Business Editor for the NZ Herald

Insurance boss found guilty of fraud

Insurance broker Grant Herbert leaves the Auckland District Court. Photo / Dean Purcell
Insurance broker Grant Herbert leaves the Auckland District Court. Photo / Dean Purcell

A now-bankrupt insurance broker who shared a kickback with a senior manager at Bunnings Warehouse in order to keep the hardware chain's business has today been found guilty of 24 charges.

Grant Herbert last month denied 18 Crimes Act charges of theft by a person by a special relationship. The former boss of failed insurance broker Herbert Insurance also pleaded not guilty to eight charges under the Secret Commissions Act for allegedly corruptly gifting to an agent.

Before the trial Herbert admitted to using a forged document in relation to obtaining a credit facility in the sum of $250,000, it can now be revealed.

In 2003, Herbert approached a close friend who was a manager for Bunnings Warehouse, One of this man's responsibilities related to Bunnings' insurance.

It was alleged Herbert proposed an arrangement where the pair would share a secret commission or "kickback" in return for Bunnings using Herbert Insurance's services.

The Bunnings manager provided "sham" valuation surveys to Herbert Insurance, as a front for receiving the secret commissions.

When the Bunnings employee submitted invoices for these surveys to Herbert Insurance, the insurance boss would incorporate the fees into the insurance premiums which were then charged to the hardware chain.

The indictment against Herbert alleged he paid the Bunnings manager $159,000 between 2003 and 2010.

Herbert was managing director of Herbert Insurance from 1991 until it collapsed in March 2011.

As an insurance broker, the company was paid clients' premiums and forwarded the money on to insurance companies, taking a commission from it.

The company was required to keep these customer premiums in a separate account.

However, between February 2009 and when the company went into receivership in March 2011, customer premiums were transferred into Herbert Insurance's operating account and used to meet a variety of Herbert's and the business' expenses, the court heard last month.

The amount involved was about $2.5 million, the SFO said today.

The Crown case was that Herbert was operating a money go round where money was coming in from certain customers and being used to make payments which should have already been made with other client funds.

In some cases, Herbert's paying customers had no insurance cover in place.

Herbert today was found guilty by a jury of all but two of the charges he faced, the SFO said in a statement.

He was found not guilty of one Crimes Act charge and one Secret Commissions Act charge, the SFO said.

"Mr Herbert breached the confidence and trust of both the insurers he worked with and his clients, many of whom were exposed to potentially significant losses when they were misled by Mr Herbert into believing they were insured. The offending Mr Herbert engaged in undermines the insurance broking industry and the insurance industry itself, which is largely based on trust. Fortunately Mr Herbert had very limited involvement in brokering insurance for Christchurch clients who are currently a priority focus of the insurance industry, " SFO Director Julie Read said today.

Herbert is on bail and will be sentenced in October.

- NZ Herald

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