Wanted Chinese businessman denied bail ahead of Australian extradition fight over alleged tax fraud

The Australian Government wants to prosecute Li Zhang over alleged tax offences. Photo / Sam Hurley

A Chinese businessman, who was living undetected in New Zealand, has been denied bail as he prepares to fight extradition to Australia over an alleged multimillion-dollar tax fraud.

Li Zhang, 56, appeared this morning in the High Court at Auckland as he attempted to be released on electronically-monitored bail while Australian authorities attempt to extradite and prosecute him.

The alleged fraud he is accused of is linked to a luxury New South Wales golf course and resort in which the Australian Government was allegedly defrauded of $10.5 million.

The total loss to the Australian Government is alleged to be more than $19m.

Zhang, who was earlier declined bail, will remain in a Kiwi prison after his failed appeal today, Justice Mark Woolford ruled.

Further details discussed at the hearing are prohibited from being published under the Bail Act.

Zhang's lawyer Quentin Duff has said his client will challenge the authority of the Australian extradition request at a hearing in August.

The Chinese-born Australian citizen had left New South Wales in 2009 after the Australian Taxation Office (ATO) and Australian Federal Police conducted a search warrant.

He then disappeared from authorities for a decade.

But on April 4 this year, Zhang was arrested by the New Zealand Police. It came after officers attended a minor car crash, Australian media reported.

An Australian warrant for his arrest was endorsed by New Zealand Judge Ajit Singh.

It became apparent that Zhang had been living at a high-end rental property north of Auckland. However, it remains unknown how long he has been living in New Zealand.

According to the ATO, Zhang owned the Chinese construction company Hightrade, whose more than 100 of its subsidiary companies collapsed 10 years ago.

The company's finance head, Simon Chan, also left Australia and has not returned.

Hightrade was used to engage in fraudulent behaviour during the construction of the Pokolbin golf course and its resort in the Hunter Valley, according to the ATO.

The Australian Government alleges the construction group inflated the cost of building the resort by more than $115m.

Hightrade executive Song (Peter) Chang was charged with tax fraud and so far is the only member of the company to face a criminal prosecution in Australia.

Chang was jailed in 2017 for five and a half years for conspiracy to defraud the Australian Government.