Two former managers of retail gas supplier E-Gas Ltd have gone on trial for under-reporting more than $17 million of gas it was supplying to its customers.
Sydney Lio John Hunt, 46, former general manager, of Wellington, and Ronald Peter Rosenberg, 72, former managing director, of Paraparaumu, each face 41 charges of dishonest use of documents.
The trial, which is expected to take a month, is before a judge alone in the Wellington District Court.
The charges allege that E-Gas under-reported gas consumption by about 950,000 gigajoules worth about $8.74m and penalties were avoided to the value of about $8.67m between May 2005 and September 2008.
Serious Fraud Office prosecutor John Upton, QC, said an employee of E-Gas would email the actual figures to either Hunt or Rosenberg who would then tell them the figure to be reported or how much gas usage E-Gas would declare.
"There was systematic under-reporting of the amount of gas it was billing its clients," Upton said.
If someone used 1000 units, E-Gas would submit that they had used 900, he said.
E-Gas was false filing more than $17m.
E-Gas avoided paying fees, overrun costs if more gas was used than allocated and avoided distribution costs.
An analysis of the figures showed the actual use of gas was under-reported.
"To put it bluntly they were rorting the system,' he said.
Upton outlined the complicated process of gas suppliers and what they were required to do each month to the judge.
The company had been making a loss before it began to falsely report. Once it began under-reporting the profits rose steadily and the company became solvent, he said.
E-Gas was established in 2000 to supply gas to the retail market. In December 2010 the SFO received a complaint concerning possible inaccuracies between the amount of gas supplied to its customers compared to the amount of gas reported as being used to gas wholesalers. The company went into voluntary liquidation the same year.
Upton said witnesses would say there was difficulty in getting data from E-Gas, which was the only retailer to refuse to provide some data.
- Fairfax Media