Explanation for missing $10m ‘simply not credible’

The proposed multimillion-dollar hotel in Brownston St. Image: Supplied
The proposed multimillion-dollar hotel in Brownston St. Image: Supplied
A company's explanation for failing to inform an investor of exactly how his $10 million was spent is "simply not credible", a judge says.

In July, Kurt Wagner took B Property Group Ltd (BPG) to court over the money he had invested into developing the Kitea Hotel in Wānaka.

Justice Rachel Dunningham ordered that the company provide Mr Wagner with some of the documents he was requesting within 10 days.

Months later, the information was still not adequately disclosed to the 50% shareholder and the matter was brought back before the High Court at Invercargill this month.

The disclosure said that his money had been distributed to "related parties" associated with the sole director of the company, Andrew McIntosh.

Mr Wagner said documents recording the related party loans and payments of the loans were not provided to him as ordered by the judge.

Mr McIntosh said that was because he had no further documents despite him providing a memorandum to his counsel that detailed who the related parties were and how much had been loaned to each of them.

Associate Judge Dale Lester said that explanation was "hard to accept".

"It is simply not credible that BPG paid expenses for the above companies without any documentary record. BPG must have been provided with payment claims, invoices, settlement statements, or the like relating to debts for those entities which it met," he said.

Mr Wagner also sought more information including access to BPG’s accounting software, IRD statements and an explanation of how the related parties were linked to the hotel development.

"Mr McIntosh is to provide a full narrative in respect of each of the advances in the balance sheet," Associate Judge Lester said.

He ordered that all documents be provided within 10 working days.

"Mr Wagner’s funds were deposited into BPG’s bank account on 16 June, 2022. Within a matter of weeks all of those funds had been distributed. Mr McIntosh has not explained how the application of those funds is linked to the hotel development in Wānaka," he said.

"Mr McIntosh’s then piecemeal disclosure along with bare assertions, that cannot be correct, he has no records in relation to transactions, entirely justifies Mr Wagner wanting access to as many hard records as possible."

A further hearing regarding legal costs will be scheduled.

 

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