A Wanaka accountant has been ordered to pay more than $26,000 after he was appointed receiver of a failed winemaker despite an obvious conflict of interest.
Alistair Rickard King was found guilty of breaching the New Zealand Institute of Chartered Accountants' (NZICA) code of ethics, in a decision released today.
At the time King was appointed receiver of William Hill Winery Limited (WHWL) in May 2009, he was already representing another client associated with the Central Otago winery.
The NZICA disciplinary tribunal said King accepted the appointment as receiver "in circumstances where safeguards were not and/or could not be employed to manage the risk of adversely affecting either client".
In his role of receiver, King was acting on behalf of Southland Building Society (SBS), the secured creditor for the winery.
King's other client was granted name suppression but referred to as 'Mr Y' by the tribunal.
"During the course of the insolvency engagement he (King) failed to withdraw immediately from the engagement when he knew or ought to have known that the interests of SBS and Mr Y were in direct conflict," the tribunal said.
In particular, King should have recognised the dilemma when he wrote to Mr Y around June 22, 2009.
In that letter he said Mr Y no longer had the right to deal with the wine and barrels in WHWL's possession. The reason for this was that Mr Y's security interest in the property was ranked behind a security interest held by SBS.
The tribunal described King as "a relatively new but enthusiastic practitioner who failed to identify and/or manage a conflict of interest when accepting an appointment as receiver".
However, it said there was no evidence of lack of fitness to practise or lack of integrity on King's part.
King pleaded guilty to the charges of breaching the NZICA's Rules and/or Code of Ethics and was ordered to pay $26,488 for costs and expenses.
He has 14 days to appeal the decision in writing.