Dotcom surprised by investor Yan
Kim Dotcom has distanced himself from Mega investor William Yan, who has had assets frozen by the police, saying he has not met the Chinese businessman for months.
Mega chief executive Graham Gaylard revealed today that police had frozen an 18.8 per cent shareholding in Mega, the internet business founded by Dotcom.
The shareholding was associated with Yan, he said.
A police spokesman confirmed police were in process of restraining the assets of a 43 year-old Auckland businessman and his 38 year-old female partner as part of a "lengthy and on-going Criminal Proceeds Recovery investigation".
The seized assets had a total value of more than $15 million and included "cash, shares, jewellery, fine wine and a Bentley motor car", according to a statement police originally issued on Saturday.
The investigation was focused on the laundering of large amounts of money that police believed had been accumulated through illegal activities, the police statement said.
Dotcom said Yan became a Mega shareholder only after he [Dotcom] had resigned from Mega's management team a year ago. "He was introduced to us as a property developer who is building large apartment projects on the North Shore.
"The Mega management team vetted him before he was allowed to invest. The most concerning finding was that he had a court case against him challenging his citizenship. But he won that case."
Dotcom said he was told Yan's funds came from the sale of a listed company in China worth "hundreds of millions".
"I'm surprised about the seizure of Mr Yan's shares. I had no knowledge about any investigation or any potential wrongdoing by Mr Yan. I have not seen or spoken with Mr Yan for several months," Dotcom said.
Police said they were working hard to ensure that "innocent third parties" who were involved in business arrangements with the couple would have their interests protected and ``only those involved directly in money laundering activities will be affected by the restraint of assets".
The spokesman was aware of Mega's public statement but would not comment further.
Gaylard said police had taken out a restraining order on the assets of two companies associated with Chinese businessman William Yan, formerly known as Bill Liu, and other parties, under the Criminal Proceeds Recovery Act.
Their shareholdings in Mega were now under the Official Assignee's custody and control, he said.
TRS Investments, the NZX-listed shell company that intends to acquire Mega through a reverse takeover, briefly suspended trading in its shares this afternoon. Chairman Keith Jackson said he did not believe the restraining order would impact the plan to take Mega on to the NZX, but TRS would make further enquiries and "if its view changes or further information comes to light, it will advise the market accordingly", he said.
Gaylard said in his statement that Mega had been "extremely diligent to ensure that all its operations are fully compliant with all legal and regulatory requirements".
"Mega does not undertake any illegal activities and does not wish to be associated with any such activity," the statement said.
"Mega, as a limited liability company incorporated in New Zealand under the Companies Act, is quite separate from its shareholders and is not responsible for the actions of shareholders or their finances."
Mega never had any reason to believe funds used to buy its shares resulted from illegal activity and it was business as usual for Mega, he said. He did not know anything more about the nature of the allegations, he said.
Auditor-General Lyn Provost examined former Immigration Minister Shane Jones' decision to approve Yan's application for citizenship in 2008, which was made against officials' advice.
She found no evidence of corruption, inappropriate motive, collusion or political interference, but was critical of Jones and officials for the way the situation was handled.