SFO recruits heavy-hitting QC in Digi-Tech case

By Deborah Hill Cone

Friday 26th April 2002

Jim Farmer QC

The Serious Fraud Office has scored a coup in signing up star litigator Jim Farmer to prosecute its fraud case against the promoters of the Digi-Tech investment scheme.

The move has pleased investors and raised eyebrows in the legal fraternity, with some questioning how the SFO can afford to pay one of the country's most expensive QCs.

Dr Farmer was the acting chairman of Air New Zealand during the airline's crisis and made his name representing major corporates in Australia and New Zealand in civil cases.

Four men - John Reid, Peter Connolly, Peter Russel and a man who has name suppression - have been charged with fraud and money laundering by the SFO in a prosecution relating to the Digi-Tech investment scheme.

Between 1995-97 local investors bought shares in small Wellington company Digi-Tech in a complex, supposedly tax- efficient deal.

But Inland Revenue deemed deductions made under the scheme were not valid and has been pursuing investors to pay it back an estimated total of $100 million in tax.

The IRD said there had been been "a significant degree of concession" by taxpayers and those who had not conceded had been given two months to reply to a notice of proposed adjustment.

Some local investors are believed to be putting together a civil case in this country against key figures involved in promoting the scheme.

Mr Russel is a former partner of accounting firm Gosling Chapman and Mr Reid is a principal of Milloy Reid Wong, which describes itself as a merchant bank.

The SFO said Dr Farmer is an appointed member of its panel of counsel and so is paid under the Crown solicitors' regulations, not the market rate, said by others to be up to $400 an hour.

When the case came up last week in the Auckland District Court they were remanded until May 3, with a depositions hearing expected to be set down for October.

A case against Mr Reid being taken by investors in Australia begins on May 6 in the New South Wales Supreme Court.

Dr Farmer is just one of a group of the country's top QCs who are being briefed on the fraud case, with John Haigh QC and John Billington QC acting for two of the defendants.

Last week we incorrectly described Dr Farmer as chairman of Air New Zealand. He is the former chairman and the present chairman is John Palmer. We apologise for the error.

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