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Sam Morgan details dealings with Ray Avery
[Updated with reaction from Sir Ray Avery].
One of New Zealand’s biggest philanthropic funders has confirmed he gave significant money to enterprises run by Sir Ray Avery, but would not do so again.
Sam Morgan became one of New Zealand’s most significant philanthropists and investors after selling Trade Me to Fairfax in 2006.
Morgan’s foundation, Jasmine Social Investments, has given more than $50 million to international organisations working on poverty and related issues, including projects to reduce infant mortality and improve maternal health. Jasmine Investments has full-time staff focused on due diligence.
Morgan’s contributions to Avery’s enterprises and entities were significant and came at a time when Morgan’s philanthropy was in its infancy.
In June 2006, Morgan’s foundation gave an entity associated with Avery a $300,000 accelerator grant for radiotherapy equipment for the Bhaktapur cancer hospital in Nepal. The project went well and the equipment was installed.
In August 2006 he made a $150,000 grant for the Acuset, an IV drip controller Avery was developing. In October 2006, he made another $150,000 grant to the Acuset. In 2009, Jasmine loaned $100,000 to Mondiale Technologies, which Morgan says was to file the Acuset patent while Avery closed a distribution deal with Baxter. Avery repaid the loan, with interest.
For a time the pair were close, but Morgan says his relationship with Avery ended acrimoniously in 2010. Morgan had asked for more details about how money was being spent and moved between charitable and commercial entities controlled by Avery. In return for this transparency he’d offered to write off the $100,000 loan made in 2009.
However, relations deteriorated and Avery repaid the loan. Since then, Morgan has seen other relationships with Avery end unhappily after beginning with good intentions.
“If asked by other prospective funders, I am open about my experience,” he says.
In an investigation detailing Avery’s projects to date, including the LifePod incubator, for which Avery wants to raise $4 million in donations from the public in addition to more than $2 million already raised, Newsroom reported that Morgan had offered to fund the die-making tooling required to an IV flor controller called the Acuset. At the time, according to an online article, it was being evaluated in a study at Auckland Hospital and field trials in Nepal.
In 2013, a pamphlet from American non-profit Design that Matters, the outfit that originally asked Avery to work on a low-cost drip controller, said the Acuset controller had completed clinical trials in 2007 and volume production began in 2008.
This month Avery confirmed production hadn’t started. However, he said it had been in use for a number of years in two hospitals in Nepal and to dose water tanks with chlorine.
Avery is now raising money to launch the Acuset, now in a revised form that includes a connecting drip set, through a spin-off company, AIS. As of today AIS is seeking minimum investments of $10,000 for a total of 17.5 per cent of the company, which it has valued at $7.1 million. Production is planned for late 2019, and, by 2021 – the brochure projects – the company will be earning $27.5 million.
Avery responded to Morgan's comments by telling Newsroom: "Sam Morgan invested in the Acuset providing money for the Acuset dies. I called Sam one day to advise him that we did not have the funds to pay an urgent patent renewal. Sam said he would provide it with an interest-free loan so we could keep the patents current.
"He made us sign a loan agreement with a 10 percent penalty if we did not repay the loan at a specified time frame. Given the tight timeframe for securing the patent I signed this agreement without board approval. We were not able to make the repayment of the loan at the specified timeframe so Sam foreclosed on the loan and wanted his 10 percent interest."
Avery said: "When I advised the Medicine Mondiale board they advised that the contract breached the Charities Commission requirements that no individual should make a profit from a charitable entity and I should not have signed the agreement. To 'fix' this problem I paid the 10 percent interest myself so that the trust was not compromised."
'A frustrating experience'
Morgan is not the only donor unwilling to work with Avery again. Anthony Glucina is the Chief Executive of Define Instruments, an Auckland-based electronics design business.
He said he met Avery at an event seven years ago and offered to donate his time to design electronics for the incubator. Glucina met Avery several times and he did a few hours work on the project, including starting a short production run of some components.
"But the next thing I knew he was working with someone else," he said, adding he did not receive any explanation.
"It was frustrating because as engineers we were keen to just get on and do the work. It could have all been done in a year or so," Glucina told Newsroom.
"I don't know if it was his personality and whether he was a micro-manager, but he seemed to like things done his particular way."
Glucina said he would not recommend others donate their time to Avery.
But Avery told Newsroom: " In the early days we engaged with Anthony regarding the Lifepod power supply but at that time Anthony was travelling overseas a lot and we were not making a lot of traction. We had perhaps three meetings in total with Anthony and his team but nothing tangible came out of this. So we moved on and worked with Phoenix Medical systems and Australasian based consultants."
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