Christchurch businessman vows to fight Russian family

BY MARTIN VAN BEYNEN

A wealthy Russian immigrant family has seen some of its South Island investments go sour after becoming involved with Christchurch businessman Paul Keung.

A High Court judgment released this week says members of the Russian Orthodox Koulanov family, who came to New Zealand in 1995, invested $2.9 million in a group of Kaikoura property companies run by former bankrupt Keung.

Keung used the investment to buy other properties, pay himself and his entities large advances and management fees and to fund lifestyle expenses.

The judgment ruled on a bid by the Koulanovs, of Christchurch, to liquidate the companies in which they had invested.

Keung said yesterday that he would appeal the judgment, and rejected any suggestion he had "ripped off" the Koulanovs.

Annual accounts for the company showed the payments were legitimate, he said.

He was the one who was "broke" after dealing with the Russians and fighting them in the courts, he said, and he would be vindicated by subsequent court action.

The relationship between Keung and the Koulanovs, the judgment says, started in 2007 and was based on a friendship between Grigori Koulanov, 24, and Christchurch-born Keung, who has a Chinese father and European mother.

Emails from November 2007 show Keung telling Koulanov "trust is something we both have been blessed with in our relationship", but by June this year he sent Koulanov an email saying: "What next, do you hire a hitman to kill me if you lose all your money, I mean this is how you operate right".

In the email he alleged the Koulanovs had engaged in sexual misconduct, serious criminal misconduct, perjury, fraud and corruption.

Keung was formerly connected with the Ten Thousand Men ministry that prayed in public places to oppose homosexual law reform, and his ex-wife was in the West Coast Cooperite sect.

He has been the director of more than 30 companies, many of which have been struck off, and advertises his businesses on the internet under the Keung Corporation. One of his companies was placed in liquidation in 1998.

The court ruling shows the Koulanovs, who have also begun court action against Keung personally, paid $2.5m in 2007 for a one-twelfth shareholding in Goose Bay Ranch Holdings, 89 per cent owned by Keung. The payment was followed in May last year by another $400,000.

The company's main asset is a 314-hectare farm at Goose Bay, near Kaikoura, that Keung intended to transform into a private game park and tourism business.

He bought the property in 2003-04 for $500,000 and two years later sold it to another one of his companies for $4.45m.

The property was then sold to Goose Bay Ranch for $5.5m about the time the Koulanovs bought their shareholding.

Keung, as the sole director, also had, with the Koulanovs' agreement, access to a $1.45m mortgage advance secured over the property as an overdraft facility.

Grigori Koulanov alleged the investment was based on Keung telling him the Goose Bay property was worth $17m to $21m and that he had other investors interested in the venture.

The court found the records appeared to show Keung used Goose Bay Ranch's money to:

Make a $288,000 part-payment and pay a $110,000 management fee to Keung entities in buying a neighbouring farm property called Moana, the purchase of which was eventually completed by another Keung entity.

Pay $725,000 to buy another Kaikoura property to be owned through a subsidiary by Goose Bay Ranch.

However, Keung swapped the shares in the subsidiary for shares in his PK Construction, which was placed in liquidation last month with debts far exceeding assets.

The Koulanovs also alleged Keung used Goose Bay Ranch funds to spend between $250,000 and $450,000 on upgrading a house he and his partner lived in on the Moana farm.

The judgment refers to an affidavit from Keiran Horne, the interim liquidator appointed to Goose Bay Ranch in March.

In it, Horne traces the Goose Bay Ranch cheque account used by Keung to show that between February and August last year he wrote cheques to himself or his entities for $493,000 and cheques for management fees totalling about $213,000.

She told the court that invoices from Keung Investments to Goose Bay Ranch included "numerous entertainment charges in relation to meetings, the purchase of a gun, the purchase of a washing machine and invoices for general management fees and Sky subscription".

She described Keung's management as breaching "basic" accounting and management principles and causing severe hardship for the companies in the group.

Associate Judge Gendall found the relationship between the Koulanovs and Keung had broken down and placed Goose Bay Ranch Holdings in liquidation.

He rejected a bid to liquidate two subsidiaries of Goose Bay Ranch because the Koulanovs were not shareholders of the companies.

The associate judge said it had to be acknowledged there were factual disputes apparent from the evidence before the court.

Keung had claimed the Koulanovs intended to "destroy" the companies and wanted to "steal" the group properties at a cheap price.

The first claim was "hardly likely" and "there is absolutely no evidence showing an intention to steal the properties at an under-value", the associate judge said.

- © Fairfax NZ News