SPCS

SOCIETY FOR PROMOTION OF COMMUNITY STANDARDS INC.

Prosecution of company directors in breach of s. 261 of Companies Act 193

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Under s. 261 of the Companies Act 1993 a liquidator of a company has powers to obtain documents and information from a former director of the failed company. Failure to provide that information to the liquidator can result in the director being prosecuted and if convicted of an offence under s. 261, he or she “liable to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years”.

If the company director has been adjudicated as a bankrupt at the time of sentencing a judge would be compelled to impose a prison sentence rather than impose a fine. If the offending involved long-term and systematic refusal to supply documents to a number of liquidators involving multiple companies of which he/she had been a director, and the non-compliance showed a pattern of flagrant disregard for the law, a judge would no doubt be compelled to impose a maximum sentence. For to do so would be in the public interest because the law has a pedagogical role in addition to a punitive element designed to bring offenders to their senses regarding the rule of law as it prescribes and defines criminal behaviour.

Section 261 of the Companies Act entitled “Power to obtain documents and information” includes: [Read more…]

Financial Markets Authority warns St Laurence directors

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The Financial Markets Authority has warned the directors of failed finance company St Laurence instead of taking court action.

St Laurence collapsed into receivership in 2010 owing $212 million to more than 9000 debenture-holders, of which its receivers recovered 16.7 cents in the dollar ($35.4m). It is in liquidation.

The authority has closed its investigation into the company and has formally warned eight directors over what it describes as potential breaches of the Securities Act.

It said that based on the evidence it had seen, it considered that St Laurence’s September 2007 prospectus failed to properly disclose information about loan quality and liquidity for the period from March to June 2008. [Read more…]

E-Gas managers jailed over fraud

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The former managers of retail gas supplier E-Gas have been imprisoned for three years, and 3-1/2 years respectively, for fraud of at least $9.75 million.

Sydney Lio John Hunt, 46, and Ronald Peter Rosenberg, 73, were last month found guilty on multimillion-dollar fraud charges for under-reporting the amount of gas supplied to customers.

Wellington District Court judge Bruce Davidson today sentenced Hunt to 3-1/2 years’ jail, and Rosenberg to three years.

Rosenberg was also ordered to pay $400,000 reparation within 28 days.

The Serious Fraud Office (SFO) alleged during the month-long trial that E-Gas under-reported consumption by about 950,000 gigajoules, worth about $8.7m, and penalties were avoided to the value of about $8.6m between May 2003 and October 2008.

To see full story published 30/05/14 go to:

http://www.stuff.co.nz/business/industries/10099038/Jail-terms-for-E-Gas-managers

David Ian Henderson: Probe into collapse of Hendo’s failed Property Ventures Ltd

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Property Ventures Ltd (PVL) was a development and investment company founded by Dolf de Roos and led by Christchurch-based property developer Dave Henderson. David Ian Henderson was adjudicated as a bankrupt in the Christchurch High Court on 29 November 2010 and remains a bankrupt under that order. He was to have appeared before the Christchurch High Court on 9 June 2014 for public examination of his activities whilst a bankrupt, but that “has been put on hold after the Christchurch businessman refused to hand over documents he was asked to surrender. A judge ruled that emails between Henderson and several of his business associates had to be provided to investigators so they could be considered at a three-day High Court hearing, scheduled to begin on June 9.” (The Press 29/05/14).

PVL was placed into receivership on 5 March 2010 owing $69 million and then placed into liquidation on 27 July 2010. One of its many subsidiaries – Park Trustee Company Ltd – was put into liquidation on 19 June 2012.

In May 2005 PVL attempted to raise $52.5 million from the New Zealand public with an offer of $1.75 convertible notes, without much success. Those few who did subscribe were subject to a trust arrangement with Covenant Trustee Company Limited. PVL then went further afield seeking to woo overseas investors to this offer, this time listing a PVL subsidiary – Park Trustee Company – as trustee on its investment statements.

A subsequent probe into the activities of PVL commenced by the Securities Commission in 2007 following complaints from overseas investors over non-payment of interest, raised alarms over the role of the related party trustee – Park Trustee Company  – in its apparent failure to protect overseas investors. The Commission expressed concern that the PVL investment statements may have been misleading – a potential criminal breach of the Securities Act, which does cover some aspects of overseas issues.

The trust deed that bound the trustee (Covenant Trustee Company) to protect NZ investors, allowed for PVL to withhold interest payments to investors if doing so would make it (PVL) insolvent or breach other debt covenants, but non-payment would not count as a default. With such dubious terms, it is not surprising that few New Zealanders chose to invest in PVL.

Park Trustee Company Ltd [PTCL) was incorporated on 20 October 2004 under the name “Property Ventures Trustee Company Ltd” (PVTCL) with its sole shareholder being Property Ventures Ltd [PVL]). Dave Henderson, who was a director of PVL at this time (he was appointed on 6/11/02), was appointed sole founding director of PVTCL on 20 October 2004 and he was soon replaced by sole director John Edward Butler just 13 days later on 2 November 2004. On the next day, 3 November 2004, Austin John Forbes was appointed as a second director of PVTCL (record filed 4/11/04). [Read more…]

Dave Henderson hearing delayed as emails withheld

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A public examination of Dave Henderson’s [David Ian Henderson] bankruptcy has been put on hold after the Christchurch businessman refused to hand over documents he was asked to surrender.

A judge ruled that emails between Henderson and several of his business associates had to be provided to investigators so they could be considered at a three-day High Court hearing, scheduled to begin on June 9.

However, the controversial property developer objected to the decision by Associate Judge Rob Osborne and lodged an appeal with the Court of Appeal in April.

Henderson said he believed the pursuit of the emails was “oppressive and abusive” and “simply a fishing expedition” by investigators.

The Official Assignee already had the information needed to complete her report, he said.

For full report by Blair Ensor, published 29/05/14 see:

http://www.stuff.co.nz/the-press/10095291/Henderson-hearing-delayed-as-emails-withheld [Read more…]