Investigator clears Hartners

By ANNE GIBSON

The directors of Hartner Group did not dishonestly cause the collapse of their business, says the Government official charged with investigating the affair.

John McPherson, of the Companies Office at the Ministry for Economic Development, yesterday cleared Wayne and Gaile Hartner, with financial controller Mike McQuarrie, of cheating or deception during or after the $20 million-plus collapse.

Before a meeting with the disgruntled Hartner Group creditors' liquidation committee yesterday, McPherson said he had found "no evidence of any dishonesty", potentially scotching calls for the three directors to be charged with various offences for their part in the downfall.

His full findings into the collapse will not be unveiled for some weeks.

"They have done nothing dishonest as far as I can see, but you can never be certain with these things," McPherson said.

Hartner Group and Hartner Construction (in receivership and liquidation) collapsed on February 1 last year, owing more than 400 creditors at least $23 million.

The Onehunga building business started by chippie Wayne Hartner and his wife Gaile in 1970, became one of New Zealand's largest construction and development firms.

It spawned many offshoots, including upmarket furnishings store Lifestyle Interiors in Newmarket, and owned a half share in Excell Corporation, the works business unit of Manukau City Council that had been sold to private investors.

Hartner was building five of the six new Princes Wharf apartment buildings, including the Hilton Hotel, when it went under.

Wayne Hartner partly blamed wharf developer David Henderson for not paying him, saying at the time that because Hartner Construction had not been paid, it had gone to the wall.

He also blamed the way that the industry was set up and claimed that he was a victim of the system.

The fallout sparked an overhaul of building legislation and led to the Construction Contracts Bill.

The act, expected to be introduced soon, is expected to bring about more prompt and regular payments in the building business and provide greater protection to subcontractors.

Hartner's downfall became a political football in June last year, when Winston Peters accused the Securities Commission of not supporting the Hartner creditors.

He said that was a "further indication of a state watchdog agency failing to carry out its responsibilities to protect innocent individuals from being fleeced by unscrupulous business activities".

McPherson said yesterday that he had finished his investigation into the Hartner fall and was writing a detailed report on the reasons behind it and the ensuing events.

He was expecting to present this to David Harte - the Hartner liquidator - of the Official Assignee's office within the next month.

He was sharply critical of the creditors' committee, saying that some members had acted unwisely and that they had unfounded theories about the collapse.

"They want an investigation to take place, but the facts don't fit the theories."

The committee has been demanding answers from Harte and McPherson about the collapse, listing 30 questions including issues of personal guarantees on payments and relationships between various companies.

Some committee members have been pushing for more Government involvement and have made allegations about various breaches of the law, particularly trading in relation to solvency and of the liability of directors when a company goes into liquidation and receivership.

But McPherson criticised some members of the committee -who he would not identify - and their tactics.

He accused them of leaking information to the media and refusing to let issues drop.

He had been told that TV3 was expected to film the meeting yesterday, but said he would not allow that.

"It's difficult to deal with the committee when they choose to go to the media with confidential things and when I'm rung by the media to say they have documents.

"It's not in the best interests of the whole process.

"I'll be explaining to the committee what they have done, and hopefully they will understand and not do it again, because it's really themselves they hurt rather than me.

"The creditors' committee are the only people who can benefit from the liquidation rather than me."

Members of the creditors' committee include building disputes arbitration expert Geoff Bayley of G. R. Bayley & Associates, Building Subcontractors Federation chief Peter Degerholm, Ian Caddis representing Consolidated Joinery Ltd and insolvency practitioner Bernie Montgomerie of Montgomerie and Associates.

One committee member spoken to yesterday, who did not want to be identified, said the Hartner issue "is not a dead duck - the heat is about to be turned up in the kitchen".

David Harte of the Official Assignee's office said the list of questions had only just been received from the committee.

"We're just having a look at them and we'd like to talk to the committee about them".

The Securities Commission rejected a bid for statutory management of Hartners last year.

It said that the Official Assignee as liquidator would examine "whether there were voidable transactions in respect of Hartner Construction, the cause of the failure, the role of the [National] Bank and its advisers in the affairs of the company, whether Hartner Construction was involved in reckless trading or trading while insolvent, accounting records, directors' remuneration".

Other issues included whether the Hartner directors should be prohibited from being directors again, possible fraud, and when the company became insolvent. The liquidation committee said no statement would be issued yesterday.