Yealands’ $23m settlement

Peter Yealands’ departure from Yealands Wines saw him paid $22.8 million and reach a settlement for not disclosing false record-keeping when he sold control of the company in 2015.

In late June, Peter Yealands quit as a director of Yealands Wines, the Marlborough wine business he founded, days before Marlborough Lines took control of the roughly 14 per cent of the company it did not already own.

The lines company is owned by Marlborough power users.

Months after he quit the company, a suppression order lifted, revealing Peter Yealands had been prosecuted along with two former senior staff for covering up the addition of sugar to post-fermentation wine that was destined for Europe.

Sugar can be added to wine in most markets, but it is illegal to add sugar in the post-fermentation phase for wine being exported to the European Union.

The activity, which saved time and money, took place from 2013-2015, involved material omissions in wine records and making false statements in export certificates.

Peter Yealands pleaded guilty to 10 charges under the Wine Act and was ordered to pay a $30,000 fine. The maximum penalty for the charges was jail.

Although he did not directly take part in the illegal activity, he knew of it and took no steps to prevent it, an agreed summary of facts said.

Peter Yealands’ did not disclose the false record-keeping when he sold a controlling stake in the business, Marlborough Lines said.

Marlborough Lines announced in July 2015 that it was paying $89m for 80 per cent of Yealands Wines.

Marlborough Lines chairman shares at $16.7m.

However in mid-2017, Yealands Wines revalued its assets, which saw the book value increase by $70 million.

The valuation was obtained when Yealands Wines and Marlborough Lines knew the Ministry for Primary Industries was undertaking an investigation, but the public did not.

This saw Peter Yealands’ remaining stake rise in value to around $28m.

Dew said this meant the $22.8m paid to Peter Yealands reflected compensating Marlborough Lines, by taking less than the book value.

‘‘He’s taken less than valuation, in order to, to compensate us for those things,’’ Dew said, adding that the company had obtained a good deal.

There was no chance to take legal action against Peter Yealands now, Dew said.

‘‘No. We’ve claims.’’

Dew said he felt ‘‘let down’’ by Peter Yealands, but would not say whether he believed Marlborough Lines was deceived.

‘‘The reality is, Peter [Yealands] is out of the company, that should tell you something. He’s completely out of the company,’’ Dew said.

‘‘We have distanced ourselves from Peter in every respect.’’

But Dew confirmed that Yealands Wines still has an agreement which could see Peter Yealands used as a brand ambassador.

‘‘If he’s required he’s available. We can use him if we want him, there’s no issue.’’

Yealands Wines also continues to hire land-moving equipment from a company owned by Peter Yealands.

Peter Yealands has refused requests for comments since his departure from the company became known in July.

Asked whether he had deceived Marlborough Lines, his lawyer Rachael Reed said simply: ‘‘He is not prosecuted for deceiving Marlborough Lines.’’ settled all those