A major Serious Fraud Office (SFO) investigation into post-quake fraud in Christchurch relied on an informant whose business dealings are now the subject of a police complaint.
The SFO probe between July, 2012, and April last year failed to uncover "evidence of serious and complex fraud", and was closed, raising questions about the credibility of the initial allegations and the effect on businesses investigated.
The alleged fraud was initially described by the SFO as a possible multi-million dollar insurance rort, and indicative of white-collar crime expected to emerge as the $30 billion rebuild progressed.
A Press investigation has disclosed the SFO's main informant was builder Craig Johnson, 29, whose company, NZ Premium Construction, went into liquidation in February with debts well over $500,000.
Last week The Press revealed Merivale couple Dr Fred Grosse and Victoria Sinclair had asked police to investigate Johnson over disputed invoices for their $1.8m rebuild and repair. The Christchurch fraud squad is looking at the complaint, but has yet to decide whether it warrants investigation.
Johnson has returned to Auckland where he lives in a $1.2m house and owns a $100,000 BMW X5, while angry subcontractors and disappointed clients are left counting the cost.
The SFO investigation was sparked by a complaint from Lumley Insurance, which suspected contractors were inflating assessments/costings of earthquake damage.
Lumley's concerns were driven by information provided by Johnson, who claimed his work for Christchurch consultancy company Maiden Group revealed a major conspiracy.
The offices of Maiden Group and Lumley's programme manager, Ireland Group, were raided by the SFO just before Christmas 2012. Investigators seized computers, copied the data, and returned them two days later.
"We sat there like stunned mullets . . . not knowing what the hell was going on," Maiden Group director Stu Gordon told The Press this week.
Ireland Group's sole director, Hamish Ireland, said investigators told him "there was suspicion that assessments had been purposefully miscalculated to benefit the contractor and that somehow, not only the Ireland Group, but other companies, were involved in colluding with that, which was complete and utter rubbish".
The company, which had strived to be transparent, suffered irreparable damage as a result of the investigation, Ireland said.
"To this day, no one has explained to me what was the cause for Lumley doing what they did."
The SFO investigation made it very difficult for his company to return to normal and secure similar earthquake recovery work, he said.
"Even though you can point to irrefutable evidence that there was no wrongdoing whatsoever, unfortunately the smell is left behind. I think it [the investigation] is never going to be forgotten."
Ireland Group employed 26 people before the investigation, and now had three staff.
He had not heard from Lumley since the SFO investigation ended.
"There's been no apology made, no explanation - nothing."
"I've spent many years building up a company with integrity and a good reputation, and it just shows you how very quickly someone can destroy it."
Gordon said the SFO investigation was almost the death of the Maiden Group, as it followed the shock of being dropped by Lumley six months earlier. Through the Ireland Group, Maiden had been one of its preferred contractors.
His company had geared up for hundreds of contracts that would have brought in an estimated $7m.
While the company had been cleared of any wrongdoing, the SFO investigation did significant damage to the company and its reputation, Gordon said.
"It had the impact of sitting us back on our bottoms for a significant period of time. Whatever we've got now, we've built purely on the relationship with clients. We've worked bloody hard to get that."
During the SFO investigation, Johnson was paid by Lumley to check the pricing of nearly 200 jobs.
He told The Press he was "engaged" by Lumley to help with the investigation about the time he left Maiden, but declined to comment further.
Lumley's marketing manager, Wendy Rayman, declined to answer detailed questions, as did the SFO.
December 2010 – Maiden Group is formed.
August 2011 – Craig Johnson is appointed as a director of Maiden Construction, a subsidiary of Maiden Group.
May 2012 – Johnson resigns from his role as company director.
July/August 2012 – The Ireland and Maiden groups are told they're no longer needed by Lumley Insurance.
December 2012 – SFO investigators and police raid the offices of the Ireland and Maiden groups amid allegations Lumley has been defrauded of millions of dollars.
May 2013 – The Ireland and Maiden groups receive letters from the SFO notifying them an investigation had found no evidence of "serious and complex fraud".
- The Press