Cleared Digi-Tech four could seek $1m

By PAUL PANCKHURST


The four men cleared of conspiracy to defraud and money-laundering charges in the Serious Fraud Office's failed Digi-Tech prosecution could seek more than $1 million in costs.

Defence lawyers are considering applications for costs.

Back-of-an-envelope calculations put them at $300,000 to $400,000 for each of the four.

That would add to the cost of an investigation and prosecution that included hearings to take evidence in Hong Kong and the Netherlands and - finally - a five-week trial in the High Court at Auckland.

The SFO would not comment yesterday on the cost of the case so far.

Last Friday, Justice John Fogarty issued the reasons for the judgment which 13 days ago acquitted the men of two counts of conspiracy to defraud and 19 of money-laundering.

The four were: investment banker John Anthony Reid, former accountancy firm partner Peter William Russel, lawyer and accountant John Donald Currie, and Peter Michael Connolly.

In essence, the judge found that Digi-Tech and another scheme, NZIL - parts of a series of tax schemes for wealthy investors that included Trinity and Salisbury - were genuine attempts at tax dodges.

The SFO had alleged a "legitimate, if marginal, tax scheme" had been rendered a fraud by fictional transactions.

Justice Fogarty said he never doubted that Digi-Tech and NZIL were tax-avoidance structures.

But he was never persuaded of a conspiracy to defraud investors who put $16 million into the schemes, which offered potential tax benefits of a much larger scale.

The judge said it now seemed the Inland Revenue Department regarded key transactions in the scheme as real - a proposition "completely at odds" with the main premise of the SFO prosecution.