Tax woes dog Canterbury man

David Teece is a prominent academic and businessman in the US. Photo / Paul Estcourt

A Business Herald investigation has revealed intriguing details about one of the main shareholders behind the struggling Canterbury sportswear company.

David Teece, who with two American partners acquired Canterbury in 1999, has been investigated by US authorities regarding his tax affairs. In April, the US Tax Court ordered Teece and his wife Leigh to pay US$1.8 million in back taxes.

According to a report in Forbes magazine, the Inland Revenue Service originally alleged Teece and his wife owed US$12 million in back taxes and penalties, after claiming US$21 million in bogus short-term capital losses. Forbes has also reported that a US holding company linked to Canterbury, which Teece controls, is alleged by the IRS to have improperly deducted US$1.9 million in expenses in 2000 and 2001. Court records on the case are incomplete, so it is unclear whether the case has been settled.

Teece was born in New Zealand, and is now a prominent academic and businessman in the US. He is said to have strong political connections with the Republican and Democratic parties, and has been credited as a key figure behind some of Tony Blair's economic policies.

He declined to speak to the Business Herald about his tax cases, or his involvement with Canterbury. The company's European division was placed in administration this week, and the entire group is now up for sale.

According to Companies Office records, Teece is Canterbury's second-biggest shareholder, behind an Islamic bank. He is a regular visitor to New Zealand and still owns property here. The NBR Rich List last year estimated he was worth $150 million.

Teece is believed to be friendly with former Act candidate and former Treasury secretary Graham Scott, who was recently hired by the National Party as an adviser, and also has several links with former National Party Finance Minister Ruth Richardson. Richardson was a director of Canterbury in 2001 and 2002, and chaired the company in 2005 and 2006. She is also a director of the US-based Law and Economic Consulting Group (LECG), which Teece co-founded. In January last year, LECG noted that it had become aware that Teece, who is vice-chairman of the company, was being sued by US tax authorities.

It described the case as a civil matter which had nothing to do with the company, and said its directors were "currently reviewing the situation". Just a few weeks previously, it had agreed to pay Teece a US$10 million retention bonus to keep him for the next seven years.

Meanwhile, a former managing director of Canterbury has warned that the brand could be seriously damaged by the decision to immediately sever its sponsorship deals with top sports teams in Europe.

Terry Iggo said: "It's going to cripple whatever's left of the brand internationally, because if you can't meet your sponsorship deals, you're dead. It doesn't matter who tries to pick it up again - it could be a vertical climb."