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Lid lifted on Tainui cash shambles

By Jock Anderson

Friday 8th September 2000

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MDC Investment Holdings - the high flying, high risk investment arm for Tainui's historic 1997 $170 million raupatu settlement - was hopelessly insolvent at least a year ago.

The company, previously headed by Waari Ward-Holmes and which promised "significant results" from 2001, was placed in liquidation by High Court order on August 7.

Sketchy details of Tainui's disastrous financial record, first exposed by The National Business Review in 1998, are being officially unearthed.

In Tainui's complex borrowing maze - full details of which still remain a mystery - MDC Investment Holdings is understood to owe parent company Tainui Group Holdings $18-20 million.

MDC Investment Holdings owned or controlled 15 known subsidiaries in a tangle of nearly 30 Tainui companies.

Liquidator Anthony McCullagh, acting for creditor ASB Bank, which is owed nearly $1 million, said he had yet to see evidence that MDC Investment Holdings conducted itself in a "business-like fashion."

Mr McCullagh said the company minute-book contained no record of major transactions, minutes or resolutions, which suggested the company had not followed legal procedures.

Of major concern was the discovery that the Friday before the Monday, when MDC Investment Holdings was placed in liquidation, it assigned a $6.27 million debenture over the Warriors league club to Tainui Group Holdings for $1.

MDC Investment Holdings owned two-thirds of the Warriors, with the remaining third owned by Graham Lowe and Malcolm Boyle, who said they knew nothing of the assignment or the debenture.

Tainui Group Holdings subsequently made a demand for payment of the $6.27 million on Warriors companies Rugby League People and Auckland Warriors Rugby League.

Mr McCullagh said circumstances surrounding the debenture and its assignment amounted to a major transaction and he was considering his options under the two-year rule and voidable preference.

Mr McCullagh said the move on the Warriors raised issues such as the unquantified value of the brand and a debt of $1 million the club still owed to the Auckland rugby league.

The fate of the broke Warriors was also embroiled in transtasman political machinations surrounding its future in the National Rugby League.

Mr Boyle said the Warriors, while cash-strapped, had a value in respect of five years remaining on its NRL licence, a $A2 million annual payment from the NRL, 35 player contracts and a lease on facilities at Auckland's Ericsson stadium.

Meanwhile, talks over the sale of the Warriors appear to have stalled. And the storm over which group of people runs Tainui heads back to Hamilton High Court on Wednesday.

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