The Serious Fraud Office (SFO) is investigating two property development companies over allegations the directors misled South Canterbury Finance and Dominion Finance Group to secure loans.
The office says it is investigating loans worth $7 million secured from the finance companies by Property Ventures and Cashel Ventures to build Hotel So in Christchurch.
The two companies were owned by now bankrupt property developer David Henderson.
Property Ventures was placed in receivership in March last year, and Cashel Ventures went into liquidation in December.
SFO chief executive Adam Feeley says failed property developments have had a far-reaching effect on finance companies.
"What we are starting to see now as we work our way through (the collapse of) finance companies in general is that it is starting to spawn investigations into individual property transactions."
He says it is common knowledge that some finance companies were funding fairly speculative commercial developments.
The SFO is still investigating South Canterbury Finance and Dominion Finance. Mr Feeley says his office has made significant progress in its investigation into South Canterbury Finance, and this week he's reviewing a report that analyses the failed finance company's property transactions.
