Health tonic was toxic for charity
POLICE AND the Charities Service are investigating the collapse of a gingko scheme which has cost a charitable trust for the disabled about $1 million.
Nature Green NZ, a registered charitable gingko biloba trading company, folded in July 2012 owing creditors about $1.7m.
The company was set up by Napier real estate agent John Knight and Napier City Council economic development manager Ron Massey to produce and sell high grade gingko to China.
Gingko is used as a health tonic but has proved toxic for the charity it was meant to enrich, the Disability Training Service H.B. Trust Board. The trust supports its disabled clients to become independent in all areas of their lives, such as cooking skills.
The trust’s losses, including on the sale of trust buildings to satisfy some of Nature Green’s loans, related to the gingko blowout totalling almost $1m.
Nature Green’s liquidator David Petterson said Nature Green NZ failed for reasons including a lack of expertise by the directors, the time it took to develop a gingko grower base to a critical production mass, and paying too much for gingko leaf stock. Undercapitalisation of the company was another issue.
Both Knight, who was sole director of Nature Green NZ when it folded, and Massey, were trustees of the Disability Training Services Investment Trust Board which was founded in 2003 to build and manage investments and assets for the benefit of the trust board’s disabled clients. The trust board provided capital for the pair’s gingko venture through the investment trust and in 2010 and 2011 allowed its properties to be used as collateral for $650,000 worth of loans from local businessman Colin Crombie and the owner of a Napier mini-mart. The Disability Training Services Investment Trust Board is listed as the sole shareholder of Nature Green NZ.
Financial statements filed with the Charities Service, the former Charities Commission, show Knight was paid $192,551 – $86,376 in 2011 and $106,175 in 2010 –in director’s remuneration by Nature Green NZ. Massey was paid $4000 in 2010, the financial statements show.
Knight would not comment on Nature Green NZ’s failure or the appropriateness of the director’s fees. He said he ‘‘wouldn’t have a clue’’ what he had been paid by Nature Green NZ and directed questions to the liquidator. Petterson said Knight had received more than $550,000 in total from Nature Green NZ.
‘‘It’s a large amount of money . . . When you consider all of the invoices he submitted and paid himself.’’
Petterson said he had laid a complaint with the Napier police relating to Nature Green NZ’s failure. A police spokesperson confirmed there was an active file open on the matter.
And the Charities Service has also confirmed it is ‘‘reviewing the Disability Training Services Investments Trust Board’s charitable purpose’’.
‘‘We cannot comment on the nature or extent of this review while it is under way,’’ Charities general manager Brendon Ward said.
Petterson said he had filed civil claims against Nature Green NZ’s director – Knight – and former director Massey. He wouldn’t detail the nature of the claims but a court date has been set down for April 2 in Napier.
He alleged in his liquidator’s
‘Somebody made some very, very aggressive decisions and the question is, where does the accountability for those decisions lie?’
beneficiaries or board members. In 2010 the trust board wrote off $35,990 due to the ‘‘insolvency’’ of associated company 3P Industries. Knight was a director of 3P along with former investment trustee James Tennant.
The board’s 2010 accounts show $100,000 was paid to 3P for wages subsidies. The investment trust’s 2010 financial results show a current account for 3P had $54,306 in it.
No insolvency documents for 3P are listed with the Registrar of Companies.
Disability trust board member Jenny Galbraith distanced herself from the Nature Green NZ collapse.
She said it was the investment trust which owned Nature Green NZ and made the decisions.
‘‘I have nothing to do with the investment trust or their decisions,’’ Galbraith said.
The failure of a company Galbraith and her husband Rodger set up in 2003 resulted in a charity, the Christian Outreach Centre NZ Trust, selling its Napier church to satisfy the company’s debts, according to a liquidators report for the company, Citylight Napier.
The Galbraiths were pastors of the Napier church that was sold. They repaid $10,000 to the church for a company overdraft, the liquidators report said.
Galbraith wouldn’t comment on the circumstances of her business failure or whether it was appropriate for a charity’s assets to be used as collateral for a personal business venture.
A spokesperson for the outreach church said the Galbraiths were no longer involved with the church.
Rodger Galbraith has been employed at the disability trust since 2010.