The now-vacant 61 Lowe St (Masonic) building in Gisborne's CBD was the registered head office for a web of property companies linked to the parents of convicted drug trafficker Thomas Cheng. Photo / Zoe Mills
Six companies belonging to the parents of a deported Singaporean drug lord previously based in Gisborne have been put into liquidation over unpaid tax.
The liquidations are the latest chapter in a lengthy legal battle over tax evasion spanning the last decade.
Six businesses collectively known as Cheng Group – William Cheng, Stardust Building, Andersons Building, Queens Hotel, Unitec Investment and commercial property vehicle KFC – were placed into liquidation by the High Court at Gisborne on September 25.
This followed an application from the Commissioner of Inland Revenue because Cheng Group had failed “to meet their obligations to Inland Revenue in respect of overdue GST and income tax, together with associated penalties and interest”.
Kristal Pihama and Leon Francis Bowker, of KPMG, were appointed liquidators.
The directors of Cheng Group included Chew Hong Nyioh, also known as “Winnie”, her husband William Cheng and Winston Franklin, who is deceased.
Cheng and Nyioh are the parents of convicted drug trafficker Thomas Cheng, who was based in Gisborne as landlord at Gisborne’s Masonic Hotel before his arrest in 2016.
He was sentenced to 10 years in prison in 2018 after being convicted of importing and supplying methamphetamine. He received additional charges for further offending from prison. He was released on parole and deported from New Zealand on June 15, 2023.
Six properties owned by companies associated with his parents Cheng and Nyioh were restrained under the Criminal Proceeds Recovery Act during Thomas Cheng’s criminal prosecution.
A further nine commercial properties and $10 million held in New Zealand bank accounts were restrained on suspicion of tax evasion and money laundering by his parents.
Six of the restrained buildings are in Gisborne, including the Masonic Hotel.
Police unsuccessfully applied for forfeiture of more than $20m in assets.
In 2023, High Court Justice Francis Cooke concluded there was no evidence of money laundering through the buildings, but they were “in a world of trouble” with IRD for “blatant” tax evasion, which he accepted had been proven on the balance of probabilities.
Justice Cooke’s decision to decline the profit forfeiture order was appealed by the Commissioner of Police in the Court of Appeal.
Justices Courtney, Mallon and Hinton made a profit forfeiture order of just over $1.6m from Cheng and Nyioh’s frozen bank accounts for Cheng Group under the Criminal Proceeds Recovery Act for significant tax evasion last year.
According to court documents, the Commissioner of Inland Revenue assessed the total tax owed by 18 companies associated with Cheng and Nyioh at $11,443,457, including penalties and interest, as at February 15, 2023. The $1.6m seized by police was part of this sum.
The companies now in liquidation were party to these proceedings.
Pihama and Bowker, in their first liquidators’ report on November 2, noted they had been advised there were no separate bank accounts for the properties, leases and rental expenses under the six businesses. The directors funnelled everything through the family trust bank account or their personal bank accounts.
They engaged with Nyioh and her solicitor to understand the companies’ business and affairs.
She had taken on the primary responsibilities of managing the Cheng Group companies as Cheng was receiving fulltime medical care in Malaysia.
“The director has advised that the companies were established to acquire and hold property investments in New Zealand,” the liquidators wrote.
Before liquidation, Cheng Group’s office was registered at 61 Lowe St (the Masonic building) in Gisborne’s CBD.
Six properties are linked to the businesses. Three are in Whanganui (148 Victoria Ave, 50 Victoria Ave, 168 Ridgeway St), one in Te Puke (150 Jellicoe St), one in Timaru (2 Barnard St) and one in Pahīatua (120 Main St).
The properties are linked to mortgages held by Singapore-based company Mortgage International LLP, another entity related to Nyioh and Cheng.
“The liquidators have contacted the current tenants of the properties and are reviewing the lease documentation provided. The liquidators understand that some of the properties are unoccupied and have been for an extended period.”
Three of the companies, unnamed in the first report, receive rental income through their respective properties.
Creditors reportedly claimed $765,089 at this stage.
The highest reportedly owed by a single entity was Unitec Investment at $224,664, followed by William Cheng Ltd ($190,246) and KFC ($119,016).
Two creditors are listed. Mortgage International is listed as the sole secured creditor. IRD is listed as a preferential creditor and a known and potential unsecured creditor.
Liquidators had received interest from “several parties” about buying the properties.
“The liquidators are currently awaiting further information from the properties’ mortgagee before determining a marketing and sale process.”
While the companies were parties to legal proceedings involving Cheng and his son, the liquidators said this was not expected to affect the conduct of the liquidations as they were concluded.
At this stage, liquidators wrote, “it is not possible to provide an estimated date for the completion of the liquidation”.
Nyioh and her solicitor have been approached for comment.
In 2024, Gisborne Mayor Rehette Stoltz wrote to the Government asking for stronger laws for landlords who maintained commercial buildings. She said the council found it “impossible” to address the building issues with Cheng’s New Zealand representative.
All creditors should contact Henry Wang of KPMG.