What now for Gloriavale Christian Community's $41m business empire?

Friday, 16 April 2021

Running an airline, farming close to 7000 cows and deer, oil and gas exploration, hosting wealthy Americans on hunting expeditions, and selling sphagnum moss to Disneyland.

The Gloriavale Christian Community’s business empire has certainly been diverse, but what would happen if the enterprises that earned the tax-exempt registered charity $21.2 million last year could no longer use volunteer labour?

On top of investigations into allegations of child abuse and a civil lawsuit seeking to remove trustees for allegedly breaching their duties, there is growing unease about the extent of Gloriavale’s unpaid workforce.

The most recent evidence of that came when a community company lost a contract to make Moo Chews milk-bites after a backlash from consumers and distributors when they learned a Gloriavale factory made the children’s snack marketed by a cute soft toy cow.

**READ MORE:

* Moo Chews ditches Gloriavale factory and seeks new manufacturer

* Products made at Gloriavale keep their FernMark export licences for now

* Gloriavale: The daily life, the dark side and uncertain future explained

* Gloriavale trust's assets and profits up on last year

**

Where the money comes from

As a registered charity Gloriavale’s Christian Church Community Trust is obliged to file annual financial statements with Charities Services, and they show its annual income has increased fivefold from just over $4m a decade ago.

Farming has been a mainstay of Gloriavale since it was established near Christchurch in 1969 by Neville Cooper, known as Hopeful Christian, before moving in 1991 to Haupiri on the West Coast where it owns dairy farms carrying 3126 cows, and one of the largest deer farms in the country.

Last year the community bought Lake Brunner Station, a 2365-hectare property with stands of exotic and native timber, extensive frontage on Lake Brunner and consent for the construction of tourist lodges.

According to the trust’s 2020 financial statement it agreed to pay $6.6m for its share of the joint purchase with Christian Partners, an entity providing labour to all the group's trading companies and education centres.

The statement lists 15 companies and businesses entities directly under trust control which do not have to pay tax.

Its apiaries produce honey sold under the Forest Gold brand, and bee pollen and deer velvet are ingredients in health supplements and skincare creams marketed by Pure Vitality.

Gloriavale is also into pet food with Value Proteins processing offal and meat into meat meal for export.

Apetiza Ltd is licensed to export pet food but a man who answered the company phone number said it never really took off and was shut down.

The trust’s investment in aviation has also wound down considerably from the heady days when it ran commercial flights from the West Coast to Wellington.

The passenger service was halted by the global financial crisis, and although scenic tourism flights continued, and it still owns three smaller aircraft, the aviation business now largely involves aircraft maintenance and earned just $18,000 last year, well down on $144,000 in 2016.

In the trust’s annual report, oil and gas exploration company Ocean Harvest International is described as “non-trading.”

Back in 2010, Stedfast told Stuff oil and gas operations were at an experimental stage, it was too early to say how the resources would be used, and he did not want to discuss how the project was funded.

Gloriavale has not hesitated to divest itself of operations when necessary.

A trophy hunting operation, attracting well-heeled mostly American customers prepared to pay $5000 to $50,000 to bag stag, chamois or tahr, was sold last year after Covid-19 struck.

The community exited the sphagnum moss industry some years ago, but it was once a major player with leader Fervent Stedfast telling RNZ’s Country Life programme that its national distribution warehouse in Los Angeles had sold moss to Disneyland.

Government grants of more than $2m contributed to the running of Gloriavale’s school and preschool educational facilities last year, and providing midwifery services earned the community a further $201,000.

However, Gloriavale’s business dealings are constrained by the terms of a trust deed that prohibits charging or receiving interest, borrowing money or taking out mortgages.

Researcher Dr Michael Gousmett has a special interest in tax-exempt charities, and he has perused Christian Community Trust statements going back five years.

His conclusion is that in purely commercial terms, a net annual surplus of about $1m on assets worth $41m is hardly making a killing, but as a charity he acknowledges the trust “has other objectives”.

His main beef is that the accounts lack detail, such as how many children benefited from the early childhood grants, and how many babies the midwives delivered.

“These are taxpayer-subsidised organisations, and they are in my opinion publicly accountable for how they are applying their funds.”

Volunteers vs Employees

Gloriavale’s use of volunteers has been under the microscope as a result of former community members speaking up about lack of remuneration, long hours, and workplace injuries.

Infometrics senior economist Nick Brunsdon says the statistical area (SA1) that essentially covered just Gloriavale in the 2018 census showed that out of 243 people over the age of 14, 168 were working full or part-time.

Annual trust financial statements to Charities Services since 2009 have consistently said no one was employed in full or part-time paid work.

The total number of volunteers fluctuated from a low of 25 to a high of 90, and the total average hours they worked per week ranged from 750 to 3446 (30 to 37 hours per person).

From 2018, although volunteer hours remained at about 1200, they were recorded as the average per year instead the average per week. A Stuff request to explain this change received no response from Gloriavale.

Late last year ex-Gloriavale resident Isaac Pilgrim said most community members aged 15 to 55 worked between 50 and 90 hours a week, and those that were paid signed a partnership agreement giving the money to the trust.

He provided copies of his 2017 bank statements showing regular $300 deposits by Christian Partners, followed rapidly by a withdrawal of the same amount as a donation to the Gloriavale Christian Community Account, which the trust says is used for “personal donations to overseas entities and overseas excursions”.

“I had no idea or control over what went in or came out of my bank account,” Pilgrim said.

“One of the major points about anyone born into Gloriavale is that you’re raised in a system that schools you from day one to give total obedience to the management, or you will go to Hell, and when you have a very religious upbringing this thought terrifies you.”

Another recent leaver suggests there is nothing “voluntary” about the work.

“If you don’t go to work you end up in trouble, while there is only one option, it’s not a choice.”

Gloriavale’s trust or volunteer structure is outside the Labour Inspectorate’s jurisdiction because, acting national manager Loua Ward says, it is technically not an employer as defined by the Employment Relations Act.

However, if it was proved that there are workers within such a structure, she says the inspectorate can take compliance action.

Inspectors have interviewed current and former community members to assess whether those working unpaid should actually be treated as employees entitled to minimum wages, holiday and sick pay, and they are awaiting advice from the Crown Law Office on how to proceed.

Impact of a baby boom

Brunsdon says the 2018 census showed that almost half 603 people recorded for the Gloriavale area were under the age of nine, the highest concentration of this age group out of 30,000 statistical areas nationally.

“This explosion in the child population has come with virtually no increase in the adult population, so they have a significantly higher number of mouths to feed with virtually no additional workers to cover these increased costs.”

In the last couple of years leavers estimate the population has dropped to about 580 as families quit the community, increasing the work burden on those left behind, and that includes teens.

According to the Ministry of Education website, in July last year the Gloriavale Christian School had no students over the age of 15 or beyond Year 11.

That is a worry for some.

“The biggest concern is the young adults that should be continuing with their education, they are a pretty integral part of the workforce,” one recent leaver said.

“Getting up at 4am and doing a 12-hour day. At 14 years old, most people would say that person is still a child and should still be in school, I don’t disagree with that.”

The cost of volunteer labour

Concerns about possible exploitation are already starting to hurt the community’s bottom line.

Moo Chews NZ Ltd initially suspended its contract with a Gloriavale company until it was “satisfied with employment practices,” and it has not explained why it then chose to end the manufacturing arrangement.

Grey District mayor Tania Gibson has visited the Moo Chews factory, but in light of ongoing enquiries by various Government agencies, she is reluctant to comment on Gloriavale’s use of volunteer labour.

“It’s a totally different way of thinking to what we think.”

Trust spending topped $18.5m last year and Gibson is acutely aware of its importance to the wider West Coast economy.

“They don’t employ outside people in their businesses, but they do spend a lot in our community.”

Infometrics estimated that the Lake Brunner area, which takes in Gloriavale, contributed $27.3m in GDP last year, 1.3 per cent of the West Coast region’s GDP, mostly from dairying.

Brunsdon says those figures could in fact be higher because they were based on quite low employment numbers for Brunner, and he suspects many Gloriavale residents did not regard themselves as “employed”, so their jobs were not recorded.

Who holds the purse strings

Control of Gloriavale companies is concentrated in the hands of half a dozen or so men, often related by blood or marriage, whose names appear repeatedly in Companies Office records of directors.

The trust itself has seven male officers, three of whom are independents recruited from outside the community.

Gousmett says that if the trust was ever dissolved, a “reversion” clause in the deed would see its assets distributed to a similar charitable organisation, not to individual members past or present.

“Part of the rationale for that is that these organisations have been exempt from tax and generated funds over time, so you can’t then just suddenly distribute income-exempt funds to people who are taxable entities in their own right.

“It has got to go to a similar organisation that will carry on the work which has been subsidised by the taxpayer in the first place.

“If the members are worried about it being wound up and them missing out on money, well they better have another rethink and read the deed, because they won’t get any money.”