Developer faces business probe

By David Fisher

Multimillionaire developer Andrew Krukziener is facing a possible legal ban from managing companies, after multiple business collapses associated with Auckland's landmark Metropolis tower.

Five years after defaulting on the bond repayments which helped build Metropolis, Krukziener continues to be haunted by the hotel and apartment tower, which should have been the jewel in the crown of his property career.

A string of companies connected with Metropolis have gone into liquidation in the past 18 months, recording losses of almost $4 million. Creditors, including Krukziener, have received less than 20c for every dollar they are owed.

The company failures have triggered a Registrar of Companies process which could force Krukziener to resign as director of more than 80 companies and step away from managing any.

Krukziener, who drives a Bentley and Lamborghini sports car, is confident he will be vindicated but knows the risks are considerable.

"The impact to me is huge," he said, when asked what the effect of a banning order would be.

Krukziener told the Herald on Sunday he was challenging a draft report to the Registrar of Companies, which wants him to explain why he should be allowed to keep running his businesses.

He expected the registrar to accept his explanations and not pass the banning order. He has until the end of October to make his case.

He dismissed the draft report by the Companies Office as routine.

"I understand that issues of this sort are routinely looked at by the registrar but that orders prohibiting a person from being a director on the kinds of grounds at issue here are extremely rare. I strongly oppose any suggestion that my position should be an exception."

Krukziener initially agreed to meet the Herald on Sunday and explain his position. Then, after taking advice, he sent an email saying: "... this matter should now be treated as if it were sub judice" and that he should not make any comment.

But in an earlier conversation, Krukziener said the liquidations were linked to the collapse of Metropolis, the 40-storey $180 million inner-city tower which he built in the late 1990s.

Metropolis is still considered a benchmark for quality and style, but it failed financially. A $21 million public bond issue was used to help finance the project, but Krukziener defaulted on payment in 2001, and the debt to those holding the bonds has increased to $30 million.

"The simple reality is that the reason for all those companies going into liquidation centres around one event, which was the Metropolis project, and the fact that I lost a huge amount of money from that project and those companies were all in various different ways related to that project."

Krukziener said he believed the Registrar of Companies had to be convinced that a director made a habit of not paying creditors.

"In our case, the only party owed money in any of those entities is IRD and myself. There is no trail of creditors at all for those companies. There is no trail other than the IRD and myself."

He said that the report before the Registrar of Companies was not surprising.

"Having 12 companies that have gone into liquidation, notwithstanding the reason, it's normal for this process to be undertaken."

Krukziener said he had investigated the success rate of banning orders brought by the Companies Office and believed he would succeed by challenging it. He said that the unit had an excellent "hit rate" in cases that weren't defended - those that went through automatically.

"If you do defend it, they don't have such a good hit rate."

Krukziener also dismissed the level of return to creditors from the liquidated companies. "Forget 20c in the dollar back. It's all been GST."

He said he believed the case was the latest strike in an ongoing battle with Inland Revenue. He said he had put many of his companies into liquidation himself, before Inland Revenue put them into liquidation, simply so he could choose his own liquidator.

"At the end of the day, given the IRD's malice, we didn't want to have their favourite liquidator acting in a way that was [preferential] to one creditor as opposed to all creditors. The IRD wanted to appoint their liquidator, and we wanted to appoint ours, and we appointed ours, which we had every right to do legally."

Liquidator Lloyd Hayward of Meltzer Mason Heath refused to comment. Asked why the companies returned less than 20c in the dollar, he said: "Because there are no assets. Or if there are, they are not recoverable."

Companies Office securities and corporate compliance manager John McPherson said the banning process was automatically triggered by two or more companies going into liquidation, and Krukziener had to defend himself, he said.

McPherson said Krukziener had a "good chance" of making his case for the order not to be applied in this instance.

"For the moment, he is not banned and he may not be banned."

Curse of the failure of Metropolis continues to dog the career ofproperty developer Andrew Krukziener

Andrew Krukziener was once caught doing 103km/h down Tamaki Drive in his Bentley, worth $350,000.

When he was disqualified from driving and fined $800, the 41-year-old millionaire walked out of the courtroom and straight into microphones. He dug his heels in.

It might have been raining, and visibility might have been poor, but the waterfront is "like a four-lane motorway" with a 50km/h zone.

"Hardly an adrenaline rush," he said, dismissing the case, and heading off to get married the next day.

It was a flashy display. But Krukziener loves a show. The speeding Bentley is not the only one registered to his name; there are at least three. And a Lamborghini, and a Mercedes.

It was not his first speeding conviction. "He's a very good driver, but he has always been a speedster," friend Olly Newland told the New Zealand Herald at the time.

Forgive him, he asked, because Krukziener was "one of those characters who makes the world go around".

The next day, Krukziener married Iranian beauty Gitta, the sister of Gilda who had already married James Kirkpatrick, 76, worth $80 million.

Gitta converted to Judaism before the marriage; Krukziener's parents, Abraham and Vera, are both Holocaust survivors.

The wedding was a matrimonial fast car - guests were greeted by two young lions and their handlers. The swimming pool was filled with white swans.

His offices on Quay St look out over the Waitemata Harbour. It's a closer view than from the penthouse of Metropolis, which he has bought and sold a number of times.

Newland plucked Krukziener out of nowhere at age 21. "The guy's basically a genius. His grasp of detail and concepts is amazing."

Asked about the Registrar of Companies action this week, he refused to comment.

Krukziener started in property buying a block of 10 Onehunga flats aged 20. In 18 months he and his partner had 180 properties.

He then started buying warehouses in the city and sold them off as apartments. Each project was bigger than the last - until Metropolis.

He told the Independent this year that he is annoyed that his career has been defined by Metropolis. "We've done 85 developments, and we screwed one up, but it was high profile, worthy of media commentary, and involved public money." This should be set against 20 years in the business and $900 million of developments. He told the Business Weekly he had lost $21m himself on the deal, and had returned 43 cents in the dollar to creditors. "I felt guilty that it had failed, but I did everything humanly in my power to make it a success."

Last week Krukziener was adamant that each company failure now being considered by the Registrar of Companies was linked to Metropolis.

It's threatened for years, and threatens again to dog his empire.

Again, it's his albatross.

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