Mainzeal director silent on firm's failure

CATHERINE HARRIS AND JASON KRUPP
Last updated 05:00 08/02/2013
Richard Yan
Mainzeal director Richard Yan

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Richard Yan, the Harvard-educated Chinese businessman at the centre of the Mainzeal Property and Construction collapse, has thrown up a wall of silence around the building firm's failure.

Subcontractors, some owed hundreds of thousands of dollars, fear the worst - that they could lose the lot in the collapse.

Yan is a part-owner of two multimillion-dollar properties in upmarket Auckland suburbs, one worth $4.1 million in Remuera and another $2.35m in Epsom.

He did not respond to phone calls yesterday, and family members at his Epsom home refused requests to talk to him.

Neither Yan, nor any of the former Mainzeal directors, including former prime minister Dame Jenny Shipley, would talk about Wednesday's collapse.

Yan's Richina Pacific empire includes Mainzeal Property and Construction, with 400 staff, Beijing's Blue Zoo Aquarium, and one of the world's largest tanneries in Shanghai. An associated company also owns Te Motu vineyard on Waiheke Island, bought for $3.9m in 2010.

Yan went to school in Beijing during the Cultural Revolution. In 1981 he was awarded a Rotary scholarship to study English in Auckland - the first Chinese high school student to do so.

He gained degrees at the University of Auckland and later an MBA at Harvard.

Mainzeal's receiver had a sliver of good news yesterday: staff got paid.

But subcontractors owed money from before the collapse will need to make a claim for their money.

One Wellington electrical contractor was owed $800,000; a South Island subcontractor, owed about $260,000, has said there is little chance of getting his money back.

Thomas Plumbing and Gas owner Harold Thomas, of Kapiti, said he had not been paid since December for work on the Coastlands Aquatic Centre in Paraparaumu. He was told by the receiver that it was working on the basis that there was no money left for unsecured creditors, such as subcontractors.

"When I hear things like Jenny Shipley and all these people that were directors of this company resigned the night before - that really gets up my craw," he said.

"They jump ship and leave the ordinary working people of New Zealand behind."

Dame Jenny and fellow directors Paul Collins and Clive Tilby resigned from Mainzeal's parent company on Tuesday, after being asked to shift from the construction company's board in December.

In a statement, the three said Mainzeal had been battling leaky-home liabilities, a payments dispute on a large contract, and supply chain problems.

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Industry players said the full extent of losses would not be clear until Mainzeal's total debts were revealed, possibly next week.

The receivers say they are slowly determining how many staff could keep working, despite the company's failure.

WHO IS RICHARD YAN?

For many, the name of Richard Yan will have only just entered their awareness with the collapse of Mainzeal, the country's third biggest construction group.

But the ties between the Chinese businessman, and New Zealand run deep.

Yan arrived in the country in 1981 on a scholarship to study English at Auckland Grammar School, reportedly the first student to leave China under pro-market reforms implemented three years earlier.

He moved on to earn a Bachelor of Arts in economics and a Bachelor of Commerce from Auckland University, before going to Harvard's prestigious business school.

MBA in hand, Yan spent a few years working as a merchant banker at Bankers Trust in New York, while setting up an investment fund.

The goal was to invest in China, but the first investment Yan turned to was Kiwi, acquiring Mainzeal in 1995, and later buying out leather and venison subsidiary Mair Astley, to form Richina Pacific.

The company diversified into financial services, tourism, construction and leather goods, all heavily focused on the opportunities Yan saw in China.

Richina Pacific, through various subsidiaries, built the Blue Zoo Aquarium in Beijing and bought a majority stake over time in former state-owned tannery Shanghai Leather Company.

It also acquired the rights to vast tracts of property in Shanghai, and the firm has holdings in hotels, car parks, department stores and a taxi firm, among other businesses.

Yan's enthusiasm for China was not always matched by financial success, with losses and paper thin profits dogging Richina companies, including some of the New Zealand companies, for many years.

In 2008 Richina Pacific, including construction company Mainzeal, was delisted from the stock exchange.

Having been hosted by the wealthy Auckland Caughey and Symes families while a student, Yan would later tap Tony Caughey as chief executive of Richina Pacific, and Jim Symes as chairman.

TIMELINE

1963: Born 100 kilometres outside Beijing

1981: Moves to Auckland to study English

1982 - 1988: Earns a BA and BCom at Auckland University, later an MBA at Harvard

1989 - 1995: Works as a merchant banker in New York, before setting up a China investment fund with classmate Susanna Foels. The United States-based Ziff family, who run a computer magazine publishing empire, including PC Magazine, invests US$52.5 million in the fund

1995 - 1996: Acquires Mainzeal and later Mair Astley to form Richina Pacific

1996 - 2003: Starts acquisition spree in China, with big investment in tanneries, tourism and construction, with mixed success

2008: Delists Richina Pacific from the NZX. Richina's corporate headquarters are now in Bermuda, a tax haven

2013: Mainzeal collapses

- BusinessDay.co.nz

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