SFO probes Canterbury Asset Management property failures

Friday 16th February 2001

NO PROSPECTUS: Metro City apartment development

By Chris Hutching

The Serious Fraud Office is continuing to investigate the use of investor funds behind the failed Metro City apartment development in central Auckland, the liquidator of one of the companies confirmed yesterday.

Stephen Tubbs of BDO Spicers said he had completed his first liquidator's report on Canterbury Asset Management, the company that promoted the Metro City apartments to investors, as well as an upmarket residential subdivision near Blenheim called Marlborough Ridge.

Both projects involved Garry Lawrence, a director, shareholder and investment adviser of Canterbury Asset Management. He teamed up with developer Colin Lofts on several development projects but they failed to sell. BNZ appointed receivers to Metro City on a debt of $5 million, and at Marlborough Ridge the ANZ called in receivers over a $4 million debt.

Canterbury Asset Management clients are understood to have had another $1.7 million tied up at Marlborough Ridge.

Mr Lawrence is not taking proceedings lying down. He disputes Mr Tubbs' decision to waive a creditors' meeting because he hopes to appoint an alternative liquidator and work with him to salvage tax losses possibly available to Canterbury Asset Management, with the ultimate aim of recovering something for investors. Mr Tubbs has placed the matter in the hands of his firm's solicitors.

Mr Tubbs said investors became concerned in 1999 about discrepancies between what Canterbury Asset Management said would happen with investors' money and what did happen. He said there was little if any hope of return of money to creditors.

"It is apparent that Canterbury Asset Management had possibly breached the Securities Act and the Fair Trading Act due to the non-issuance of prospectus and not following what would be done as stated in some information memoranda," he said.

A potential witness interviewed by the Serious Fraud Office told The National Business Review this week that investigators were focusing on whether Canterbury Asset Management's promotions constituted an offer to the public - requiring a prospectus - or to the select group of investors who had a client relationship with the company.

Meanwhile, the receiver of Metro City Apartments, David Davidson of PricewaterhouseCoopers, has sold all 64 apartments to one buyer at a significant discount to the original prices. The apartments are being re-advertised for sale in Auckland at competitive prices. Mr Davidson said he believed the first debenture holder was seeking judgment against developer Mr Lofts relating to guarantees.

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