I didn’t know about tax debt: director

A former Forsyth Barr stockbroker who poured $460,000 into a nowfailed internet business says he was unaware of its tax debt.

Rowan Johnston told the High Court at Auckland yesterday that he would never have bought into NZNet had he known about the Inland Revenue debt, nor would he have lent more money to the internet provider.

Johnston is one of three men being chased by NZNet Internet Services’ liquidators for compensation after the company collapsed in 2011 owing creditors more than $1.1 million.

The liquidators, Damien Grant and Steven Khov, say Johnston — with fellow NZNet directors Stephen Andrews and George Thomas — elected to trade while the firm was insolvent.

The three men are accused of reckless trading, failing to exercise the skill and diligence of a reasonable director and failing to keep proper accounting records.

Johnston said he was approached about buying shares in NZNet by Andrews, who had been with the firm since it began. The pair had known each other for more than 30 years and Andrews had been Johnston’s

class teacher at their church. After due diligence, Johnston put $260,000 into the business and became a director at the end of 2009. He continued to lend it money, pouring a total of $460,000 in by the time he resigned in September 2011.

But Johnston said NZNet’s tax debts were not disclosed to him.

The IRD is now claiming $386,000 from NZNet’s liquidators.

When he discovered the amount owing in a letter from IRD in September 2011, he quit the company, he said.