A now-bankrupt insurance broker who shared a kickback with a senior manager at Bunnings Warehouse in order to keep the hardware chain's business has today been jailed for four years and six months.
Grant Herbert was last month found guilty of 17 Crimes Act charges of theft by a person in a special relationship. The former boss of failed insurance broker Herbert Insurance was also found guilty of seven charges under the Secret Commissions Act for allegedly corruptly gifting to an agent.
Before his trial in the Auckland District Court Herbert admitted to using a forged document in relation to obtaining a credit facility in the sum of $250,000.
Herbert was managing director of Herbert Insurance from 1991 until it collapsed in March 2011.
As an insurance broker, the company was paid clients' premiums and forwarded the money on to insurance companies, taking a commission from it.
The company was required to keep these customer premiums in a separate account.
However, between February 2009 and when the company went into receivership in March 2011, customer premiums were transferred into Herbert Insurance's operating account and used to meet a variety of Herbert's and the business' expenses, the court heard during his trial.
The amount involved was about $2.5 million, said the Serious Fraud Office, which brought the prosecution against Herbert.
The Crown case was that Herbert was operating a "money-go-round" where money was coming in from certain customers and being used to make payments which should have already been made with other client funds.
In some cases, Herbert's paying customers had no insurance cover in place.
In 2003, Herbert approached a close friend, Christopher Green, who was a manager for Bunnings Warehouse. One of this man's responsibilities related to Bunnings' insurance.
It was alleged at trial that Herbert proposed an arrangement where the pair would share a secret commission or "kickback" in return for Bunnings using Herbert Insurance's services.
Green provided "sham" valuation surveys to Herbert Insurance, as a front for receiving the secret commissions.
When Green submitted invoices for these surveys to Herbert Insurance, the insurance boss would incorporate the fees into the insurance premiums which were then charged to the hardware chain.
The indictment against Herbert alleged he paid the Green $159,000 between 2003 and 2010.
Green was last year sentenced to five month's home detention while today Herbert received a sentence of four years six months in jail.
"Clients who were uninsured as a result of Mr Herbert's offences were exposed to a risk of loss many times greater than the cost of the premiums which they paid in good faith. These and the other offences of which he has been convicted represent serious breaches of trust on the part of Mr Herbert. Mr Herbert's conduct has also had the potential to damage the community's confidence in dealing with brokers and thereby damaged the interests of all those brokers who act honestly," SFO director Julie Read said today.