Brownlee was on fraud-accused's board

MATT NIPPERT
Last updated 08:18 26/10/2012
Gerry Brownlee
FAIRFAX NZ

EMBARRASSED: Gerry Brownlee says he didn't do any research before joining the board of a company said to be run by alleged fraudster Loizos Michaels.

Loizos Michaels
Sunday Star Times
LOIZOS MICHAELS: On trial for fraud.
Peter Goodfellow
PHIL DOYLE/Fairfax NZ
Peter Goodfellow enters the Auckland District Court where he is giving evidence in fraud trial.
Jonah Lomu
Getty Images
JONAH LOMU: Ex-All Black is angry his name has been tarnished by a man on trial for fraud.

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Cabinet minister Gerry Brownlee is ''deeply embarrassed" at getting caught up in an alleged fraud saga that has dragged in senior business figures and ex-All Black Jonah Lomu.

"I didn't do my research at all . . . I'm just deeply embarrassed I was anywhere near it," Brownlee said of his short tenure on the board of NZ Casino Services, a company said to be run by alleged fraudster Loizos Michaels.

He was speaking to Fairfax about a court trial where National Party president Peter Goodfellow was giving evidence in Michaels' trial. Michaels has pleaded not guilty to 31 counts of fraud involving dozens of investors who lost more than $3 million.

Brownlee became a founding director of NZCS on Goodfellow's recommendation but resigned after a few weeks.

Goodfellow yesterday told told the Auckland District Court how he extricated himself from a supposed casino venture after concluding that the appearance of an alleged conman claiming connections to Macau billionaires "just wasn't up to scratch".

The court heard Goodfellow was left $114,000 out of pocket after lending money in August 2007 to old friend and former Christchurch Casino boss Stephen Lyttelton to invest in Michaels' schemes.

The loans included $64,000 paid in cash, at Lyttelton's request, which Goodfellow said was "very unusual".

He said he first heard of Michaels from Lyttelton after his friend quit his job in Christchurch and moved to Auckland to work on schemes engineered by Michaels. Goodfellow accepted a request from Lyttelton to be a founding director of NZCS, although he admitted he was unclear about the entity's purpose.

"It was all a bit vague and [Lyttelton] really indicated we would find out exactly what it was going to do, really, in time," Goodfellow said.

Earlier, Lyttelton told the court that NZCS was formed on the instructions of Michaels and was intended to be the vehicle to take over SkyCity Entertainment Group using purported backing by the billionaire Macau-based Ho family and their Melco Group.

The former casino boss said he was convinced by Michaels to apply for a casino operator's licence and to run a media campaign falsely alleging pokie cash skimming and prize-draw rigging at New Zealand casinos in order to crash the price of SkyCity's shares to smooth the path for the takeover.

Brownlee, who is not scheduled to be a witness at the trial, said he regretted his involvement. He said he had never met Michaels or advanced any money to his schemes, and resigned from NZCS after he read news reports that Lyttelton had applied for a casino operator's licence.

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Goodfellow lasted only three weeks longer before also resigning.

He told the court he did so after a lunchtime meeting at swanky Auckland restaurant Euro, where he met Michaels and his suspicions were raised.

"His appearance just wasn't up to scratch," Goodfellow said of Michaels. "His clothes were not particularly sharp and his shoes were scruffy."

Goodfellow refused subsequent requests by Lyttelton for money, and later hired private investigators to probe Michaels' background.

The trial continues.

- BusinessDay.co.nz

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