Fraudster's ties to failed waste firm
Convicted finance company fraudster John Gray has ties to a collapsed recycling firm that received government contracts worth millions of dollars and is now under investigation by the Serious Fraud Office.
Recycling firm RCN, comprising RCN E-Waste and RCN & Associates, entered liquidation in June following warnings it was likely to fail to deliver on a $4.4 million government contract to recycle old television sets.
Liquidator Derek Ah Sam, of Rogers Reidy, said creditor claims for the two companies - including from the Ministry and KiwiBank - totalled $7.5m and the value of assets was negligible.
Gray, the former accountant for collapsed finance company National Finance, was working for RCN prior to its collapse.
Gray is shown on security documents as acting on behalf of the company as recently as March, and he also had an RCN email address.
Gray was sentenced to nine months home detention after pleading guilty in 2010 to three charges of theft by a person in a special relationship and false accounting for actions undertaken while at National Finance.
The Companies Office is also investigating his current role as director of a half-dozen companies. People convicted of dishonesty offences are barred from directing companies for five years.
Revelations of Gray's involvement in RCN comes on the heels revelations last week he was also involved in failed clothing designer and wholesaler Catherine's Fashionwear.
Catherine's collapsed last year owing Heartland Bank $2.3m, and the SFO began investigating receivers' complaints that stock and invoice levels had been over-stated.
The combined losses from the collapse of RCN and Catherine's is expected to near $10m.
Gray did not reply to phone messages seeking comment this week. His home address in Murray's Bay was vacant and property records show it is in the process of being sold.
An SFO spokeswoman confirmed the investigations were ongoing, but declined to comment on Gray's involvement.
"We cannot confirm specific details in reference to any individuals," the spokeswoman said.
Joseph Capizzi, the owner and director of RCN, confirmed Gray worked for the company but defended his former staff member.
"All I can say is he did nothing wrong in terms of accounting. He had no access to, or visibility, of banking," he said.
Capizzi was unwilling to further discuss Gray's role, citing non-disclosure agreements he had signed as part of his interview by the SFO.
Capizzi said property records showing he had in 2009 sold a multi-million dollar Albany house to Catherine and David Casey - the owners of Catherine's - was pure coincidence and Gray was not involved in that sale.
"What a small world! It's pure coincidence, and so funny," he said.
Mike Mendonca, director of operations for Ministry for the Environment, said the Ministry had entered into a contract with RCN to recycle 180,000 television sets for $4.4m.
Mendonca said the Ministry had became aware "all was not well with RCN" in January, and commissioned a review of the company.
"The report clearly identified there were serious issues," he said.
RCN only completed half of its contracted work before entering liquidation. "In terms of being a creditor, our liability is 90,000 unprocessed televisions," he said.
Mendonca said the Ministry undertook due diligence but were unaware of Gray's involvement with RCN when the recycling contract was signed in October 2012. Citing the SFO investigation, Mendonca declined to discuss whether Gray's role with the company was a matter for concern.
Green Party MP Denise Roche said the collapse of RCN had left a large number of community recyclers, who collected old televisions sets for processing, out of pocket.
"Community recyclers are basically small businesses with very small margins, and to carry some of these major costs really jeopardises their viability," she said.
- Sunday Star Times