The Serious Fraud Office has opened a second round of investigations into collapsed lender NZF Money and the NZF Group – focussing on alleged related-party transactions.
NZF Money, a commercial and residential lender, was placed into receivership in July, owing debenture holders about $16.4 million.
The Financial Markets Authority (FMA) exposed NZF's short-term funding problems when it forced the company to pull its prospectus, which hoped to raise $359 million in July.
SFO boss Adam Feeley says the fraud fighter will now work closely with the FMA to investigate alleged related party transactions between group directors and officers between 2006 and now.
“We are satisfied there are valid grounds for an investigation into the wider group, and there is a legitimate interest in publicly advising investors of this investigation,” says Mr Feeley.
Shares in parent company and deposit-taking arm NZF Group (NZF), trading at 0.6c this afternoon, are in a trading halt. They have shed 80% of their value this year.
NZF chief executive said in a statement to the NZX today it has has no knowledge of alleged related-party transactions, but will co-operate with the SFO's investigation.
Peter Huljich resigned as a non-executive director and chairman of NZF Group in April last year.
In December, he was convicted and fined $112,632 after pleading guilty to misleading the public in the investment statements issued for Huljich Wealth Management's Kiwisaver fund.
NZF Money debenture holders have been warned they will get back less than half of what they are owed.
Receivers Grant Graham and Brendon Gibson of KordaMentha have recently estimated the return to be between 25%-42% -- a maximum overall recovery of $6.9 million.
The shortfall was well flagged: Receivers said the loan book was significantly over-valued, at $28.3 million, upon receivership.
Since then, KordaMentha has managed to recover $2.2 million in repayments from borrowers and to sell a subordinated note for more than $900,000.
But twenty loans totalling $27 million remain outstanding.
Receivers say it's extremely unlikely there will be anything returned to unsecured creditors – owed $115,000.