Accusations fly as Callaghan Innovation and small business platform Manaaki face off

Monday, 31 October 2022

Chooice founder and managing director Sarah Colcord does an unboxing with Manaaki director Monty Betham, in happier times before a disagreement drove a wedge between the businesses.

A rancorous dispute centred on a high-profile small-business support agency has blown up and spread to a controversy enmeshing the Government’s own innovation agency, Callaghan Innovation.

The dispute – parts of which have played out on the LinkedIn social media platform – has included allegations of bullying and small businesses being taken advantage of, and questions about the spending of government funding.

Māori entrepreneur Robett Hollis has been among the most outspoken against the agency, known as Manaaki, which launched at the start of the Covid pandemic as an online advice service for small businesses and gained some high-profile endorsements. It was founded by former Xero executive Pat MacFie, former boxer Monty Betham, and former Icehouse chief executive Andy Hamilton.

Manaaki had continued to enjoy a high profile, including for its work with Māori and Pasifika business start-ups.

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But Hollis started making public accusations against Manaaki of misusing government funding and mistreating small businesses, in his newsletter and on social media platform LinkedIn.

In a statement to Stuff, Hollis said a number of small businesses had expressed concern to him about bullying at Manaaki. That led to him accusing Manaaki of misusing government funding and mistreating small businesses.

In a recent funding round, Callaghan Innovation brought in a private investigator, John Borland, to review businesses which had applied for funding from it.

The agency said it “took a considered decision to increase its due diligence of organisations” from which it procured services following the death of a founder in the startup ecosystem late last year, understood to be Jake Millar.

”We were becoming increasingly aware of allegations of bullying … by some players operating in the founder/startup ecosystem,” Callaghan said.

(Left to Right) Manaaki co-founder Andy Hamilton, managing director Rachel Adams and co-founder Pat MacFie say their business has been victim to sustained reputational attacks from Maori entrepreneur Robett Hollis.

“Callaghan Innovation has no tolerance of such tactics, and we wish not to procure services from anyone who practices them.”

Borland’s report – which Callaghan has repeatedly refused to make public – was understood to be critical of Manaaki’s behaviour.

Manaaki claims the Borland report, and subsequent accusations from Hollis, have resulted in $5 million of lost funding and contracts.

It has pointed the finger back at Callaghan, claiming that Borland had a conflict of interest which should have disqualified him from producing such a significant report – including personal ties back to Robett Hollis.

Over the weekend, a Callaghan director, Hamilton-based health tech entrepreneur Rachel Kelly, posted on LinkedIn that she had resigned her position with Callaghan, apparently because of concern about its handling of its relationship with Manaaki and how it had kept its board abreast of the issues at play.

While she did not mention Manaaki in her post, she said there were “irreconcilable differences in values”. It is understood she objected to Callaghan not releasing the full report.

MacFie said the allegations against Manaaki were untrue, and had caused financial and mental strain for those running the business.

Macfie admitted that issues had been faced and resolved by Manaaki, but argued that Hollis was using his influence to blow them out of proportion, to try to bring down the business.

Macfie said Borland’s report did not paint Manaaki in a good light, but the company had not been given the opportunity to fact-check or respond to claims in it.

Macfie pointed to both Borland and Hollis having connections to Dunedin digital marketing agency K&J Growth, which ended with K&J taking legal action to recover $161,000 it said it was owed by Manaaki. Manaaki said money was withheld because of delivery outcomes that had to be met.

Hollis had been pressing Callaghan to release Borland’s report and had gained high-profile support from the prominent Māori entrepreneur Sir Ian Taylor, who had also weighed in on the dispute via LinkedIn.

Taylor said the questions raised by Hollis about Manaaki were “simply too big to ignore”.

Taylor said it was especially important for Māori and Pasifika businesspeople to be transparent when questioned by their community.

In a statement on Monday, Callaghan said it received multiple Official Information Act requests seeking the detail of the report. “Much detail has been released but some has not, with all decisions made following consideration of clear internal and external legal advice.

“We did not wish to or seek to withhold this information. As a Crown Agency Callaghan Innovation must operate within the laws that govern the public sector.

“The decision to withhold some information is now the subject of a complaint to the Ombudsman and Callaghan Innovation will comply fully with any findings that may emerge.”

Some of the report is understood to relate to a falling out between another small business network, Chooice, and Manaaki’s parent company, Indigo, founded by MacFie and Betham.

Chooice started by Sarah Colcord as a buy-local Facebook page at the start of the pandemic, and has grown into an e-commerce shop window for a wide range of small businesses.

Indigo invested more than a million dollars into the development of Chooice.

MacFie said the business was the first to admit when partnerships had failed.

“We have done our best to resolve these fairly and through proper processes not via social media,” MacFie said,

“Not everything we have been involved in has been a success. We own that and move on,” MacFie said.

MacFie said he tried to keep his head down and continue working for Maori and Pasifika founders while the “echo chamber” of social media continued to grow more aggressive.

“The impact has been significant. It has taken a toll on my family and my health – it has been very hard. But being the target of this kind of abuse I just want to make sure I don’t reflect that back.

“I talk to my elders from my tribe and they give me advice. They say, ‘kia tau, young fella, kia tau – be still’. But that is difficult when you see your mahi, your people being attacked.”

Manaaki had made an open offer to discuss any issues raised by Hollis, Taylor or others face to face, he said.

“But a social media shouting match is just not our way. It is not the way my mum raised me, and it's not the way of our organisation,” MacFie said.