24 May 2011

SFO investigates complaints against developers

Serious Fraud Office investigates complaints against Property Ventures Ltd and Cashel Ventures Ltd

The Serious Fraud Office (SFO) confirmed today that it is investigating allegations of financial misrepresentation made against Property Ventures Ltd (PVL) and Cashel Ventures Ltd (CVL).

PVL was placed in receivership in March 2010 and CVL was placed in liquidation in December 2010. Both companies were associated with the development of Hotel So in Christchurch.

SFO Director, Adam Feeley, said that the agency had commenced its investigation under Part 1 of the Serious Fraud Office Act in response to allegations that both companies may have made misrepresentations to South Canterbury Finance (SCF) and Dominion Finance Group (DFG) in order to secure funding.

“Many of the finance companies under investigation by the SFO have been underpinned by major property development transactions that failed. These failed developments have had far-reaching consequences on those companies and our investigation into Property Ventures Ltd and Cashel Ventures Ltd is an example of one such instance.

“At this stage, the focus of our investigation is simply to determine the nature of the funding advanced and the statements that were made in order to secure that funding,” he said.

Mr Feeley noted that the February earthquake had created some difficulties in identifying the location and recoverability of some records.

“Our first priority will be to work with relevant parties, including the receivers and liquidators, to identify where pertinent records are held. In this regard we are fortunate to already have records from South Canterbury Finance and Dominion Finance Group which will enable us to identify any material inconsistencies between the funding and borrowing parties.”

For further information

Adam Feeley
Director
Serious Fraud Office
Phone: 021 333 539

Role of the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Act in response to the collapse of financial markets in New Zealand at that time.

The SFO operates three investigative teams:

Fraud Detection & Intelligence;
Financial Markets & Corporate Fraud; and
Fraud & Corruption.

The SFO operates under two sets of investigative powers.

Part 1 of the SFO Act provides that it may act where the Director “has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud.”

Part 2 of the SFO Act provides the SFO with more extensive powers where: “…the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed…”

The SFO’s Statement of Intent 2011-2014 sets out the SFO’s three year strategic goals and performance standards. It is available online at: www.sfo.govt.nz(external link)