Crafar income not declared, IRD tells court

May Wang hopes to pay creditors 6.5c in the dollar but the IRD wants her bankrupted. Photo / Greg Bowker

UBNZ, the company at the heart of the Natural Dairy deal, is receiving income from Fonterra for milk from the four Crafar farms it already owns but has not declared the money to the IRD despite claiming millions in GST refunds, a court heard yesterday.

Inland Revenue lawyer Nischal Malarao cross-examined UBNZ director May Wang at the High Court at Auckland on her personal and company tax history and obligations during a hearing to bankrupt her.

Wang is seeking court approval to pay her creditors 6.5c in the dollar, but the IRD wants her bankrupted over a $1.3 million debt it is owed.

Today, Wang's lawyer Paul Sills will cross-examine his client on her tax dealings.

Wang said Natural Dairy's proposed sale and purchase of a dozen Crafar farms would fall over if she was bankrupted.

UBNZ Asset Holdings already owns four Crafar farms it bought this year. Natural Dairy owns 20 per cent of UBNZ.

Malarao tried to ascertain how much Wang would personally benefit from the deal - if it eventually goes through.

Wang said if she was bankrupted she would be banned as a director and UBNZ would not be able to continue with Natural Dairy's deal.

Wang said she was a trustee, so apart from her fees, she would not personally benefit, despite being the sole shareholder of UBNZ Trustee, the entity set up to be the vendor.

The deal hit problems two weeks ago, when the Serious Fraud Office announced it was investigating the proposed sale and purchase agreements between UBNZ and Natural Dairy to determine if the transactions between the companies were fraudulent.

Wang said UBNZ and Natural Dairy were co-operating with the SFO and that the deal was "very transparent and due Overseas Investment Office approval".

Wang has been given $500,000 in future earnings from UBNZ and $800,000 from "friends and associates" for the creditors' proposal.

She would not openly disclose where the $800,000 had come from, saying she promised those people anonymity due to the intense public interest and media scrutiny on her, UBNZ and Natural Dairy.

A chambers hearing - closed to the media - was held to discuss where the money came from.

The Business Herald does not know whether the names of the people were disclosed.

Malarao said he needed to know who those people were and what their "character was".

But Sills argued they had a right to privacy and to not be drawn into the proceedings of UBNZ and Wang.

Malarao said Wang had not paid GST on the $500,000 payment from UBNZ Asset Holdings to UBNZ Trustee to pay off creditors or on another $200,000 she received from the group.

Wang said she was waiting for her accountants BDO to complete the returns and that all three companies in the group - UBNZ Asset Holdings, UBNZ Trustee and UBNZ Funds Management would be filed together.

UBNZ Asset Holdings has been receiving income from Fonterra for the milk four Crafar farms purchased this year are producing

The IRD says the income has not been declared but the company has filed GST returns of $24 million.

Malarao questioned why 37 companies Wang has been the director of had not filed about 300 taxreturns.

Wang answered that many of those companies never traded or had ceased trading.

The sale and purchase of the 12 Crafar farms in being considered by the Overseas Investment Office.