30 Jun 2015

Grant firm investigation 'taking too long'

8:47 am on 30 June 2015

The small business sector says the Commerce Commission is taking too long in investigating a company they claim is leading them to believe they will get government grants.

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The Commerce Commission said a formal investigation into the company was started last year. Photo: 123RF

It's a situation they believe is preying on vulnerable start-ups.

Around 100 official complaints have been made since early 2013 about the New Zealand Small Business Assistance Centre.

Businesses have told Radio New Zealand they paid to access a database of grant providers after the company said they were eligible to apply for money.

But they said it turned out they were not due anything and information about grants was all available for free anyway.

'Paying for nothing'

Tracy Kewish's new luxury tour company in North Canterbury needed some cash for advertising.

She said her husband found a website, called the company, and after answering a series of questions, was told they were in line for more than $10,000 in government grants.

They paid $330 of a $551 annual fee to gain access to the database of grant providers, but when they logged in, found they were not eligible for anything.

"We couldn't find any way whatsoever where that $10,000 came from. There was no one there at all that was going to give us a grant of $10 let alone $10,000, or even a loan, an interest free loan, or anything at all."

Ms Kewish said they went to the New Zealand Small Business Assistance Centre, thinking it was linked to the Government, and her payment, which went to London, showed up on her bank statement as "Govt Funding.org".

Jeff Wright, who was trying to get his pet product company off the ground, said he was told he was entitled to a lot more.

"They basically told me I'm entitled to up to $1 million. There was nothing at all that suited me, and it was all for companies earning over maybe $3 million plus that could apply, so there was nothing there for a start-up."

The operations manager at Netsafe, Lee Chisholm, said businesses were not getting what they expected.

"They're definitely led to believe that they will get funding and that's just not accurate. They get the impression it's a Government agency, but it's not."


Netsafe said it had passed all the complaints it had received about the website to the Commerce Commission, which said there had been around 100 since early 2013.

It said a formal investigation was started last year.

But more than two years since the first complaints were made, start-up companies are still using the service.

Jo Emerre, a business growth advisor in Gisborne for Activ8 Tairawhiti, said action was taking too long.

"I'm really surprised and somewhat disappointed because I've had two walk through my door. I'd hate to know how many others have pulled their credit card out and done exactly what these two have done.

"It's crazy that someone's not done something about it," said Ms Emerre.

Ms Emerre said the site targets vulnerable people looking for advice and accepted money that young start-ups could not afford - especially as all information about Government grants was free.

The Commerce Commission said it expected to be able to give more information on the company later this week.

Customers 'advised no guarantees'

A woman who gave her name only as Alexandra, and said she was a division manager at the New Zealand Small Business Assistance Centre, said all customers were advised they were not guaranteed funds.

She disagreed that the company misled people, but could not answer why customers' invoices read "Govt funding.org".

The company's chief executive was not available for comment.

Follow Lauren Baker on Twitter @LaurenBakerRNZ