RNZ has confirmed its request for a $5m overdraft, which breached the Crown Entities Act, was signed off by the board.
By Mary Argue and Craig McCulloch of RNZ
The public broadcaster on Monday revealed a shock $12 million budget blowout, after a litany of financial blunders.
CEO Paul Thompson took responsibility for the result and said internal reports gave an inaccurate picture of the finances, meaning the scale of the loss only became clear in October.
While carrying out the broadcaster's annual audit, EY identified a breach of the Crown Entities Act - emphasising it in RNZ's annual report.
"We draw your attention to Note 12 on page 32 about the Group not complying with sections 160 and 162 of the Crown Entities Act 2004, in that the Group entered into a financing arrangement without the authority of the Minister for Media and Communications and the Minister of Finance."
The breach concerned a $5m overdraft that was set up without ministerial approval.
RNZ said the $5m overdraft was initiated to provide RNZ with a safety net in the event one of its land sales was delayed, so the company could manage significant one off costs, but was never used.
By law, RNZ needs sign-off from two ministers to borrow money, which it last received in 2006 for up to $3.5m.
On Checkpoint, RNZ board chair Brent Impey accepted the organisation had broken the law.
"Now, how did that happen? That's very difficult to explain. That there was a loan with Westpac and again, the Crown Entities Act was breached."
A RNZ spokesperson said the board approved a temporary $5m overdraft facility on June 9, 2026.
The former chief financial officer, Hilary Parker - who resigned unexpectedly in early October - initiated setting up the overdraft, which RNZ's executive took to the board, the spokesperson said.
Public law expert and barrister Mai Chen said the fact that ministerial approval wasn't obtained raises questions.
"You've got people in highly paid positions who don't seem to understand that they're a Crown entity, they're subject to the Crown Entities Act," she said.
"Why did they do it without going through the right process?"
Chen said it was concerning that the board appeared to be unaware of the breach and more broadly in the dark about RNZ's financial position.
A RNZ spokesperson said the $5m overdraft was set up to provide RNZ with a safety net in the event one of its land sales was delayed, "while the company also managed a significant number of one-off costs".
They noted the overdraft was undrawn as at June 30 2026.
Asked if RNZ management was aware of its obligations under the Crown Entities Act, RNZ pointed to section 160 of the Act - that outlines the need for ministerial sign-off - in its borrowing policy.
They said no internal or external legal advice was sought prior to entering into the overdraft.
"The independent review will establish what happened and why," the spokesperson said.
A Westpac spokesperson said the bank didn't comment on specific customers' banking details.
"However we can confirm that we have strict approval processes for all lending of this scale. Any questions specifically relating to RNZ's banking are best directed to RNZ."
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