4 Apr 2019

Shareholders in failed forestry scheme receiving some money back

12:21 pm on 4 April 2019

Thousands of shareholders enmeshed in a failed forestry investment scheme are finally receiving some of their money back, but many may be significantly out of pocket.

Logs stacked after an industry operation.

Logs stacked after an industry operation. Photo: RNZ / Stock Photo

The 18 Forestlands companies were placed in liquidation last year, after the Financial Markets Authority (FMA) intervened in recovering the proceeds of the sale of its forestry assets for $23.5 million in 2016.

Forestlands liquidator, Neale Jackson of KordaMentha, said 2500 investors, out of more than 4000 would receive this month an average of 47 cents for every dollar they were owed.

"There's still about 1800 odd shareholders who are completing the process that we started to confirm all their details so we can pay them this first distribution as well."

There would be subsequent distributions, however Mr Jackson would not put a value on them.

One shareholder and former accountant, Wayne Drogemuller, 59, who invested $26,000 in 14 Forestlands companies, said he was not confident he would receive even half of his money back.

"Oh, hell no. It's going to be drip fed to us from today... Probably this payout will give us $11,000."

Mr Drogemuller invested in the scheme 20 years ago, but complained about the time taken for the payouts to be finalised and the lack of information about the investigation into the scheme by authorities.

"It's disgusting. We haven't heard anything from the FMA or the Serious Fraud Office."

The FMA and SFO said their investigations into Forestlands were still ongoing.

"While our own process does take time, we are pleased to see investors are starting to see interim payments from the liquidation," an FMA spokesperson said.

Director settles on payments

Meanwhile the liquidators have reached a settlement with the Motueka-based Forestlands group former director.

The liquidation found Rowan Kearns owed $1.75 million to the group of 18 companies, directly and through parties related to him.

Liquidator Neale Jackson said they prepared to pursue legal action to recoup the money from Mr Kearns, but he denied liability, and believed he had a case for a counter-claim.

To shut down the legal to and fro, liquidators negotiated a settlement.

The terms of the deal were confidential but Mr Jackson said it was in the best interest of shareholders.

"It avoids the inherent uncertainty and cost that would be associated with pursuing claims through the courts," he said in his report.

The amount Mr Kearns would pay would be revealed in the next liquidators report due in October.

Mr Kearns had previously said he felt attacked, threatened and bullied, as the Financial Market's Authority (FMA) and Serious Fraud Office investigated his affairs.

Mr Jackson said he did not know when the liquidation would end.

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