Two former managers of retail gas supplier E-Gas Limited 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 Wellington District Court.
The charges allege that E-Gas under-reported gas consumption by approximately 950,000 gigajoules worth approximately $8.74 million and penalties were avoided to the value of about $8.67 million between May 2005 and September 2008.
SFO 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 underreporting of the amount of gas it was billing its clients," he said.
He explained that if someone used 1000 units, E-Gas would submit that they had used 900.
Mr Upton said E-Gas was false filing in excess of $17 million.
E-Gas avoided paying fees, overrun costs if more gas was used than they were allocated and avoided distribution costs.
An analysis of the figures showed the actual use of gas was underreported.
"To put it bluntly they were rorting the system,' he said.
Mr Upton outlined the complicated process of gas suppliers and what they were required to do each month to the judge.
Mr Upton said the company was making a loss before it began to falsely report. Once it began under-reporting the profits rose steadily and the company became solvent.
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.
Mr Upton said witnesses would say there was difficulty in getting data from E-Gas who was the only retailer to refuse to provide some data.
- © Fairfax NZ News
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