“But also these are sovereign entities with governance structures and management. They should have done better.”
Cheer said the trusts were working to rectify the situation, with $11.5m recovered so far.
Gaming Machine Association chairman Peter Dengate Thrush told RNZ that while mistakes were made in the accounts, it looked worse than it was because of the review’s timeframe.
“If the total figure that the department is now saying needs accounting for is $28m, while that’s a lot of money, spread out over the 10 years that the department has now gone back … it’s only a very small proportion of the total flow.”
He said it was the regulator’s job to keep the industry clean.
Most trusts tried to comply with the rules, work closely with officials and operate transparently, he said.
However, he believed there should be consequences for trusts that engaged in creative accounting.
“There will be some societies who are in deep trouble, for which this is not just an accounting readjustment.
“The department occasionally finds some people breaking the law. If there are any at that end of the scale, then they should be prosecuted,” he told RNZ.
On Friday, DIA director of gambling Vicki Scott said about three-quarters of the 32 trusts were non-compliant with the rules to some degree.
“We’ve been investigating for two to three years now.
“Many were essentially prioritising their own growth and their own competitive advantage over the interests of the community.
“They were spending beyond their means on things like gaming machines.”
She believed about $20m could be recovered. Repayment plans have been devised with some trusts.
“Our role isn’t to put a significant section of the industry out of business but we are really firm that the money needs to be back in the community’s hands in a reasonable period of time.”
About $1 billion is generated by pokie machines in New Zealand every year.