Newsroom

Inside Internal Affairs’ Ray Avery inquiry

A year since we wrote about Sir Ray Avery’s charity projects, we look at what has happened since. A charities’ probe stepped up a notch after an OIA from a journalist. It found no serious wrong-doing, but shed some light on one reason for ongoing delays. Meanwhile, fundraising continues.

Questions from a television journalist about Sir Ray Avery’s Lifepods appear to have nudged New Zealand’s charities regulator to step up its inquiries into the much-awaited incubators.

Charities Services, which is part of the Department of Internal Affairs, found no evidence of serious wrong-doing when it probed delays and payments from the Sir Ray Avery Foundation, though an investigator considered there was a risk the incubators would never be delivered.

A senior investigator, Paul Budd, concluded broken deadlines for sending pods to Fiji and elsewhere were a “PR issue” for the charity but not a breach of charities law, since Avery was still actively trying to produce the incubators, consistent with his charity’s goals.

Documents released to Newsroom from the inquiry reveal Fijian hospitals have declined to accept the incubators unless they have been "proven reliable and endorsed" by recognised neo-natal doctors. Avery had apparently anticipated supplying them without such warranties. According to the case notes, he told the investigator he “intended to deliver to Fiji in early 2019 but Fiji hospitals require reliability has been proven and endorsed first”. Getting the pods a CE Mark – as Avery plans to -- may also require completing a successful and robustly-designed clinical trial using babies. However, the status and location of a promised trial in India remains a closely-guarded secret.

Avery has been an immensely successful fund-raiser, frequently drawing on his backstory of growing up rough in England at speaking events. After raising hundreds of thousands for a yet-to-be-launched IV drip system, he began raising $2 million in 2014 to get a low-cost incubator to the point of production. In 2015, he told the media Lifepods would be manufactured in India by January 2016. By that time, he said, there would be 20 pods deployed in the Pacific. It appears those 20 may have been intended to be prototypes.

Last July, when publicising a proposed charity concert that would have raised another $4 million, to produce the incubators, Avery told Newsroom the pods would have completed a clinical trial in India and be ready for production around the time of the proposed Waitangi Day concert: February 2019. “By the time we get to Waitangi Day, the testing will be completed,” he said.

When Charities Services’ closed its file on Lifepods in November 2018, Budd told Avery he might want to update his donors on a more realistic timeframe. Avery told the regulator he’d had written to every donor with an updated timeline, though he didn’t plan to announce anything publicly, because, he said, it would expose the Fijian hospitals who’d demurred on his offer to unwanted attention.

Avery told the investigator a pilot production line at his intended manufacturer, Phoenix Medical Systems in Chennai, would start rolling in December 2018. Incubators would be “released to selected hospitals in Chennai in early 2019.” (Avery has never named the hospitals, even before receiving critical publicity.) The CE Mark would be in place after that, he said, following 5-8 months’ testing. Deployment to the Pacific was dependent on getting ISO or CE Mark accreditation. "We anticipate that by December 2019 we are likely to have enough end user endorsements from hospitals in Chennai and from commercial international sales executed by Phoenix to commence our supply to Fiji hospitals,” he said.

That was in November 2018. In March 2019, Avery told the Herald the Indian trial would start in July 2019 – next month. But he “would not set a deadline” for deployment of finished incubators to Fiji.

Avery declined to answer Newsroom’s questions about the Indian trial and its set-up.

“Not an investigation”

Charities Services looked into the delays after a donor raised concerns about potential misuse of Lifepod funds. “I am concerned about donations that we have made. In his 2008 book there was a photo of the incubator – and now, 10 years on, and many dollars of donations through schools etc, there is still yet to be a certified operable version of the incubator….While I am sure there have been technical issues to sort, can you reassure us all monies have been properly accounted for?” the donor asked.

That was in July, following a Newsroom story airing concerns by disillusioned former volunteers and donors. Charities Services also got another query, from a journalist, asking whether Medicine Mondiale (as the Ray Avery Foundation was then called) was guilty of false advertising.

At the time, the Lifepod’s fundraising website told donors they were buying “Lifepod #[number]” (that wording is no longer present). A few schools and donors had told Newsroom and TVNZ they’d thought they were buying finished incubators that would have already been sent to hospitals. “The website even tells (donors) what number Lifepod their money is building and he’s repeatedly said he’s delivering Lifepods into the Pacific. It’s now clear no Lifepods have been manufactured,” said the media query.

The charities regulator saw the donor’s email as a mere inquiry, not a complaint. Budd, the senior investigator, looked at Avery’s website and concluded the project was “just moving very slowly and over-running its deadlines.” Yes, Avery had promised incubators would be manufactured and deployed in the Pacific by January 2016, but: “Sir Ray has acknowledged this failing and publicly adjusted the deadline to February 2019.”

Said the investigator: “I have reviewed the entire entity’s website today and it does not contain any statements that incubators have already been rolled out anywhere in the world…There is no statement that any pods have been issued…The website does not show numbered or personalised pods being tracked going through the manufacturing process [so] in conclusion the website does not contain any misleading information or ‘false advertising’.”

While the investigator considered that “potential remained” for the Lifepods to “fail to be successfully manufactured and/or licensed for production” he said this would be “all down to the Indian company [Phoenix Medical Systems] to resolve.”

Having found no evidence of wrong-doing, Charities Services didn’t start a formal investigation. So, when TVNZ journalist Benedict Collins inquired whether there had been any donor complaints, they told him no, and said there’d been no investigation.

Collins checked on this again in October, adding a follow-up query: had Charities Services started its own inquiry?

Staff discussed how to reply: “We advised the complainant (donor) by email that no formal investigation would be initiated, we also advised that we would contact the Foundation to see why they have taken significantly longer to produce their incubator than they forecast to donors and beneficiaries…If the journalist has the email to the complainant, he may consider it would constitute some form of investigation.”

At that point, investigators hadn’t made contact with Avery. They decided they needn’t tell the journalist they planned to question the charity. “The media don’t need to be informed of this…it is not our usual process to break down our processes to that extent with them.”

Then Collins tried another tack: a request under the Official Information Act for any Lifepod queries and all correspondence assessing them. At that point, after an internal chat, and “in light of the OIA request”, as an investigations manager put it, the regulator decided to open a case file. Charities Services invoked section 51 of the Charities Act, which requires charities to supply documents and answer questions by a set deadline, to move matters along a bit faster. “It is still only a case inquiry, not an investigation,” the manager emailed.

Two lines of questioning

Before receiving the OIA, the regulator had already started making its own inquiries into $68,843 in salaries and $188,471 in project management fees, which Avery’s eponymous charity paid out in the financial year ending March 2017. Investigators saw their own inquiry as the main issue; the donor’s question was “very much a subsidiary”, they said.

Charities Services bundled its questions about the payments and delays into one letter to Avery’s charity, which it sent in late October, along with a reminder that the charity was overdue filing its financial statements.

Avery quickly confirmed the charity would file its disclosures that week, adding “the recent media campaign from a specific media outlet…has meant our auditors have been much more diligent than usual.”

Much of the design, engineering and promotion of Avery’s projects is done for free by volunteers. The regulator noted that Avery had recently told the media that his charity “only has a book-keeper, so we have to rely on people donating their time and services.”

In light of that statement, the staff investigator wondered, who and what were the salaries and project management payments for? (A screenshot from the charity’s website, taken and filed by Charities Services, says: “Each dollar donated flows directly to improving the health of thousands.”)

Avery supplied details of the staff member receiving the salary, satisfying the regulator on that question.

As for the $188,471, that was paid to a consulting company owned by Avery, his wife and the charity’s accountant. The payment was for “oversight of activities on a day to day basis and financial administration” of the charity. Since payment had been properly disclosed in the charity’s financial statements, the investigator decided it was aboveboard. The only other related-party payment recorded by the charity was a modest $25,000-per-annum fundraising commission for Avery’s wife.

Financial statements for the next financial year show both arrangements continued, with similar-sized payments the next year. In the year to March 2018, the combined roughly $214,000 for the Averys and their consultancy came from a revenue stream of about half a million per annum, comprising mostly charity donations: $415,000 in Lifepod donations, $69,000 in “general donations” and less than $8,000 from Avery’s speaking fees and books sales.

Having raised $2 million to get Lifepods production-ready, as of March 2018, the charity had $139,600 in the bank.

Its financial statement notes the charity has committed to supplying 100 incubators at no cost, 50 to Fiji “in 2019”, and 50 elsewhere in the Pacific. The incubators are to be produced “using the resources of the [Sir Ray Avery Foundation],” it says.

Effusive praise

The investigator told Avery he just needed to supply enough information to prove the charity was pursuing the incubator project; enough to reassure the media, the worried donor, and the charity sector.

Avery proffered design files, manufacturing information and voluminous other details, some of which he said were too big to email.

Avery with a Lifepod prototype. Photo: Getty Images

Case notes say Avery was “very concerned about commercial sensitivity around research and development” fearing someone might use them to produce a “generic equivalent” of the Lifepod. The confidential documents included the manufacturing and distribution contract with Chennai’s Phoenix Medical Systems.

The investigator acknowledged material could be sought under the Official Information Act (as Newsroom has done) but reassured Avery: “We would try to redact sensitive information if we were lawfully permitted to decline a part or a whole request. Charities Service would not want to jeopardise any good work of the Foundation.”

He told Avery: “I will be very happy for you to make any redactions you require to those sensitive evidence documents and then advise that if we require we can make arrangements to visit the Foundation offices to view the un-redacted originals…Would that work for you?”.  Ultimately he decided a site visit wasn’t needed.

In Budd's assessment -- concluded on November 18 2018 – he says the charity “provided documentary evidence confirming to the satisfaction of Charities Services that it continues to pursue the activities of the Foundation towards its aim of delivering….incubators.”

“It would appear Sir Ray Avery has over-promised on when the developed and certified incubators would be developed. The media and the query/complaint rightfully demonstrate concerns centred upon this failure…However the Case Inquiry also establishes that the Foundation is pursuing other activities conducive to its charitable purpose, the development of an Essential Nutritional Food Source [Avery’s muesli/nutrition bar] and the Acuset IV Flow Controller.”

“It is a PR issue for the Foundation to clarify the status of Lifepod incubators and present accurate, achievable timelines.”

Shortly before he learned of the outcome, Avery emailed the investigator with a question: could he repay a disgruntled donor whom Avery believed was in correspondence with Newsroom?

Newsroom have contacted schools and some published donors to engender support for their premise that donors believed that their donation was to purchase an individual Lifepod incubator. In all our fundraising correspondence…we were clear we needed to raise finds to commence production of the incubators….We would be happy to refund any disgruntled donor but we need to make sure we do this in a professional l manner taking into consideration all stakeholder interests.”

The investigator said donations belonged to the charity but he could return them if he wanted. “Your thoughts very much mirror the board’s,” Avery told him.

On November 28, the regulator told Avery his charity was in the clear and there was “no requirement for any further inquiries. I had previously indicated that I might need to attend the foundation premises, but the information you have provided negates the requirement for this visit…it may be in the best interests of the Foundation to provide an update to the public and donors alike…But, as I say this is a but a suggestion. In the event a further OIA request should be received, I will consult with the Foundation to ascertain if any of the information you have provided to use requires to be withheld under commercial sensitivity grounds or any other lawful grounds…Thank you for your co-operation and good luck for the future.”

Avery effusively thanked the investigator and Charities Services for their professionalism. Their work to improve reporting standards, Avery told them, “could only benefit all stakeholders.” A thank you email signed with Avery’s “very best personal regards” was forwarded by the investigator to the Charities Service’s general manager, Natasha Weight, who replied: “Excellent, well done and thanks for sharing. So great to see your new case inquiry process in action, bringing about useful and timely results.”

A few days later, Budd alerted Avery that Internal Affairs’ Maria Robertson was going to be interviewed by TVNZ’s Collins, telling Avery what Robertson planned to say if the journalist asked about the inquiry. “He will be informed that we have completed our inquiries and that we are satisfied that there are no concerns,” Avery was told.

There were further discussions with Avery about what would happen if the regulator’s material was OIA’d. (Newsroom’s material, received this month, features several redactions, mostly for privacy reasons). The investigator updated his bosses: “Sir Ray repeated his praise for the functions of Charities Service as a whole and suggested a meeting in the future to see if he can support the Education and Capability functions by providing experts/resources for some workshops to support smaller charities. I advised him that Maria’s interview is delayed until Friday.” He passed on an apology from Avery that the regulator was having to conduct an interview on his account.

Newsroom asked the service whether it had accepted Avery’s offer of a meeting and resources. “It is not unusual for a charity to offer or provide support to other charities around a range of capabilities. It is not necessary for the regulator to be involved in these arrangements and so no meeting has taken place with Sir Ray in relation to this,” it said.

Where to now

Since then, fundraising has continued. In February, Avery wrote to all his LinkedIn contacts asking for donations for unspecified projects his charity was working on.

“We are launching a number of innovative products this year but need your help to get them out at scale. I want to raise $200,000 and if every one of my LinkedIn contacts donated just $100 or anything you can afford, we could make this happen….Kindest regards, Ray.”

Newsroom asked Avery questions about the status of the clinical trial in Chennai, the CE Mark process, and other things. He indicated he would not be answering them, as he did not believe the writer’s style of journalism “added any value to the fabric of society”.

He did, however, send Newsroom a chapter of his forthcoming book, where he links the country’s appalling youth suicide rates to “tall poppy syndrome”. 

Read Newsroom's earlier stories on Avery and his projects and promises:

Can Ray Avery turn promises into reality?

Newsroom inquiry - the main points

A cheerleading media

Who is Sir Ray Avery?

LifePod delays disappoint schools

Sam Morgan details dealings with Ray Avery

Millionaire funder still backs Ray Avery

Ray, Whaleoil and exposing an expose

Another delay for Sir Ray

The $11m health watch that wasn’t

FMA questions for Ray Avery company

Legal threat to suppress clinical study

We value fearless, independent journalism. We hope you do too.

Newsroom has repeatedly broken big, important national news stories and established a platform for quality journalism on issues ranging from climate change, sexual harassment and bullying through to science, foreign affairs, women’s sports and politics.

But we need your support to continue, whether it is great, small, ongoing or a one-off donation. If you believe in high quality journalism being available for all please click to become a Newsroom supporter.

Become a Supporter

Comments

Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.

With thanks to our partners