The Serious Fraud Office (SFO) today arrested and laid over 100 charges under the Crimes Act against four individuals involved with the collapse of Five Star Finance Group.
SFO lay charges against directors of the Five Star Group
The Serious Fraud Office (SFO) today arrested and laid over 100 charges under the Crimes Act against four individuals involved with the collapse of Five Star Finance Group.
The loans to which the charges relate have total value of $50M, a large proportion of which is irrecoverable.
The four accused are Nicholas George Kirk, Marcus Arthur MacDonald, Anthony Walpole Bowden and Neill Allan Williams.
Kirk, McDonald and Bowden are former directors of Five Star Finance Limited, while Williams, although not a director, was heavily involved in the management of the company.
The charges concern related party lending that occurred between 2003 and 2007. They allege that in the course of undertaking that lending the defendants:
- intentionally applied funds in breach of the company’s obligation under its trust deed; and/or
- dishonestly used documents with intent to obtain a benefit.
The offences each carry a maximum penalty of seven years imprisonment.
Announcing the charges, SFO Chief Executive, Adam Feeley said the conclusion of the investigation was an important step towards the SFO’s new goal of contributing to greater investor confidence in New Zealand’s financial markets.
“For investors to have confidence in the financial markets, they need to know that there will be quick and effective intervention by a law enforcement agency with the powers and resources to deal with serious and complex fraud.”
Mr Feeley said that the SFO’s major cases currently under investigation, which include Capital + Merchant Finance Ltd; Aorangi Securities Ltd; Belgrave Finance; and allegations of fraud inside the Accident Compensation Corporation, were all scheduled to be completed well inside the SFO’s new 12 month performance target.
Mr Feeley praised the work of the team which had worked on the case saying that it had been one of the largest and most complex cases investigated by the Office in recent years.
“Investigations of the scale and complexity of Five Star Finance require detailed forensic accounting analysis which inevitably takes time.”
“We now are bringing even greater accounting and legal resources to bear on important cases such as Five Star, and this will in turn result in faster investigations without quality being compromised.”
Mr Feeley said that with serious criminal charges now laid against Bridgecorp, Five Star Finance and National Finance, the SFO was now emerging from a period of restructuring and transition into a more effective agency for investigating and prosecuting serious financial crimes.
As these proceedings are now before the court, the SFO will not be comment further on the Five Star Finance case.
For further information
Adam Feeley
Chief Executive
Serious Fraud Office
Phone 021 333 539
Note to editors
The Five Star Group comprises Five Star Finance Limited, Five Star Debenture Nominee Limited, Five Star Consumer Finance Limited and Antares Finance Holdings Limited
In 2007, the Five Star Group companies failed and were placed into receivership and liquidation:
- Five Star Finance Limited was placed into receivership in September 2007 and in June 2008 a Liquidator was appointed.
- Five Star Debenture Nominee Limited was placed into liquidation on 6th November 2007.
- Five Star Consumer Finance Limited was placed into receivership on 29th August 2007.
- Antares Finance Holdings Limited was placed into liquidation on 9th May 2008.
Losses to investors and creditors are anticipated to be in excess of $85M.
The receivers of Five Star Consumer Finance Limited have commenced a civil action in the name of the Company against the directors of the Company for breaches of their duties to the Company.
The Registrar of Companies has prohibited the defendants from being directors or promoters, or from taking part in the management of any company for a period of five years.
Kirk, McDonald and Bowden’s ban runs from 23 March 2009 and Williams’ ban runs from 29 May 2009.
The role of the Serious Fraud Office
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 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 2010-2012 sets out the SFO’s three year strategy and goals for contributing towards the Government’s Justice and Economic Development goals. It is available online at http://www.sfo.govt.nz/f56,555/SFO_Statement_of_Intent_2010.pdf(external link)(external link)