Money from the Government's Whanau Ora program has been used by gang members to buy cannabis for drug deals, police say.
Police documents presented to Dunedin District Court on Wednesday say the Mongrel Mob used about $20,000 of Whanau Ora money to fund a drug shipment from Auckland to the South Island in March, the Otago Daily Times reports.
Michael Logan Wong-Tong, 26, of Turangi, was one of four men charged jointly with conspiracy to sell cannabis. He has pleaded guilty and will be sentenced in October.
Police say they discovered $20,000 was misappropriated from the We Against Violence Trust - which had a contract with Te Puni Kokori (the Maori Development Ministry) to deliver services via the Whanau Ora program until April - during their investigation into drug smuggling.
Ten men were arrested during the operation and four have been charged with dishonestly converting the trust's money.
Police say they intercepted phone calls between the men, one saying they had "booked a van" from Auckland to the South Island and he "had it sorted as he was going to use the Whanau Ora money".
Police searched the van on a Cook Strait ferry and seized 3.15kg of cannabis, which would have cost $24,500.
The We Against Violence Trust did work on whanau violence and community support.
Whanau Ora Minister Tariana Turia declined to comment, saying the matter was still before the courts.
A Te Puni Kokori spokeswoman said the ministry was assisting police. She declined to comment further.