SFO charges economist with fraud of wealthy investors

CHRISTCHURCH: A Christchurch economist who convinced some of New Zealand’s wealthiest businesspeople to plough tens of millions of dollars into his Cayman Islandsbased investment fund has been charged with fraud.

Kelly Tonkin (52) was charged by the Serious Fraud Office (SFO) on March 26, court documents state.

He has yet to enter a plea and is next expected in court on May 27.

The alleged fraud is believed to be one of the biggest of its type in New Zealand history and its alleged victims include several richlisters and Auckland’s private Diocesan School for Girls.

According to the charging documents, the SFO claims that investors in Tonkin’s Penrich Global Macro Fund were told the scheme was worth $137.2 million in February last year, but it actually had a value of only $20.7 million.

Penrich collapsed suddenly in March 2020 and liquidators appointed to its branches in London, the Cayman Islands and Christchurch.

They told investors a ‘‘significant discrepancy’’ had been uncovered, and the SFO began investigating soon after.

Tonkin was charged by SFO principal investigator Willie Harris at the Christchurch District Court with five offences, including two of false accounting; two of making false statements to causes losses or induce new investors; and one count of forging an audit letter.

Tonkin said yesterday he was not in a position to comment.

‘‘I think I’m still in the can’t sayanything stage at the moment,’’ he said.

Asked if he intended to defend the charges, Tonkin replied, ‘‘I haven’t even got to that point as yet’’.

The false accounting charges relate to Tonkin’s alleged inclusion of false asset values and hidden cells in the fund’s ‘‘Monthly Value’’ spreadsheets for nearly a decade, from September 2012 until the fund’s sudden freezing in February 2020.

In September 2012, the fund reported a value of $13.6 million, but this was alleged by the SFO to have been inflated by $10.6 million.

In 2016, a UK pension scheme, Evergreen, noted in its annual report that it had withdrawn from the fund ‘‘due to the delay in the provision of audited accounts . . . and the auditor’s inability to verify the valuation of the underlying assets’’.

Charging sheets allege some international clients stopped receiving monthly investors statements about this time, suggesting they withdrew their investments.

They included Swiss stock exchange’s depository SIX SIS AG, and France’s Societe General Bank which had been involved as a custodian for client funds.

According to charging documents, on December 18, 2017, Tonkin is alleged to have manufactured financial statements that gave a false picture of the fund’s position in 2016.

‘‘The defendant falsely stated the total assets, total liabilities and the net assets of the Penrich Global Macro Fund,’’ the SFO alleges in its charge of forgery.

‘‘The defendant forged a BDO Cayman Islands auditors report and attached it to the financial statements.’’

The charges of false statements relate to Tonkin’s representations to investors, both in including the allegedly fraudulent inflated value in their monthly account balances, as well as in monthly updates on his trading activity which the SFO alleges far understated the level of risk and losses he was incurring.

Tonkin grew up in Christchurch and graduated from the University of Canterbury with an honours degree in economics, before working at Treasury, then Banker’s Trust where he made regular media appearances giving economic and financial commentary.

He moved to London in 1999, working at illfated investment bank Lehman Brothers, before starting Penrich in 2004 and returning to New Zealand a decade later, where he became a fixture in Canterbury football and Cashmere school boards of trustees. —