Paltry return on $3.8m haul

Westpac hasn't had much much more luck recovering money from its runaway millionaires in New Zealand than it has abroad.

The bank has legally taken and sold four houses owned by Leo Gao or his mother Huan Di Zhang, and soaked up any cash left over from his Rotorua business, Heights Service Ltd.

But there wasn't much to get - the properties were mortgaged, in many cases to Westpac, and have suffered from the property market or, in one case, the leaky homes debacle.

In May, the bank gained the legal right to seize assets owned by Gao, his mother or brother up to the value of almost $3.8 million - the amount the family managed to hang on to after a $10m banking error.

Gao's former investment home in Auckland's West Harbour was advertised as having "weathertightness issues" and no compliance certificate.

"Would suit builders," the estate agent suggested. Rated at $735,000, Quotable Value recorded it selling for $360,000.

In Eden Terrace, a rundown villa with a government valuation of $770,000, sold for $570,000.

A group of students and workers at a house in Eden Terrace have also lost out - while the house was owned by Gao and he was on the run with Kara Hurring, they lived rent free. One tenant said they were paying rent again.

Two homes in Rotorua were also sold, and the bank was the main recipient of the receivership of Gao's service station, Heights Service.

Documents from the receiver show the bank claimed a $4.7m debt from Gao - a clear $1m more than the amount kept from the banking error, showing the extent of the family's debt.

After meeting debts, paying tax, staff and their own costs, the receivers were able to return some funds to Westpac - a grand total of $2007.

- HERALD ON SUNDAY