The trial of former New Zealand Wine Company chief executive Peter Scutts over allegations of kickbacks continues today in the High Court at Auckland.
In a case brought by the Serious Fraud Office, Scutts is facing 16 Crimes Act charges of dishonestly using a document and one Secret Commission Act charge of receiving secret reward for procuring contracts. He has pleaded not guilty to all charges.
In the High Court yesterday, Crown prosecutor Rachael Reed said Scutts played a "double game" in early 2011, working for the New Zealand Wine Company (NZWC), which he later became chief executive of, while also receiving kickbacks from Australian wine wholesaler Liquor Marketing Group (LMG).
Scutts received A$1 for each case of wine supplied, the kickbacks ultimately totalling A$53,000, Reed said.
NZWC did not know of the reward paid and it was in direct conflict with his role with them, she said.
NZWC first supplied wine to LMG in May 2011 and Scutts proceeded to invoice LMG in the name of his and his son's company, Rochfort Rees Wine Company, for what he recorded on the invoices as "marketing services".
The invoices were in fact "thinly disguised brokerage payments", which were hidden from NZWC, Reed said.
Scutts told SFO investigators that LMG had asked for photographs of the heads of NZWC winemakers, but they had refused, so an agreement was reached where a photo of Scutts' son Oliver was used instead for a fee of A$1 per case sold.
The explanation defied logic and commercial reality as it was common practice in the industry for winemakers to provide marketing materials and wine tastings free, Reed said.
It also contradicted the evidence as Oliver Scutts' image appeared on marketing materials for only six months, yet Peter Scutts invoiced for 15 months of "marketing services" from May 2011, Reed said.
Peter Scutts' lawyer John Billington said the "key and central difference" between the Crown and defence cases was the timing of the agreement between Scutts and LMG.
The agreement came about when the wine was on the water and it was realised that NZWC did not have the resources to market the wine in Australia, Billington said.
The agreement was also a good one for NZWC as Scutts supplied a significant volume of Marlborough savignon blanc to the market for a profit, during a wine glut in the Australasian market and when NZWC was under the scrutiny of its bankers and on the brink of insolvency, Billington said.
NZWC, whose stable included Grove Mill, Sanctuary and Frog Haven brands, merged with Foley Family Wines in September 2012 after shareholders agreed to Californian billionaire Bill Foley taking an 80 per cent stake in the company.
The trial, which is being held before Justice Mary Peters, is set down for the rest of this week.