GoldTimes trustees facing civil action

Wayne Porter (left) and Peter Pharo

The trust which funded the Westpac rescue helicopter is suing former trustees Wayne Porter and Peter Pharo, claiming almost $7 million.

The claim is over the same financial arrangement which was at the centre of a criminal trial concluded nine days ago with the acquittal of Mr Porter, Mr Pharo and two others on charges of conspiracy to defraud.

The civil action, filed with the High Court in Auckland, is understood to claim that the former GoldTimes Foundation trustees breached their fiduciary duty in an advertising arrangement by which about half of the money raised through poker machines went to their pubs.

It is understood the trust got a legal opinion from a Queen's Counsel before filing its claim with the court. The claim was filed shortly before the criminal trial began early last month. Tasman Trust, formerly GoldTimes Foundation, is the plaintiff; Wayne Porter and Peter John Pharo are the defendants.

The standard of proof for civil litigation is "the balance of probabilities" which is lower than the standard - "beyond reasonable doubt" - in criminal cases.

Tasman Trust chairman Trevor Maxwell told the Herald the proceedings were at an early stage and he did not wish to comment further.

Mr Maxwell, a retired District Court judge, was appointed a trustee and the chairman of GoldTimes/Tasman in May 2002 after the Department of Internal Affairs and the Serious Fraud Office began investigating.

Paul White, a lawyer acting for Messrs Porter and Pharo, said the claim would be vigorously defended. He would not say more because the matter was before the court.

Mr Porter and Mr Pharo were trustees of GoldTimes from its inception as a charitable foundation in 1990. Its role was to collect and distribute the proceeds of pokie machines, minus legitimate expenses, to charities.

Mr Porter and Mr Pharo owned or had an interest in five of the pubs or clubs in which GoldTimes had pokie machines. They were paid a site rental by GoldTimes for housing the machines but also received a sum amounting to about half of the pokie machine revenue for advertising in an arrangement agreed with the Auckland Rescue Helicopter Trust, of which Mr Porter was also a trustee.

The helicopter trust received most of the grants paid by GoldTimes.

In the criminal case, the Serious Fraud Office alleged that the advertising payments bore no resemblance to the real value of advertising and that the arrangement was a rort.

The court heard the advertising money helped keep the pubs viable.

In summing up, Justice Christopher Allan told the jury that Goldtimes Trustees had a fiduciary duty to maximise gaming returns available for distribution to charities but that breaching that duty did not necessarily amount to criminal guilt.

The jury's job was to decide whether there had been a conspiracy involving dishonest intent.

Jurors took three hours to reach their not guilty verdict.

In 2003 the High Court ruled that gaming machine money was intended for charity and could not be used to subsidise pubs.

The case

* Wayne Porter and Peter Pharo owned or held an interest in hotels in Auckland including the Birdcage, the Palace Tavern, the Strand Tavern, Cazino Bar and Goldies Casino.

* Mr Porter and Mr Pharo were founding trustees of the GoldTimes Foundation which owned gaming machines in the Porter/Pharo pubs.

* Mr Porter was a trustee of the Auckland Rescue Helicopter Trust.

* GoldTimes paid the Porter/Pharo pubs a site fee for housing its machines. It distributed the bulk of income available to charity (income minus costs) to the rescue helicopter trust.

* The rescue helicopter trust paid half of the grants it received from GoldTimes to the Porter/Pharo pubs as advertising.