New Zealand judge hits out at UK finance group

Imperial Consolidated stands accused of deliberately producing misleading documents during legal proceedings
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The Independent Online

Imperial Consolidated, the accident-prone UK and offshore finance group, has been accused by a New Zealand judge of backdating key documents for a legal case "in a deliberate attempt to mislead anyone who might later look at them". The comments came in a defamation case brought by Imperial Consolidated against a New Zealand broker.

In his written judgment, Judge William Young strongly criticised Imperial Consolidated and its New Zealand principal, attorney Michael Gilbert. Judge Young was "seriously unimpressed" with the "evidence and conduct" of Mr Gilbert during the legal proceedings, describing his behaviour as "extraordinary".

The judge also cast doubt on two of Imperial Consolidated's investment products at the centre of the dispute, saying they "may have been prime bank investment frauds or something similar".

Additionally, he ruled that Imperial had paid funds to a broker who was not entitled to them and said some investors' funds had "never been properly accounted for".

A spokesman for the group said: "Imperial Consolidated is very disappointed by the judgment. We strongly disagree with many of the conclusions made by the judge in this case and with the overall judgment. We are particularly disappointed with the judge's conclusion that documents in this case were backdated. This was not the case." The spokesman defended the group's record.

"The judge pointed out that no investor lost any money in this product. In fact, investors received a substantial return on their capital as per their contracts with the company. For the record, no individual has ever failed to receive the return they expected by investing with Imperial Consolidated."

David Marchant of the Miami-based Offshore Alert newsletter, who has been monitoring the group's activities, said: "It is ironic that the judgment in New Zealand is far more damaging to Imperial Consolidated's reputation than the allegedly defamatory website that they were complaining about in the lawsuit.

"In an attempt to prove to the judge that they were a decent and honest firm, they submitted documents as evidence that the judge determined had been fabricated. Apart from being ironic, it is highly comical."

The judge's criticism is just the latest of a long series of problems that have curtailed the group's ambitious expansion plans over the last year and have been extensively reported by The Independent on Sunday.

The defamation case stems back to the late 1990s when Imperial Consolidated opened a New Zealand investment operation. The scheme, called "Rusaust" , claimed to offer a return of 9.25 per cent a month for 18 months to investors. New Zealand broker David Stewart claims that Imperial Consolidated failed to pay him $240,000 (£150,000) commission due for investments he brought in. When negotiations broke down, Mr Stewart set up a website questioning the business methods of Imperial Consolidated's New Zealand operation, using headlines such as "Can these companies be trusted with your money?" and "Can they be trusted to look after client interests?" Imperial Consolidated then sued him.

In a judgment on the case in the High Court of New Zealand at the end of December, Judge Young ruled that Mr Stewart was being truthful when he criticised the group on the website. The judge said that a number of Imperial Consolidated internal documents had been backdated to support its case that Mr Stewart was not owed commission. He said that the documents were "falsely dated" and that "whoever concocted these documents on a backdated basis did so with a reasonable degree of care". Two of these documents bore the signature of Bill Godley, who took over as chief executive of the group just before his predecessor Lincoln Fraser was banned from holding directorships by the Department of Trade and Industry in April 2001.

The disqualification related to Mr Fraser's involvement in Progressive Leisure, a company that owned the Midland Grand Hotel in Blackpool, which was wound up in 1995 owing £117,000. He ran Progressive with Jared Brook, who was also later involved in the running of Imperial Consolidated and was banned from being a director at the same time as Mr Fraser.

Imperial's New Zealand principal, Mr Gilbert, and the solicitor's firm of Michael John Harvey of Luton, England, which was representing Imperial Consolidated on the scheme at that time, apparently signed other documents.

Coincidentally, on the day of the New Zealand judgment, the Law Society intervened against solicitor Michael John Harvey, taking over his firm. The intervention is not related to the Imperial Consolidated New Zealand controversy, and Mr Harvey may face a disciplinary tribunal in due course. He appeared before a previous Law Society tribunal in Sep- tember 2000. On that occasion he was fined £4,000 and ordered to pay £881 in costs for breaches of solicitors' accounts rules.

A spokesman for Imperial Consolidated said the company "has not had dealings with Mr Harvey for a number of years and was therefore totally unaware of this development".

Founded in 1994, Imperial Consolidated is a UK-based financial group with subsidiaries in 11 countries, mostly offshore. Its headquarters are at the former RAF Binbrook base near Market Rasen in Lincolnshire. It started as a debt-collecting agency and in Britain was employing 340 people, although some 100 were laid off last year after a series of legal cases hit the loan side of the business. The group says it has 28,000 UK clients for its various investment schemes.

In light of the long series of embarrassing problems, Imperial Consolidated appears to be undergoing a major rebranding and restructuring. Following earlier difficulties, a shake-up of the Imperial Consolidated parent company board took place in April 2001. But in the next eight months, Companies House records show that all those directors resigned. Two incoming directors are in charge of the company: the debarred Lincoln Fraser's brother, Nicholas Grant Fraser, 28; and Masao Imadzu, 51. Mr Godley has resigned from the main board but Mr Gilbert, severely criticised by Judge Young, is still in charge of the New Zealand operation. The firm of which he is director changed its name from Imperial Consolidated (New Zealand) Ltd to Alpha Equities Asia-Pacific (NZ) Ltd on 29 November 2001.

The Imperial Consolidated spokesman said the company was not made aware of the stage the litigation had reached by its legal representatives in New Zealand. "At no stage did our legal team seek the attendance of an Imperial Consolidated representative at the court, even though that person would have been in the position to provide detailed information to answer every single concern that is raised in this judgment.

"We believe that this lack of information, caused through no fault of our own, severely hampered our case and allowed the judge to reach regrettable conclusions. We are particularly disappointed with our legal representation and are considering our position with regard to future litigation. We are also considering our legal position with regard to an appeal."