KEY POINTS:
Fourteen years ago, when the first eager investors began snapping up Metropolis apartments off the plans, Andrew Krukziener never even considered failure.
The word had never entered his business vocabulary in the past so why should it now?
By the end of the first day of sale, 40
apartments had been sold. By the end of the first week, 100 had gone; another 100 by the end of the year and by mid 1998, more than 300 units - $112 million of property - had been sold.
Project Metropolis was all go.
As the new millennium approached the tower was completed.
It was when a group of Taiwanese investors, who had lent him $20 million to fund the land and pre-development costs, wanted their money back to invest in new projects with Krukziener that the trouble started.
To raise the $20 million needed, Krukziener issued property bonds (nicknamed "junk bonds" at the time), offering them to investors.
The bonds were unsecured and high risk - offering interest rates of 14 per cent at a time when the banks were offering less than half that.
More than 1600 investors clamoured to be part of the offer and within weeks the bonds were oversubscribed.
But as the new millennium dawned, the Auckland property market took a dive. Behind the scenes, Krukziener was desperately trying to refinance to pay the bondholders back on the due date. But in May 2001 the bonds defaulted and suddenly the darling of Auckland property development was in the firing line.
"When something like that happens, people want to see someone get hurt."
In hindsight, Krukziener says, he should have raised equity through a sharemarket issue, such as the Kiwi Income development of Vero Tower, rather than bonds.
"If shares go down 50 per cent, investors don't want to take someone out the back and beat them senseless."
He takes some comfort that the contractors, Multiplex Construction, and all sub-contractors and consultants were paid in full. The main parties out of pocket were the IRD and himself - and the bondholders who recovered 43 cents in the dollar.
But by then, the damage was done and Krukziener's name was mud.
Krukziener, too, was counting his losses.
He was forced to sell most of the $100 million property portfolio he had built up over the previous 15 years, he says.
Instead of being his crowning jewel, Metropolis triggered a chain of events that saw Krukziener battling to stave off bankruptcy, having to defend a threat of being banned as a director (which he won), and pursued by the IRD, a battle which has cost him hundreds of thousands of dollars in legal fees.
Faced with a Companies Office investigation to determine if he should be banned as a director - after a dozen companies associated with Metropolis went into liquidation - Krukziener fought back, gathering a stack of testimonials.
One accountant who helped Krukziener arrange finance wrote that he had "immense" energy, working a 20-hour day when he had to, and that ideas flowed from him "like the water over Victoria Falls."
Christine Fletcher, former Mayor of Auckland, said Krukziener was one of the few developers that the city "could truly trust to deliver at the end what he promised at the beginning".
An Auckland lawyer and businessman said New Zealand needed people with passion, energy and the propensity to take risk.
"We all get to ride the coat-tails and feed from the troughs provided by these fearless entrepreneurs ..." They should be celebrated, he said, and not become the subject of a witch hunt.
The investigation went in Krukziener's favour with the Registrar of Companies Neville Harris saying it would be unfair to ban Krukziener from running a company in the future.
Krukziener says: "In business, you take a risk ... The Government doesn't want to ban taking risks. It wants to ban idiots and crooks, to prevent those people hiding behind the veil of limited liability."
