Safari Group, which builds high-rise hotels around the country, is embroiled in a court case over what it says was five years of fraud committed by Concept Builders Queenstown Ltd.
The alleged swindle involved Safari being invoiced for "ghost contractors" who did not exist and for the time of real contractors who did not work the hours claimed.
A senior staff member at Safari, Martin Dunning, who left his role last year, was implicated as the inside man and Concept owner Martin Lawn said he was simply an unwitting accomplice.
In 2020, two Safari employees received an anonymous email claiming Mr Dunning had been involved in a shady plot.
"The directors ... were very doubtful of the truth of this suggestion, given the trust they had in [him], and he emphatically denied it," Justice Rob Osborne wrote in a judgement last year.
But an investigation in November 2022 appeared to substantiate the allegations.
When Mr Dunning was served with court documents, he allegedly made "implied admissions" to Safari director Robert Neil, which further implicated Concept, and elaborated on his comments during a later meeting with an investigator in December, the court heard.
Safari’s inquiry found that since 2020, Mr Dunning had opened new bank accounts and made "significant payments" towards his mortgages.
In December, an order was made to freeze his assets and the High Court at Invercargill also made a similar ruling in relation to Mr Lawn and his firm.
Justice Osborne noted there had been evidence of conversations between the two men after court action was instigated and that "very recently" Mr Lawn had put his house up for sale.
By May, Safari’s case with Mr Dunning was settled out of court and his name suppression lapsed in August.
Later that month, Concept and Mr Lawn returned to the High Court in a bid to have the freezing order overturned.
However, Justice Peter Churchman noted there was some concession on their part.
"They have admitted they knew the ghost contractors were not working for [them], and that they were charging a $15 per hour per labourer ‘administration fee’ for placing the ghost contractors on Concept invoices," he said.
The evidence of wrongdoing had strengthened in the last year, the judge said.
Among it was a statement from a contractor whom Safari suspected was used to overcharge them, in which he stated he was not working in Queenstown when Concept continued to charge for his labour.
Lawyers for Safari argued Mr Lawn’s emails implied that from at least 2016, he was aware that at least one ghost contractor did not exist.
An affidavit regarding an online conversation between Mr Lawn and Mr Dunning "joking" about a specific ghost contractor contained opinion and was ruled inadmissible by Justice Churchman, but he decided there was enough evidence to maintain the freezing order.
The court heard Concept had minimal liquid assets and had transferred out about $1,082,037 in loans and advances to Mr Lawn, or in investments in one of his companies, over an unknown period.
Safari director Damien Taylor said the company was committed to financial redress.
"We’re taking this matter incredibly seriously and looking for full recovery," he said.
Mr Lawn declined to comment and Mr Dunning could not be reached.
The trial is set down for October next year.
Key dates
2020: Safari Group is contacted anonymously about alleged fraud of senior staff member Martin Dunning.
Mid-2022: Mr Dunning leaves the company where he had spent almost a decade.
November 2022: An investigation finds the company may have paid more than $1 million for "ghost contractors".
December 2022: Courts freeze assets of Mr Dunning and Queenstown builder Martin Lawn.
May 2023: Safari settles out of court with Mr Dunning.
August 2023: High Court refuses to quash freezing order against Mr Lawn and his company Concept Builders.
October 2024: Trial set to take place.
