The Serious Fraud Office (SFO) says it has launched an investigation into the sharemarket listed NZF Group, its failed finance company subsidiary NZF Money and their related companies over alleged related party transactions between members of the group, directors and officers since 2006.
In a statement the SFO said both it and the Financial Markets Authority had been assessing a range of allegations relating to the conduct of the group.
"The primary focus of the SFO assessment relates to alleged related party transactions between members of the group, its directors and officers. The transactions cover a period from 2006 to the present," SFO CEO Adam Feeley said.
"We are extremely conscious of the need to respond quickly where material concerns arise. We are satisfied that there are valid grounds for an investigation into the wider group, and that there is a legitimate interest in publicly advising investors of this investigation.”
He said the SFO had commenced a Part II investigation into all of NZF Group Limited, NZF Money Limited, and their related companies.
NZF Money traded as a finance company, primarily providing commercial and residential loans. It was tipped into receivership on 22 July 2011 by trustee Covenant Trustee Company due to an anticipated trust deed breach, owing debenture holders about NZ$16.4 million.
"Investors who have information relating to this case that may be of interest to the SFO are encouraged to contact the investigation team in the first instance on 0800 109 800 or firstname.lastname@example.org," Feeley added.
In a statement, NZF Group chief executive Mark Thornton said the company would fully cooperate with the SFO investigation.
"But the Board has no knowledge of any related party transactions that could be subject of such an investigation and the CEO has also questioned past executive directors who also confirm that they are not aware of any such related party transactions," NZF Group's statement said.
Receiver's concerns & Mike Pero Mortgages' partners action
In its second report released earlier this week, NZF Money's receiver KordaMentha said NZF Money's loan book was "significantly overvalued' with a "significant level" of unrealised bad debts. The receiver estimates debenture holders will get back between 25% and 42% of their money. KordaMentha also said Hillview Trust, which is associated with NZF Money director Pat O'Connor, claims an interest in the proceeds of "certain loans" in priority to Covenant Trustee's interest. KordaMentha's Grant Graham and Brendon Gibson said they "do not yet agree Hillview Trust's view is valid."
NZF Group also owns 50% of Mike Pero MortgageHoldings. Last month it it received a statement of claim from parties representing Liberty Financial Limited, the co-owner of Mike Pero Mortgages, alleging NZF Group was in breach of a joint venture agreement between the two established in June 2006 to own Mike Pero Mortgages. NZF Group says it's "vigorously defending" the allegations.
(Update adds comments from NZF Group).