Last minute deals could end Digi-Tech tax trial

UPDATED 5.15pm: Settlement is understood to have been reached this afternoon in the long-running Digi-Tech tax benefit trial. 

Confidentiality meant no details could be disclosed, however the case is to be called in the Auckland HIgh Court tomorrow morning for what NBR has been told will be a brief hearing. 

Eleventh-hour developments today could end businessman John Reid’s bid to extract some $60 million from disgruntled investors in his 1990’s Digi-Tech tax benefit scheme.

The complex trial of claim and counterclaim is due to resume tomorrow amid continued IRD scrutiny and speculation of a multi-million dollar secret settlement.

IRD investigators have maintained a constant watch on the trial, which began before Justice Stephen Kos in August.

Mr Reid and associates Peter Russel, Peter Connolly and John Currie were tried and acquitted of Serious Fraud Office charges relating to the Digi-Tech scheme in 2004.

A feature of the present civil case has been repeated allegations by investors’ lawyer Paul Dale that Digi-Tech was a circular fiction, a charade, deceit, a sham and a fraud engineered by Mr Reid against the IRD and investors.

Mr Reid admitted aspects of fiction but strenuously denied fraud.

Mr Reid is suing 60 investors in the Auckland High Court for allegedly breaking share sale and purchase agreements and loss of profit insurance premiums.

Investors counterclaimed about $20 million from Mr Reid for the return of their deposits.

The National Business Review understands the 60 investors remaining in the case may have already received a settlement of more than $5 million dollars.

Evidence was due to be given this week by Mr Russel, a former Gosling Chapman accountancy partner, but the trial has been adjourned until Wednesday morning while confidential behind-the-scenes- negotiations continue between the parties.

Mr Connolly gave evidence last week but Mr Currie, who was expected to testify about his part in the Digi-Tech scheme, was not called because he was no longer wanted by Mr Reid’s side.

About 20 investor witnesses were also due to testify in the coming weeks.

Smaller groups of investors withdrew from the trial earlier after confidential settlements were reached.