Fall of the House of Du Val: Are Kiwis doomed to repeat the same property mistakes?

The dramatic rise and fall of the Du Val property group is documented in a new podcast from BusinessDesk. Image / BusinessDesk

A group of first-year university students say they would be suspicious if a company they were looking at investing in recommended a lawyer or accountant to go to for advice.

The fifth episode of The Fall of the House of Du Val explores whether Kiwis’ love affair with property dooms them to keep repeating the same investment mistakes, or whether a new generation is seeing the light.

The students have never heard of the $268 million Du Val collapse and aren’t told what the podcast is about, but are asked to react to various features of an investment scheme.

In earlier episodes the podcast hears that Du Val was accused of getting docile professionals to sign eligibility certificates for investors, and that in the 2010s the failed Blue Chip property scheme made use of tame lawyers.

The students reckon they can handle an unregulated investment, but the idea of being steered towards a certain accountant or lawyer is a bridge too far.

“I’d want to, like, proffer the idea of using my own lawyer and see how they’d react,” law and finance student Luca Armitage says.

“I absolutely agree, just not being peer pressured into anything, and just holding your own, like standing for yourself … definitely,” marketing student Cleo Yee said.

The students are also wary of self-promoting founders who flash their wealth.

“I think having the need to flaunt their wealth that hard could be a red flag, because it shows that maybe all the good things aren’t in their work,” engineering student Harry Smart says.

Auckland University Business School lecturer Shohil Kishore tells the podcast that social media has a unique effect on people because it mixes friendship and family with advertising.

The trust it creates allows promoters of high-risk investment schemes to hide behind a veil of suitability.

“You could be scrolling through Instagram, say, and you would see something like an ad, which, your friend has liked this page, they follow this page. And that immediately gives you a little bit of, ‘oh, this seems legit’.”

In the episode, Retirement Commissioner Jane Wrightson outlines her ‘Five Golden Rules for Mum and Dad property investors’, which she says those who fancy themselves as property tycoons fundamentally and perennially fail to understand.

While Du Val founder Kenyon Clarke continues to insist that the regulator, the Financial Markets Authority, is to blame for the collapse of the property group, the outlook for investors owed $64m is bleak.

Russell McVeagh partner Matt Kersey, an expert in the Government-appointed regime of statutory management, says it’s only used in extreme circumstances.

In theory, it has the potential to protect people, such as in the case of a failed airline or bank.

But “I wouldn’t say it’s a good sign that a company you’ve invested in is subject to statutory management”, Kersey says.

The Fall of the House of Du Val was made with the support of the Milford Foundation’s Brian Gaynor Business Journalism Initiative and MoneyHub.

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