Investment columnist for the NZ Herald

Brian Gaynor: Van Heeren's legal marathon keeps on running

Former partner still awaiting payout, despite winning in court.
L to R, Alex van Heeren, Catriona Williams and Stephanie Iremonger. Photo / Norrie Montgomery.
L to R, Alex van Heeren, Catriona Williams and Stephanie Iremonger. Photo / Norrie Montgomery.

Huka Lodge, one of New Zealand's best-known luxury retreats, is at the heart of an acrimonious dispute between 69-year-old Alex van Heeren and 74-year-old Michael Kidd.

The two businessmen have had a marathon 20-year court battle in New Zealand and South Africa over Huka Lodge and a number of other assets.

The courts have found in favour of Kidd and ordered van Heeren to pay US$25 million ($37 million) plus costs.

Van Heeren claims he cannot pay the US$25 million because most of his assets have been transferred to tax haven-based entities over which he has no control.

The story goes back to the mid-1970s, when British-born Kidd and Dutch-born van Heeren worked for a steel trading company in Johannesburg. In 1975 they set up their own steel trading company and in 1979 they formed Genan Trading in the Netherlands Antilles, a Caribbean tax haven. The formation of the company was effected in the Netherlands, with Kidd and van Heeren holding 50 per cent each.

Genan generated huge cash surpluses from steel trading - based on Kidd's trading expertise - while van Heeren looked after the company's finances.

In the early 1980s, the two shareholders, who were concerned about the political situation in South Africa, decided to emigrate to New Zealand under our "entrepreneurial scheme". They were both granted residency and purchased homes in Auckland. They also acquired a New Zealand company, Prime International Ltd.

Van Heeren moved to New Zealand in 1981 but Kidd stayed in South Africa because Genan Trading - and a number of jointly owned South African companies - continued to operate in the African country. Kidd moved back to the United Kingdom in 1987 to be closer to his family.

Van Heeren wasted no time in New Zealand. He was captivated by Huka Lodge when he saw it for the first time from the footbridge over the Huka Falls. The lodge had been established in the 1920s by Alan Pye, an Irishman who identified the stretch of the Waikato River just above Huka Falls as an excellent spot for fly fishing.

Worldwide Leisure, which was established by van Heeren in New Zealand, acquired Huka Lodge for $1.3 million in 1984.

The Dutchman was appointed Honorary Consul for The Netherlands in Auckland in 1985, a position he held until 2012.

Van Heeren now gives his home address in Belgium, where he is the Honorary Consul for New Zealand to a number of Belgian provinces.

Meanwhile, back in the 1980s van Heeren purchased a significant shareholding in Wellesley Resources, one of the high-flying NZX property companies in the mid-1980s. He sold the stake for $30 million just three months before the 1987 sharemarket crash. The Wellesley investment demonstrated that van Heeren was an astute investor.

However, the two partners began to have major disagreements in the late 1980s. In 1991 they finalised an agreement in South Africa to terminate their relationship and divide their business assets. This agreement has been at the centre of their bitter dispute.

Meanwhile, van Heeren continued to expand his New Zealand business network. In 1993 he obtained a 9.1 per cent shareholding in the Fay, Richwhite consortium that purchased New Zealand Rail from the Crown.

New Zealand Rail changed its name to Tranz Rail and listed on the NZX. In 1998 van Heeren sold his shares for a profit of more than $42 million, just before Tranz Rail's share price crashed.

In February 1996 Kidd filed proceedings in New Zealand challenging aspects of his 1991 agreement with van Heeren.

The proceedings covered the following main assets:
- Huka Lodge.

- 80 per cent of Optech International, a New Zealand property development company that owns property next to Huka Lodge.

- Shares and assets of Prime International.

- The 14 million Wellesley Resources shares sold in 1987.

- Dolphin Island in Fiji, a 5.6ha private retreat.

- The shares and assets of Netherlands Antilles-based Genan Trading.

- Gold bars and bearer certificates.

Kidd claimed that he continued to have beneficial interests in these assets as the 1991 agreement covered only a small number of South African companies. He argued that he had been "unfairly and unconscionably manipulated by van Heeren, resulting in van Heeren ending up with control of far more than his half-share interest in the enterprises".

In September and October 1997, van Heeren successfully argued before the New Zealand courts that the dispute should be heard before South African courts because the 1991 agreement had been executed in that country.

The South African court hearing, which lasted six weeks, did not start until January 28, 2013.

Justice Satchwell found for Kidd in her May 21, 2013 judgment. She said that the 1991 agreement did not terminate the long-term partnership between Kidd and van Heeren as it applied only to a small number of South African companies.

Van Heeren did not give evidence before the South African court. He sought leave to appeal Justice Satchwell's decision but the Supreme Court of South Africa dismissed his application on October 31, 2013.

The action then swung back to New Zealand, where the High Court upheld Kidd's caveats over Huka Lodge. The hearing revealed that the lodge had been purchased from Genan Trading funds, which were largely generated through Kidd's steel trading activities. Renovations and upgrades had been funded from the same Genan Trading source.

Nevertheless, van Heeren had tried to deprive Kidd of any interest in the lodge through the 1991 agreement.

Kidd and van Heeren faced each other again in the High Court of New Zealand in February last year. Justice Fogarty made a number of orders including an interim payment of US$25 million by van Heeren to Kidd for the latter's interests in the non-South African assets.

Since then there have been a large number of additional hearings in New Zealand containing the following revelations:

- In 2006 van Heeren transferred his 100 per cent holding in Worldwide Leisure, the owner of Huka Lodge, to Dutch-based Saraceno Holdings.

- Optech International, which owns land next to Huka Lodge, is now fully owned by a Netherland Antilles company.

- Van Heeren "doesn't know what happened to" the proceeds from the sale of the Wellesley shares. If this money was invested in Tranz Rail, then Kidd would be entitled to his share of the $42 million realised profit.

- Dolphin Island, in Fiji, is now owned by a company registered in the Isle of Man. The Dolphin Island ownership was shifted to the Liechtenstein-based Timbavati Foundation and finally to Gerda Foundation, which is also based in Liechtenstein.

Van Heeren argues that most of the New Zealand assets are ultimately controlled by this Gerda Foundation, over which he has no control. He told the New Zealand court that "neither my former wife Ann Marie nor I had any involvement in the settlement of the Gerda Foundation other than requesting the trustees of the Timbavati Foundation make the settlement (US$25 million payment to Kidd). I did not control the process".

Justice Fogarty took a different view. He wrote that transferring assets into small foreign jurisdictions was an attempt to protect these assets "from being the subject of scrutiny and attachment by other jurisdictions. The Netherland Antilles, the Isle of Man and Liechtenstein, all fall within this category".

In a letter dated July 3, 2015, the Gerda Foundation refused to provide any information to van Heeren because "the foundation bylaws in combination with our fiduciary duties as trustees do not allow us to disclose any information to third parties related to the foundation and/or its beneficiaries".

Kidd hasn't received his interim US$25 million payment, mainly because of van Heeren's carefully crafted tax haven structure. It looks as if Kidd will have to wait a long, long time for his money, even though the New Zealand Court of Appeal noted in December that "Mr Kidd, at the age of 74 years, is entitled to the fruits of his judgment".

Disclosure of interests; Brian Gaynor is an executive director of Milford Asset Management.

- NZ Herald

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