Wellington firm's fraud hits bank
Bank of New Zealand could face losses of more than $500,000 as the bankers of a Wellington accounting firm whose directors are now serving lengthy jail terms for fraud.
The latest receivers' report for TPS Accounting shows preferential creditors, including staff and the IRD, are owed $55,145.93, more than a year after the firm was placed in receivership.
Bank of New Zealand, which as secured creditor stands behind IRD and staff in the order of payment, is owed $535,000.
In August, Barrie James Skinner and David Ingram Rowley were jailed for eight and a half and eight years respectively, after being found guilty of dozens of charges of fraud and attempting to pervert the course of justice.
The pair used fictitious invoices to charge clients for goods and services which did not exist, to create fraudulent GST and income tax deductions, pocketing most of the benefit themselves.
This week Barry Jordan of Deloitte, who was appointed as receiver by BNZ in August 2011, said it was "very unlikely" that the bank would recover much of the amount it was owed.
"The cost of the receivership and the low recovery of the debtor book are the reasons we've indicated would mean that it's unlikely that the bank will recover much, if anything," Jordan said.
"In the circumstances, as the trial has unfolded, it's become more obvious that that was probably going to be the outcome from the very beginning."
Staff, owed holiday pay, and IRD may also face a shortfall.
"Because we're not getting much at the top line, it's not going to go very far," Jordan said.
Unsecured creditors are owed $37,222, while printing companies Fuji Xerox Finance and Ricoh New Zealand, both secured creditors, have not yet lodged claims.
When Jordan took control of TPS' affairs, Skinner and Rowley claimed the company was owed $3.4 million by a range of clients.
However, Jordan said it quickly became clear that the figure was inflated, with much of the debt owed by companies which were already in receivership.
Other clients claimed to have no knowledge of what the amounts were for.
"Aspects of the debtors' ledger were contingent on the trial [of Skinner and Rowley]. Whilst the facts are more clear now, there's certain debtors in there saying, ‘well, this just reinforces that the invoices that were levered against us were a sham in the first place'," Jordan said, adding that some of the money was still being pursued.
"But I'm not expecting material recoveries from the remainder of the debtors book."
The Official Assignee is being appointed as liquidator of TPS Accounting with the power to investigate the company's history and the conduct of directors.
BNZ has applied to the Wellington High Court to liquidate two trusts in which Skinner and Rowley are trustees.
A spokeswoman said that the claim "is still subject to litigation proceedings".
The Dominion Post