Christchurch bars linked to criminal underworld

Police have uncovered a web of ties linking three Christchurch bars to the criminal underworld.

Christina's Tavern, in Moorhouse Avenue, Harry's on Gloucester and the Aranui Cafe and Bar, in Hampshire Street, have been implicated in criminal activity connected to burglary-ring kingpin Peter Machirus, 63, his sidekick, Vincent Clayton 33, and Machirus's partner, Linda Westbury, and former partner, Nadia Mavava Pelenato.

After a three-year police operation, dubbed Operation Rhino, Machirus was last month sentenced to 3½ years jail for running a burglary ring.

The jail term came on top of a $2 million tax bill for a bookmaking operation.

The officer in charge of liquor licensing, Sergeant Alastair Lawn, said that, as police had suspected for several years, Machirus and associates had been using frontpeople to run bars around the city.

Their suspicions were confirmed after investigations into Christina's Tavern, which supposedly was being run by Corey McCullough, whose licence they had applied to cancel in July.

A Liquor Licensing Authority hearing last month cancelled McCullough's licence.

The authority accepted police allegations that McCullough had been acting as a frontman for either Machirus, Westbury or Clayton – or all of them – since being granted a licence in September last year.

Authority chairman Judge Bill Unwin and member Dr J. Horn said in their findings on September 19 that McCullough "would have said anything to avoid revealing the true nature of the situation".

"We became satisfied that the reason Mr McCullough seemed to be unconcerned was because it was not his money that was at stake," they said.

"He was, indeed, acting as a frontperson for others. To treat the licensing system with such contempt is quite intolerable."

Police presented evidence at the hearing showing Clayton and Westbury had been found working behind the bar at Christina's Tavern on several occasions – with no sign of McCullough – as well as living above the bar.

Police found Westbury had been acting as a duty manager from time to time, as well as hiring staff – a function reserved for a licensee.

Financial accounts for gaming machines connected Christina's Tavern, Harry's on Gloucester and the Aranui Cafe and Bar.

The financial information – supplied to a Department of Internal Affairs inspector, Robert Brook, by Clayton – showed Christina's Tavern was not only running at a loss each week but accounts did not add up.

It was found McCullough had consistently made late payments to the Caver-sham Foundation Ltd, a gaming machine owner.

Under the agreement and pursuant to the Gambling Act 2003, McCullough was required to bank the proceeds from machines weekly into the foundation's account.

Bank statements show the account was in credit for only five weeks of the year and, as of January 2007, $15,919 was unbanked.

Additionally, 17 payments totalling $43,850 had been made to another trust that operated gaming machines for Harry's, owned by Pelenato, and also the bar McCullough had worked at before working at Christina's.

Brook also found a $1500 payment made to the Aranui Cafe and Bar, also owned by Pelenato.

The financial accounts did not show the source of the $43,850 paid to the Harry's on Gloucester account, and nor did they reflect the payments by the gaming foundation for site rentals.

McCullough told police the $43,850 paid to the Harry's on Gloucester account was a repayment for a personal loan from Machirus. However, there was no documentary evidence to support his assertions.

"This evidence confirmed that Mr Machirus was receiving the benefit of funds paid into the designated poker machine account for Harry's on Gloucester," the report said.

Investigations also found Pelenato, while giving evidence in criminal proceedings in the District Court in May, had admitted she was a frontwoman for Machirus.

Pelenato, who was implicated in the Operation Rhino investigation but found not guilty, is in prison for benefit fraud.

However, she remains the licensee of Harry's on Gloucester and the Aranui Cafe and Bar.

Lawn said police had applied for the cancellation of Pelenato's licence for both bars. This would be heard by the Liquor Licensing Authority next month.

Police were pushing for a legislation change to make cancellation of licences automatic when a licence-holder was convicted and imprisoned, he said.

As the law stood, police could make an application only while prisoners continued to enjoy trade, Lawn said.

"We can ask for urgency but it's been two months, if not more, to get Harry's and the Hampshire to go before the authority, and they have been enjoying trade," he said.

"They are just a nightmare. We close them down under section 174 but can close them down only for 24 hours.

"In 1989, when they changed the law, the licence would be hard to get and easy to lose."

The cancellation of McCullough's licence was a huge success for the three agencies – police, city council liquor licensing inspectors and Community and Public Health – that were involved in the investigation, Lawn said.

"It doesn't happen very often. It was a very good result. There's a lot of work involved and they just keep coming up with frontpeople. The tri-agency team is a very good model of collaborative approach," he said.

The Department of Internal Affairs was looking at prosecuting McCullough for false declaration, Lawn said.