Westland District Property Ltd will receive a $1 million 'success fee' if consents for the Haast Hollyford road are granted.
A confidential disclosure document from parent company Westland Holdings Ltd to the Westland District Council, and leaked to the Guardian, sets out the main points of the controversial $220 million road proposal.
It also reveals New Zealand-based Blakely Construction Ltd and an Australian company as the backers of the road. Until now they have remained a tightly guarded secret. The Guardian has chosen to not reveal the Australian investor's identity.
Property company director Durham Havill said the leak had potentially undermined the entire project.
"I don't know what the repercussions of this will be. This was going to be the biggest project Westland had ever seen. The contractor and investor could very well walk away and say that we have breached the memorandum of understanding."
He said the document was only given to Westland district councillors after they complained that they wanted to be kept up to date on the project.
"It has destroyed our confidence in council.
"From my point of view it is sabotage. It is gut wrenching and it may be all because of one councillor."
He said the property company held off from informing councillors as it was concerned somebody would breach the confidentiality.
"This proves we were right."
Blakely Construction is a privately-owned Christchurch company which specialises in the subdivision and infrastructure sectors.
Mr Havill confirmed that his brother Geoffrey runs a mine on the West Coast on behalf of Blakely Construction.
The key parts of the memorandum between the two companies and Westland District Property are highlighted in the document, signed off by Westland Holdings chairman Graeme King.
It states there would be no financial risk to the property company, holding company or the council.
Instead, a separate company called Haast Hollyford Highway Ltd, would be established to own and acquire all the consents needed.
"This is to fund infrastructure that Westland would likely have to provide to cater for the additional tourist numbers."
The letter then states the property company would receive a success fee of $1m upon the granting of the necessary consents.
Mr Havill said the fee would be paid by the contractor, Blakely Construction, to the property company. An upgrade of a section of the road already in place between the Arawhata River and the Cascade River will be awarded to the council-owned Westroads for $30m.
"This contract would probably require Westroads to seek assistance from a number of other Westland-based contractors," the disclosure document states.
Mr Havill is also the chairman of Westroads, but yesterday denied there was any conflict of interest.
"It was part of a deal that was put together. It's in the best interest of the Westland district."
There are three "key levels of support" that need to be confirmed in the memorandum of understanding: support from Westland, Grey and Southland district councils. It goes on to state that a decision on the structure, including an assessment of the commitment of the Westland District Council and its councillors, must also be made.
The memo continues: "This is important as the project has already suffered from the negative publicity created by one councillor making headlines in relation to the project after council had confirmed its commitment. The outcome has seen publicity in Southland that has delayed their own decision making process and the backing off from an investor ...."
With support from the Westland council, the road company would become incorporated and seek investors to take up to $6m of capital, and purchase 100 per cent of the costs incurred by the property company and council, for cash.
It would also contract the management of the proposed toll road for a 30-year term.
After 30 years the road would revert to the Westland and Southland district councils.
Without support from the council the project would be at risk of "being disestablished for political reasons", the document states.
- Rebekah Lyell of the Hokitika Guardian
