SFO investigating NZF Group
The Serious Fraud Office is investigating NZF Group with a primary focus on alleged related party transactions going back to 2006.
Friday, March 23rd 2012, 9:12AM
by Jenny Ruth
SFO chief executive Adam Feeley says his organisation and the Financial Markets Authority (FMA) "have been assessing a range of allegations relating to the conduct of the group."
The related party transactions being examined are between members of the group, including finance subsidiary NZF Money which went into receivership in July last year, its directors and officers, Feeley says.
"We are extremely conscious of the need to respond quickly where material concerns arise. We are satisfied that there are valid grounds for an investigation into the wider group and that there is a legi6timate interest in publicly advising investors of this investigation."
Chief executive Mark Thornton says the company will cooperate fully with the investigation "but the board has no knowledge of any related party transactions that could be subject of such an investigation."
He has "also questioned past executive directors who also confirm that they are not aware of any such related party transactions," Thornton says.
The only disclosed related party transactions in NZF's annual reports between 2006 and 2011 involving directors were by former director Pat O'Connor and his Hillview Trust, which made term loans to the group and invested in debenture stock, and former director Peter Huljich. Both were non-executive directors.
NZF and its 50% joint venture Mike Pero Mortgages distributed the KiwiSaver Scheme offered by Huljich's funds management company. Huljich, who had pleaded guilty to making misleading statements in his KiwiSaver scheme prospectuses, resigned from NZF's board in April last year after selling the KiwiSaver business to Fisher Funds Management.
Earlier this month, NZF Money's receivers, Grant Graham and Brendon Gibson of KordaMentha, said in their second report Hillview claims an interest "in the proceeds of certain loans in priority to the trustee's interest. The receivers do not yet agree Hillview Trust's claim is valid."
NZF Group's last annual report said: "Loans provided by the Hillview Trust to NZF Money Limited under a loan participation arrangement are secured against certain first mortgage loans" totalling $3 million at March 31 last year.
The annual report also said $1.4 million of debentures provided by Hillview had been scheduled for repayment on April 29 last year. O'Connor resigned from NZF's board in January.
The receivers said inter-company debts owed NZF Money totalling $283,000 had been paid in full.
The receivers estimate the debenture holders, owed $16.4 million at the date of receivership, are likely to be repaid between 25 cents and 42 cents in the dollar.
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