The sentencing of four Hawke's Bay men for conspiring to employ illegal labourers has marked the end of a six-year investigation into a multimillion- dollar industry that saw hundreds of workers paid a pittance to pick apples, grapes and vegetables.
In late 2004, prompted by complaints from legitimate labour contractors, the Labour Department's fraud branch began investigating the horticulture and viticulture industries. It became clear the problem was far greater than expected.
While a complex web covered the country, at its heart the same names kept cropping up, investigator John Marston said.
Those names were Michael Porter, Miles Elliott, Dharminder "Bubbly" Singh and Surjit "Uncle" Singh. They were at the centre of a nine-metre-long chart on the wall of the investigators' Auckland office.
"It was enormous. It looked like a huge spiderweb with lines linking names," Mr Marston said.
Porter, Elliott and Bubbly Singh were directors of Contract Labour Services (NZ) Ltd. Uncle, Bubbly's father, worked in the company's Hastings office.
Set up in 2004, the company leased offices in Hastings and Pukekohe and later in Blenheim. It employed hundreds of workers in Hawke's Bay, Bay of Plenty, Marlborough, Nelson, Canterbury, Manawatu and Wairarapa.
Illegal Asian workers were recruited from ports around the country, where they were enticed to jump ship for better wages and conditions. And there is no question they were better treated on land.
Demand was high for workers and the CLS directors were not alone in hiring illegals. While other contractors did it, none did to the extent of CLS, which had a highly organised network set up.
By evading tax, GST and ACC costs, and paying well below the minimum wage, CLS was able to undercut other contractors.
It nearly put Hawke's Bay man Dave Ryder out of business. His long-established company Agworks was just managing to break even in the 12 months leading up to the Immigration raid on CLS offices in December 2006.
"They stifled us. There was just no way we could compete with them. It was only thanks to clients who refused to deal with them that we survived," Mr Ryder said.
Most contractors were employing illegal labour back then. Of Agworks' 200-odd workers, about 8 to 10 would have been illegal, and some of the sub-contractors his company used would certainly have been using illegals too, he said.
"We were all doing it. Anyone who said they didn't is basically lying. The difference between CLS and the others is the others paid a legal wage and paid tax."
Although illegal, those workers still had IRD numbers so tax could be paid. "IRD couldn't care less as long as they got a return. I watched guys who had been overstayers for six to seven years rock into IRD and get a tax number, no problem at all."
Mr Ryder never contemplated paying less than a fair rate "because to be quite honest I like to sleep at night". "Everybody deserves a fair buck for a fair day's work. We could have made a shitload of money in a short space of time ... but personally I just couldn't live with it".
Once the recognised seasonal employer (RSE) scheme came in, Agworks, like others, no longer needed to employ illegal workers.
Tony King, who owns Focus Contracting, said: "No one in this business in Hawke's Bay could say they didn't employ illegals, but some of us paid the tax, ACC levies and a reasonable rate." He had employed a few illegals himself.
Some of the blame had to be sheeted back to the vineyards and orchards that employed the contractors, as they must have known the rates they were paying could not cover a legal operation, he said.
When The Dominion Post asked the deputy chief executive of Immigration New Zealand, Nigel Bickle, why none of the vineyard or orchard owners was charged, he would say only that the focus of Operation Limb was on contractors.
Some of the companies with which Mr King had contracts were approached by CLS in a bid to undercut him, "but they weren't interested in dealing with dodgy invoices". He cites Matua Wines as a company that operates in a manner he believed others should emulate.
"Before you get inside the gate you must give them passport numbers and a photograph of the worker. They go around regularly to ensure everything is all right."
Mr King had illegal workers from another contractor turn up on his doorstep last year asking for work after the raids. "I took them straight to the immigration service. They'd been completely shafted. Their wages were held back for weeks so they wouldn't leave."
Michael Porter was one of the most vocal contractors about the lack of available labour. As early as July 2005, he was quoted in a Marlborough newspaper as saying illegal overstayers should not be deported when there was a labour shortfall.
He added that, although he did not advocate the use of illegal labour, he believed many overstayers had a sharp work ethic and were often highly skilled. And, he said, they "paid their taxes" – which was ironic because the only "tax" Porter's workers were paying was going into his and his fellow directors' pockets.
By late 2006, investigators had enough information and, on the morning of December 5, police and Immigration staff raided 12 offices associated with CLS. Mr Marston said it was "without question" the largest criminal commercial enterprise the service had uncovered.
The raid also rocked Auckland firm Allied Workforce, which in late 2005 had become a 64 per cent majority shareholder in the company. (CLS was liquidated two weeks after the raid. Allied lost millions of dollars on the investment.) Allied financial controller David Sutherland and general manager Simon Hull flew to Hastings and met Porter and Elliott, who denied that cash had been paid to illegal workers by the company.
Bubbly Singh was more forthcoming, or naive. He told the men the illegal workers were paid cash but this was done through sub-contractors. When Singh was stood down, he became furious. He yelled that Porter and Elliott were lying and knew about illegal workers.
The falling out between the three men was still palpable three years later during the trial in which they faced a representative charge of conspiring to aid and abet foreign nationals to remain in the country illegally between 2004 and 2006.
The trial in Hastings District Court was supposed to last at least six weeks. After a few days it was clear to everyone in the courtroom the men would struggle to defend the charges and they pleaded guilty.
The evidence was compelling. Mr Marston and his team had tracked down a witness on an island off the coast of Sumatra. Omar Santoso had worked as an administrator in the CLS office and was able to detail the company's ruse of paying illegal workers through "sub-contractors" – either non-existent or complicit.
Another key witness was one of those sub-contractors, Ahmad Bakhtiar, who had served two years and ten months in prison for writing false invoices. He explained how he wrote invoices at the request of CLS, how he was paid a "commission" to do so, and he even had the diary he used to record all transactions.
If the trial had continued it would have seen many well-known wineries and other companies mentioned as beneficiaries of the illegal labour, although none was implicated in the crime.
The court was told:
CLS had a turnover of $17.6m from September 2004 to December 2006.
The company used an A-list for legal workers and a B-list for illegal workers and beneficiaries who wanted to be paid in cash.
It sent couriers to Blenheim on domestic flights carrying $100,000 in cash in plastic bags for their supervisor to distribute to illegal workers.
A "tax" of 20 per cent was docked from workers' wages, which went to the company's directors.
At the peak of the picking season, between October and March, the company was paying out about 100,000 a week on false invoices.
In order to avoid Immigration road checks, the directors would take legal workers along a road first to ensure it was clear.
Porter told people he knew someone in Immigration who would tip him off if investigators were going to Hawke's Bay.
The guilty pleas were the culmination of six years' work by Mr Marston, his colleague Mike Hogan and their team. "Operation Limb" was triggered by a large number of complaints from legitimate contractors who were being forced out of business by the likes of CLS.
"It was common knowledge in the horticultural industry that there was a ready pool of illegal workers. We just had to prove it," said Mr Marston. "We decided we had to do it from the bottom up. If you knock on someone's door and ask, `Are you employing illegal labour?', they're not likely to say, `Yep, fair cop guv'.
"We started by approaching unlawful people who had been caught, or by contacting illegal workers through informants. Many had an inherent fear of authority and knew they were here unlawfully. They had to present themselves to us thinking they could be on a plane the next day going home."
Hundreds of workers were interviewed, with about 150 retained as witnesses. Some were allowed to stay until the trials ended.
"Gradually we built up their trust and they gave us the information on contractors, some while they were still working for them."
Key were "three or four" informants who were heavily involved in the industry. None was to be called as a witness in the trial.
- The Dominion Post