A senior "consultant" to Five Star Consumer Finance has been linked to $19 million in loans that are being questioned by investigators, a new report has revealed.

Investigators working for the Ministry of Economic Development state that Neill Williams, who worked at the company, was a key connection to a large proportion of investors' money that has not been recovered.

The report also reveals that Williams had been involved in the failures of two other finance companies, and joined the Five Star Group while he was bankrupt and under strict working conditions.

However, "contrary to the assurances given to the Official Assignee", investigators at the ministry's National Enforcement Unit heard Williams acted as a "de facto director" with considerable influence over the company.

The National Enforcement Unit's report was considered by Companies Office deputy registrar Peter Barker, who was told the group failed owing about $140 million.

Barker banned the three directors who ran the Five Star Consumer Finance group from being involved in running any other company.

In making the banning order, Barker considered, then dismissed, concerns that his decision might prejudice other legal proceedings. He then banned the men for five years - the maximum possible term.

Marcus MacDonald, Nicholas Kirk and Anthony Bowden also face a civil case for more than $50 million that has been lodged against the directors by PricewaterhouseCoopers, which is handling the receivership.

As well, they - and Williams - face more than 140 criminal charges brought by the Companies Office. They have entered a plea of not guilty. An investigation by the Serious Fraud Office continues.

In considering the investigation, Barker did not make any finding on Williams, who was not technically a director. However, the report mentioned Williams as being behind a sharp increase in "commercial loans" from December 2005 until the group's collapse in 2007.

The increase was in contrast to the group's promises to shareholders that most of its loans were to consumer borrowers - the company offered finance for kitchen goods and home fittings in stores across the country.

The discrepancy was highlighted in the National Enforcement Unit report, which said Five Star wrote to investors after the Bridgecorp collapse to offer assurances about the quality of the loans made with their money.

The report said that two-thirds of the company's loans were for commercial purposes and "not ... consistent" with its claims. A supporting document described the lending as "radically different from what was represented to investors and to the public".

The main report said "... most, if not all, of these loans were to entities related to the directors and/or an employee (Mr Neill Allan Williams)".

It went on to say that the receiver and liquidators - who were examining the group's records - had said they were unable to find files or documentation for $18,925,234 in loans.

"It is understood that Mr Williams and/or his family are involved in all of the loans." There had been "poor results" in recovering the money.

Among information considered by the National Enforcement Unit was a briefing on Williams' background, which said he was involved in the failure of two other finance companies. The first, in the late 1980s, was BWH Nominees, which "collapsed, losing investors' money".

The second "also collapsed".

The unit was told that Williams was involved with the Five Star group from the start, but only after the Official Assignee, which oversees bankrupts, was told he would be a "consultant" with "peripheral duties".

Instead, Williams attended board meetings, signed cheques, oversaw the accounts and "dealt with investors as though he was a director", the report said.

Among the clients he dealt with on behalf of Five Star was a company called Golden Gallery, said the report. It outlined an allegation that Williams told Golden Gallery that it had to represent to auditors as correct a debt that they disputed, or the Five Star group would "cease to assist them".

In considering banning Bowden, Kirk and MacDonald, the report also highlighted a number of loans of "concern". The report was critical of the group's lending, saying it was "outside stated policies" and made at a time when the borrower could not afford to pay the money back.

A high number of those loans were within the company group, made in the six months before it collapsed, and the majority "will not be recovered".

Among these was a loan by Five Star Consumer through "third parties" to a company connected to the directors, which was then used to buy shares in the company that originally lent the money.

The practice was "outside the normal lending practices" of the group.

Another loan similarly of "concern" of $6.75 million was made to one company then used by another. The money was then partially repaid by yet another company.

FIVE STAR COLLAPSE

The Five Star Finance group of companies, which included Antares Finance Holdings Ltd, collapsed in late 2007, owing up to $70m to about 3000 investors.

Receivers have recovered for investors 22c of each dollar they invested, and hope to increase that to 25c.

Investors had been promised returns as high as 12 per cent from the group of companies.

Directors Nicholas George Kirk of Milford; lawyer Marcus Arthur MacDonald of Greenhithe; and chartered accountant Anthony Walpole Bowden, with Neill Allan Williams of East Tamaki, face a $58m lawsuit from the receivers.

They also face criminal charges relating to allegations of offering investments to the public without having a registered prospectus or investment statement.

A separate Serious Fraud Office investigation is ongoing.