Swamp kauri firm goes under

More than 95 per cent of swamp kauri exports go to China. Photo / John Stone

Swamp kauri company fails owing $5m after fine for draining protected wetland

A swamp kauri company fined for draining protected wetland in Northland's "black gold rush" has failed owing more than $5 million.

The company, Sovereign Station Trustee, owns a 940ha Northland property in a wetland known as the Kaimaumau swamp, about 30km north of Kaitaia.

The company, according to its liquidator, was set up in 2010 when it purchased land "for the purpose of extracting swamp kauri for export to Chinese markets".

While it was looking to cash in on the "black gold" trade, Sovereign Station became embroiled in litigation with the Northland Regional Council, which saw it fined $50,000 for breaching the Resource Management Act.

After defaulting to both secured and unsecured creditors, the company was in July put into liquidation and receivership.

Liquidator Grant Reynolds released his report into the company's affairs earlier this month, showing debts of more than $5 million.

Secured creditors have a $2.5 million mortgage over the property, the report says. However, the book value of this property is only $1.89 million, the liquidator said.

Inland Revenue is owed $220,000 while unsecured creditors and suppliers are owed $2.86 million, the report says.

The "black gold rush" has soared in recent years. In May 2012 the Ministry of Primary Industries said nearly 600cu m of swamp kauri had been exported over the previous two years.

This soared to 2800cu m between January last year and April this year, according to MPI data.

More than 95 per cent of exported swamp kauri went to China, with Italy being the next biggest market. MPI does not hold information on the value of these exports.

Excavated swamp kauri trunks can be up to 50,000 years old and used to make furniture or artwork.

Under the Forests Act, it is illegal to export any swamp kauri unless it is a finished product or a personal effect or it is from stump or root material (either whole or sawn) sourced from non-indigenous forest land.

Even then, exporters require MPI approval if they want to send kauri stumps or roots overseas.

Sovereign Station, its former director Raymond Bird, and a contractor working on the property were last year taken to the Environment Court by the council.

They were charged with unlawful diversion of water, using land in breach of a regional plan rule and contravening an abatement notice and an enforcement order. Before the charges were laid, the Environment Court in 2011 issued an order allowing certain work on the property.

However, council inspections discovered work that breached this.

"The work included earthworks, vegetation removal and extraction of swamp kauri. The defendants transported swamp kauri to a mill in Mangonui where the kauri was milled and exported for commercial gain," courts documents alleged. The contractor, Gary Beckham, pleaded guilty to 21 charges while Bird admitted 16 charges.

While the charges carried a maximum of two years' jail , Beckham and Bird were sentenced in February to three months' community detention and 200 hours of community work.

Sovereign Station Trustee and a company Beckham directed were both fined $50,000.