheet and they had $2.2M investment in a subsidiary (which strangley) equals the capitation fees but their notes say consolidated with all the subsidiaries – I am confused – help

          • guest2

            actually the notes on 2003 are quite interesting because NZEBA issued 4.1M in shares to EMPU to clear debt to empu – god another wine

          • Time For Accountability

            Another hint –

            Look at 2007 Comparative figures for Capitation income.
            Then look at expenses breakdown below.
            Then look at cash flow for 2003 though for 2006 (31 March).
            Don’t look for 2007 cash flow – they did not file one.

          • guest2

            I am absolutely guessing here but did $2.2m go to the NZEBA company from capitation or a subsidiary buisness? reading 2005 accounts on the website

          • Time For Accountability


            It is roughly 20% of the Subscriptions and grew rapidly from at least 2001.

            The parent accounts disclose Capitation fees received and capitation paid of exactly the same amount. Until the suddenly cease in the 9 months ended 31 December 2006. Notice theat several if these years have nice round amounts.

            They do not appear in the cash flow of the parent.

            They do not appear in the consolidated accounts.

            There are two possible explanations.

            The first is that the expense and income did happen in cash and were merely added together and not included in the parent cash flow and similarly the consolidated accounts. If so there are questions that the Union and the auditor need to face.

            As an example imagine if the parent is the conduit for other outside unions to pay capitation fees to EPMU which are in turn paid through to the NZCTU.Then improperly accounted for but combining them to zero. Is that perhaps why they are the same so they can be zeroed. Who is the pays to the parent and who does the parent pay.

            The second explanation is that they never happened in cash, rather by journal entry and were received from a related party that is consolidated. Similarly the parent incurred an expense by journal entry to another related party. Because they never happened in cash they do not appear in the cash flow. Because they happened with related parties they do appear in the consolidation because they net out. This would beg the question why.

            Given that the two main subsidiaries are the Training foundation and the Bargaining coy. I would argue that if this explanation is correct income is being extracted from the Foundation to bargaining via the parent. If so there are questions why the Foundation has large investments and negative equity. If it the other way around again why would training pay bargaining.

            There are various other permutations of these two explanations.

            The best set of financial statements to see this is the 2001 accounts.

            Neither explanation has any credibility in accounting terms.

            Perhaps an accountant with better knowledge of auditing than I could comment if these assumptions are correct or not and what the most likely explanation is.

            I suspect the answer is not good either way.

          • Time For Accountability

            Sorry about the typos.

          • Time For Accountability

            Just looked at NZCTU – No capitation received there.

            guest2 – clearly the expense from 2003 through 2006 is buried in Fixed Costs.

            Actually the more i look at it I swing back to option 1 the parent union may be a conduit for something and the income and expense are incorrectly zeroed out in the cash flow and consolidated accounts.

            Why does capitation finish as at 31 December 2007, or does it?

            or – perhaps capital fell down the rabbit hole
            The rabbit-hole went straight on like a tunnel for some way,
            and then dipped suddenly down, so suddenly that Alice had not a
            moment to think about stopping herself before she found herself
            falling down a very deep well.

            Lets hope the someone doesn’t also fall down the rabbit-hole.

          • guest2

            youre right 2007 6m disappears

        • Callum

          Lay a complaint with NZICA, despite what ever the engagement letter says between the auditor and the client they are still responsible to all users of the financial statements. For any incorporated society or charity that is any member of the public as the accounts must be made publicly available and the auditor is aware of that.

    • guest2

      Ross Asset Managemnt had excel spreadsheets
      Hub bards had excel spreadsheets
      EMPU has excel spreadsheets

      • Time For Accountability

        So did the Otago District Health Board when they had $16.7m stolen from them.

  • blokeintakapuna

    So with the unions fudging /lying about their numbers is there some legal case for “misrepresenting the facts”? “Fraudulently inflating income”? to gain new memberships?

    If that’s the case – then there’s similarities of the finance companies ponzi schemes and the over-inflated promises they had on their websites…

    I wonder when the respective authorities will launch formal investigations into these missing millions in cash and assets year upon year and the subsequent attempts to hide them?

    How/where do we formally complain to have some brilliant sunlight disinfectant shone upon these highly questionable actions and deliberate attempts at obfuscating the facts and truth with invented figures plucked out of a ducks arse?

    Seems there’s plenty of scope for deliberate corruption with the unions financials… except no one can know for sure – especially those whose funds are being hyjacked and used for illegal purposes by the unions…

    but who the hell is checking?? How much corruption does it take?

    Or is it because they’re “unions” and part of the Labour Party that the authorities won’t act because it’s a case of “too big to pry”?

    The Governor General must be feeling kinda sick watching the credibility of our Parliamentary systems and processes eroded with such blatant and willful corruption by one of the “main” political parties here in NZ.

    Shame the authorities just sit on thumbs as the corruption festers on…

  • Ronnie Chow

    End of Chapter 1 ..Great work , Gentleman .

  • Time For Accountability

    The main point with many post below is that NZICA members are supposed to prepare accounts fit for the purpose. The prime purpose here is to report to members in a manner that can be clearly understand. Capitation income and expense is a very material item especially when the income equals the expense. and it is roughly 20% of the subscriptions.

    Clearly these accounts fail the clear test.

    There may be a case for the auditor to withdraw their audit reports and retire from the audit.

  • guest2

    Message to Time for Accountability

    Spent some time analysing last night “Time for Accountability”

    You have 6M shares issued to NZEBA to pay off debt (that is huge) and $6M loan to the Education training Fund which makes the Training Fund insolvent. That is $12M in issued capital or loan advancment.

    You have capitation fees for the first part of the 2000’s (approx $2M) being expensed which means it is going somewhere. Since Since the training fund already had $3m in cash reserves why would you burden it with a $6M loan and make it insolvent – just does not make sense at all.

    I guess the theory was that the funds for the Training fund would grow and eventually exceed the value of the loan but it hasnt and actually funds have been drawn down to pay to EMPU.

    The NZEBA company obviously had $6m in debt owing to EMPU as well and to repay it the NZEBA issued 6M shares to EMPU and 1 share to Andrew Little.

    For the life of me I cant see on the EMPU balance sheet the investment of 6M shares (please advise)

    Therefore the questions are
    As capitation fees are expensed – where too? NZEBA?
    Where does the 6M shares show as an asset on the EMPU balance sheet?
    What strategies does the EMPU have for its members to recover the $6M loan which is impaired by $3M already to be repaid back to the members?
    Why is the NZEBA accounts not reported back to the members?
    Why did EMPU only provide cut and paste financial accounts and dropped off the financial notes?
    If financial records by law are only kept for 7 years and it is now 2013 what controls are there to keep records prior to 2005 so this mess can be sorted out?
    Why would an organisation this big supply excel spreadsheets to the website when they have spent tens of thousands on audit fees?

    Look forward to your answers

    • Time For Accountability

      I don’t have the answers.
      1. Don’t know who pays the parent capitation or who it is paid back out too or even if it happens in cash.
      2. The $6m NZEBA shares are included until 31 March 2006 and not thereafter.
      3. Don’t know what strategies the have to recover investments in Subsidiaries. The Training foundation accounts are able to be viewed on the charitable trusts web site. It discloses that it holds substantial investments but owes the parent more than the assets and in insolvent as regards the parent by about 2.2m. These accounts have a BDO stamp on every page but there is a no attached audit report. Hmm
      4. NZEBA are included in the consolidation at least to 31 March 2006. Thereafter it is not clear.
      5. Indeed why the spreadsheet accounts, why no group accounts and do these match the audited accounts. I am confident they don’t.
      6. Retention Period. Is probably 10 years for important documents. 7 Years for lessor documents.

  • owl

    Time for Accountability – I see Andrew Little has a share in NZEBA Limited (which was issued 6M shares to EMPU to pay off debt) but their is no declaration on the MP’s Interest registry in parliament.

    Why would that be? Was he employed by the company at any stage?

    • blokeintakapuna

      Great work Owl…and Cam and TFA and Guest2 and Callum…

      Please keep pouring brilliant sunshine onto these highly suspect maneuverings by the unions.

      Besides deliberate fraud and corruption, why would any “entity” need or want to present their annual financials in such a murky, suspect format and manner? What is to gain? (in a legitimate context?)

      • Time For Accountability

        Could the one share be there to allow a management salary to be taken at year end?

        Why did he resign as director from a number of companies but keep his one and only shareholding. NB he is not a director. There is no requirement now to have a second token shareholder.

        Guest 2 has been close to the likely answer of the missing shares.

        The closing equity as at 31 March 2006 (Spreadsheet accounts) and Opening Equity as at 1 April 2006 as disclosed in the comparative figures of the 2007 accounts. differ by $6.8m as do the net assets.

        This will probably be an impairment loss on NZEBA Limited hence the shares disappearing. There is another $500k over the share value as well to be explained.

        In the years up to 31 March 2006 there was around $5m of negative equity
        which lived in subsidiaries. We know that in 2012 there is still
        negative equity in the training foundation of $2m. after 2006 there is
        positive equity on consolidation of $1.5. so there are questions yet to be explained.

        The impairment loss should have been recognized in earlier periods. This is odd because there are impairment losses shown in various years. Why this big one in one hit.

        If that guess is wrong there may be shackles and handcuffs involved.

        In the period that happened we
        have the unsigned and unaudited spread sheet accounts. Clearly these cannot match
        the audited accounts by the impairment write off. Therefore the person who posted the incorrect accounts either mistakenly or deliberately did so on the public register.

        This must have been known by the executive members who would have signed the audit accounts.

        I would not like to be the auditor at this point.

        this is deliberate it is very serious indeed. The auditors are NZICA members and the
        person who posted the spreadsheet has a similar name to a CA on the
        NZICA register. I notice a different person filed the later accounts.

        All this has a very dodgy feel.

        Why did the union operating surplus (Deficit) before tax go like this:

        12 Months ended 31 March 2004 ($163k Profit) Audited
        12 Months ended 31 March 2005 ($386k Loss) Audited
        12 Months ended 31 March 2006 ($1.154m Loss) Home grown accounts
        9 Months ended 31 March 2007 ($1.759m Loss) Audited
        12 Months ended 31 March 2004 ($380k Profit) Audited

        Something look horribly wrong here especially in the period we have questions about.

        Did the Auditors ever qualify the accounts. If so and the union has suppressed this deliberately from the register it is again serious.

        Notice how good the supporting information in 2004 is. Why did it cease
        after that when the Union started to make losses. Lets hope the full set
        of accounts they have been asked to file shows this level of detail and
        we can track why the above losses happened.

        The answer to the capitation puzzle is clear in the 2004 accounts.
        It is a payment from branches to head office and contra’s out. It is just bad bookkeeping. Like MUNZ and Meatworkers Union mistaken accounting practice the branches do not have any legal status so it is merely an internal transfer of money that in my opinion should not have been shown the way it was. This account practice ceased in 31 December 2006. It will be interesting to read the notes. I suspect the practice continues but is treated correctly.

        See page 23 of the 2004 accounts – Related party there is something really strange going on between National Office and Auckland District Branch with the the NZ bargaining Agents Limited line and the Welfare Fund Line.

        Lots of questions still to be answered.

        Not to Auditor – When assets have negative balances they belong in liabilities.