Hotchin denies links to BVI companies

Mark Hotchin has denied Hanover links to companies registered in the British Virgin Islands.
Mark Hotchin has denied Hanover links to companies registered in the British Virgin Islands.

Companies have been unveiled in the secretive British Virgin Islands linked to Hanover Group and overseen by the "right-hand man" of embattled businessman Mark Hotchin.

But Hotchin, the former managing director of failed Hanover Finance, through a spokeswoman denied knowledge of the companies and suggested a possible mix-up with an Australian company also called Hanover.

According to documents obtained by the Sunday Star-Times, the companies - Australasian Forestry Investments and Forestry Management - were incorporated in the British Virgin Islands in February 2001 for Hanover Group by Ernst & Young and then overseen from 2004 by Hanover director and Hotchin's personal accountant Dwayne McGorman.

Hanover Group was a property and finance conglomerate owned by Hotchin and Eric Watson, the ultimate owner of failed finance companies Hanover Finance and United Finance.

Shareholders and directors of the British Virgin Islands companies are shown in documents to be in turn more shells, with AFI directed by Grandfield Holdings Group and Blue Ocean Offshore and shares held by Managecorp. FM is directed by Million Strong International with Bearer 1 listed as shareholder.

Niki Schuck, a public relations specialist acting for Hotchin, said last week "these companies are not linked with Hanover New Zealand".

She suggested the possibility of mistaken identity.

"There is a Hanover Australia which is not linked and has totally different people, so maybe it is them," she said.

Australia-based Hanover Consumer Finance was sold off to unrelated parties by the New Zealand-based Hanover Group in July 2008.

A letter subsequently sent by lawyer Nathan Gedye, acting for Hotchin, said no records could be found for the British Virgin Islands companies and their role - if any - was unclear.

"I am instructed that they are [not] and were not personal entities of Mark Hotchin or Eric Watson and they appear to have no connection with any of the finance companies," Gedye said.

A source familiar with Hotchin and Hanover co-owner Eric Watson's business affairs at the time the companies were formed said he was also unaware of AFI and FM but said: "Anything that Dwayne McGorman did was Hotchin's affairs."

McGorman declined to comment when approached by Sunday Star-Times last week with questions about the companies.

Gedye said McGorman had no recollection of the companies, and his duties extended beyond assisting Hotchin with personal accounting. "He was actively involved in a wide range of duties within the Hanover Group," Gedye said.

By coincidence McGorman was in the High Court in Auckland last week giving evidence on behalf of the KA No 4 Trust.

The trust owns an unfinished mansion on Auckland's Paritai Drive, and Hotchin is seeking to recoup part of $12m he spent on the property's construction.

The court heard that from 2002 until 2008 McGorman had signing authority for Hotchin and administered his trusts and personal accounts. Hotchin's solicitor John Radley told the court: "McGorman was Hotchin's right-hand man."

Last week the Serious Fraud Office closed its two-and-a-half-year probe of Hanover, citing a lack of evidence of criminal conduct in a decision not to lay criminal charges.

A source close to the investigation said the AFI and FM didn't appear on its radar as offshore entities were not directly involved in the transactions it was probing, but he was aware of some other British Virgin Islands entities used by Hanover for "tax purposes".

The use of British Virgin Islands companies is not illegal, but their use for tax purposes has proved controversial with governments worldwide calling for the dismantling of secrecy regimes employed by such tax havens.

Last week British Chancellor George Osborne announced that the British Virgin Islands- along with Anguilla, Bermuda, Montserrat and the Turks and Caicos Islands - had agreed to much greater levels of transparency in response to mounting criticism.

Sunday Star Times