A fixed interest investment portfolio managed by the Bank of New Zealand has withdrawn from a global bond fund managed by a subsidiary of NZX-listed Pyne Gould Corp, whose auditors resigned over a disagreement with the company early this month.
In a letter to clients dated May 8, BNZ said that following a review conducted by its Private Bank research team, the investment review committee (IRC) had approved some changes to customers' portfolios.
The letter said Pyne Gould Corp's Perpetual Global Bond Fund had been removed from the IRC's recommended list and replaced with Russell Investments' Global Fixed Interest Fund.
"The primary reason for this is the under-performance of the Perpetual Global Bond Fund," the bank said. "However, developments last week raised some concerns," it said.
Perpetual Global Bond Fund is managed by Perpetual Asset Management - a subsidiary Pyne Gould Corp.
On May 1, Pyne Gould Corp's auditor, KMPG, resigned, citing "unresolved differences as to whether certain transactions should be disclosed as related party transactions, and concerns over the adequacy of governance and management of financial reporting".
Financial Markets Authority (FMA) chief executive Sean Hughes has said the FMA was aware of the issues between KPMG and Pyne Gould Corp and that it had been "actively engaging" with the company.
Pyne Gould Corp chairman Bryan Mogridge said at the time that the company strongly rejected the claims by KPMG.
In its letter to investors, BNZ Private Bank said it normally gives 15 days notice of any changes to portfolios.
"However, in this instance we considered it to be in our clients' best interests to take immediate action," it said. "Therefore all funds held in the Perpetual Global Fund have been redeemed on May 8, 2012," it said.
Pyne Gould Corp is majority owned by George Kerr's investment vehicle Australasian Equity Partners.
The departure of KPMG came just weeks after managing director John Duncan resigned suddenly. He was replaced by group managing director, George Kerr.
Kerr and his investment partner Baker Street Capital have been trying to take over the business.
Last year they opened a 37c a share offer, well below a range of 49c to 57c which was placed on the company by an independent valuer.
When the offer closed on March 30, Australasian Equity Partners had 76.3 per cent of the shares - short of the 90 per cent needed to compulsorily acquire the company.
The company has three divisions - Perpetual Group, Torchlight Investment Group and Property Group.
Pyne Gould Corp owns 9.5 per cent of rural services company PGG Wrightson and 6 per cent of listed financial services firm, Heartland New Zealand.
Its shares last traded at 31c each.