Court hears of plot to sink SkyCity

Two Christchurch Casino executives were manipulated into running a public campaign against gambling in a bid to drive down rival SkyCity's share price as part of a fictitious takeover, Auckland District Court has heard.

Former Christchurch Casino chief executive Stephen Lyttelton told the court he and his deputy, Peter Arbuckle, had employed a high-profile public relations firm, met an MP at her home and appeared on the front pages of newspapers in 2007 making allegations about the casino industry they now knew were false.

Mr Lyttelton's testimony came on the third day of the trial of Loizos Michaels, who the Crown alleged manufactured links about the billionaire Ho family of Macau and their planned takeover of the listed SkyCity Entertainment Group, to bolster his credibility and fleece investors of more than $3 million.

By June 2007, Michaels had persuaded both Mr Lyttelton and Mr Arbuckle to leave their jobs and move to Auckland to work on the claimed SkyCity takeover.

Mr Lyttelton said Michaels suggested the pair of former casino employees go public with the claim that corruption was rife in the industry. The plan was aimed at making the takeover of listed company SkyCity easier by depressing its share price.

Their campaign recruited experienced public relations firm Sue Wood and Associates, and involved meeting MP Sue Bradford at her Waitakere home and MP Pita Sharples at an Auckland cafe.

"Both had a particular interest in the casino industry insofar as they thought it needed cleaning up," Mr Lyttelton said of Ms Bradford and Dr Sharples.

Ms Wood is a former National Party president.

Defence lawyer Peter Kaye said the campaign involved telling lies about the casino industry, a claim Mr Lyttelton denied.

Mr Lyttelton and Mr Arbuckle's widely reported claims of prize-draw rigging and skimming of gaming-machine revenue inside New Zealand casinos were rejected by an Internal Affairs Department inquiry that resulted from the campaign.

Mr Kaye said Mr Lyttelton's actions, particularly quitting his job, handing over all his money, and working for almost a year on various schemes of Michaels' that never came to fruition, showed he was naive and gullible. Mr Lyttelton agreed he was " to a degree".

His involvement in these schemes eventually put him at loggerheads with his "best friend" and National Party president Peter Goodfellow.

Mr Goodfellow had agreed to join the board of New Zealand Casino Services, the company formed by Mr Lyttelton to effect the fictitious takeover of SkyCity, but resigned soon after joining.

Mr Goodfellow is expected to appear as a witness for the Crown in the eight-week trial.

Mr Lyttelton told the court Michaels claimed his mysterious backer "Uncle", whom he communicated with using an ear implant, wanted Mr Goodfellow approached to invest in his schemes.

In two instalments Mr Goodfellow lent Mr Lyttelton $114,000 in cash, but a third funds request led to a meeting that ended in acrimony.

"He said he wasn't going to give me any more money and moved to suggest I was the victim of a scam," Mr Lyttelton told the court of Mr Goodfellow's reaction.

Michaels immediately moved Mr Lyttelton, who at that point was living in Mr Goodfellow's Auckland home, into an Auckland motel.

But by February 2008, with empty bank accounts after giving all his money to Michaels and just having returned from five months in Macau waiting for a meeting with the Ho family that never eventuated, Mr Lyttelton told the court he was a broken man.

He said he made one last call to Michaels, letting him know his friends and family urged him to sever their relationship and contact the Serious Fraud Office.

"I posed that to him, and he just laughed down the phone and said, ‘Go for it', or words to that effect," Mr Lyttelton told the court.