Accused church will be audited
An Auckland church facing allegations of misapplied donations and sinking hundreds of thousands of dollars into a Ponzi scheme will be audited, the High Court has heard.
The Tokaikolo Christian Church and its leader Dr Liufau Saulala, catering to 2,000 Tongan parishioners in Auckland, faced claims in the High Court in Auckland its trust deed had been breached by financial mismanagement.
Plaintiffs sought interim injunctions to freeze Church spending and requested a forensic investigation examining income and expenditure since 2003.
The registered charity's accounts had not been audited since 2006 due to the expense, the Church told the court.
Judge Patrick Keane declined the interim freezing and forensic investigation requests in a judgment, citing a lack of evidence for the claims and strong denials by the church.
Justice Keane invited the plaintiffs to consider the result of the three-year audit currently underway and if necessary refile their case and direct their complaints to authorities monitoring trust and charities.
"They may also care to consider whether to apply to the Attorney-General or to the chief executive of the Charities Commission," he said.
Speaking on behalf of the plaintiffs, Pohiva Tui'Onetoa, Tonga's former Auditor General, told the court financial statements filed by the church were "in some instances both inaccurate and misleading."
The plaintiffs, a group of former senior church members, claimed funds raised to repay mortgages over church properties had not been used to pay down debt and church funds totalling around a million dollars had been invested into the Ponzi schemes of Nelson resident David Hobbs.
The church denied the million-dollar Ponzi investment and said only only $100,000 was at risk.
Hobbs was found guilty last year of running a $36.8 million Ponzi scheme following a civil prosecution brought by the Australian Securities and Investment Commission.
In February the New South Wales Supreme Court fined Hobbs a record A$500,000 (NZ$572,000) and permanently barred him from managing companies or providing financial services in Australia.
According to audio of Saulala's sermons obtained by One News, the church minister publicly supported Hobbs and his schemes.
The church denied claims of mismanagement and told the High Court in Auckland an auditor had recently been appointed to examine accounts dating back to 2009.
According to financial reports filed with Charities Register, Tokaikolo's bank debts stood at $1.6m in 2008, and had increased to $1.84m in 2012.
The majority of church assets ,worth a claimed $6.4m, are tied up in property, though current assets stood at only $450,208.