Lender under lens

Women's clothing chain Jean Jones makes up a quarter of bombed financier Rockforte's loan book. Photo / Richard Robinson

The Companies Office is to investigate failed finance company Rockforte Finance.

Gisborne-based Rockforte, which entered into the Government's deposit guarantee scheme in February last year, was placed in receivership by its trustee Covenant Trust in May.

It is closely aligned with women's clothing retailer Jean Jones, which has been dogged by financial troubles and an ownership dispute.

Bernard Montgomerie, liquidator of two of the Jean Jones companies, said advances to the retail business accounted for around a quarter of Rockforte's loan book.

Phil Day, investigation manager at the Companies Office's National Enforcement Unit, confirmed his office had received a complaint about Rockforte and was about to allocate it to investigators.

There would be interest in Rockforte's directors, Nigel O'Leary, John Gardner and Colin Simpson. The three are also indirectly shareholders in Rockforte.

Receiver Dennis Parsons said Rockforte had 71 investors and a loan book of about $4.4 million. Prior to the receivership it had told Treasury officials administering the deposit guarantee scheme that about $1 million of its loans were impaired, he said.

"We will be saying in our report that that is not correct, that the impairment is at a far higher level."

The receivers had not got to the point of investigating the related party lending to Jean Jones yet, as they were still "up to our ears" meeting the requirements of the guarantee scheme.

Under the scheme, investors will be paid out first, then the receivers would recover as much as they could for the government, Parsons said.

"There may have to be a little bit of muscle goes in there to ensure that they get paid back."

Last year, O'Leary and Gardner were embroiled in an ownership tussle with the original owner of the Jean Jones chain, Michael Ward.

Gardner eventually claimed ownership of the assets after exercising his rights under a general security agreement.

However, Montgomerie said Gardner had picked up the business for significantly less than it was worth, leaving the IRD $1 million out of pocket. The tax department was still chasing those funds, he said.

Meanwhile, he had complained to the Institute of Chartered Accountants about O'Leary, who is a qualified chartered accountant.

Covenant Trust managing director Graham Miller said he was not permitted by law to comment on Rockforte's activities. He said it was a mutual decision between the trustee and Rockforte's directors to put the company into receivership.

"They had been looking at trying to establish an exit mechanism themselves but couldn't make it work."

Rockforte withdrew from the deposit guarantee scheme on January 1. Treasury spokesman Angus Barclay said it did not comment on the affairs of individual companies involved in the scheme.

The Rockforte files

* Rockforte Finance is in receivership owing 71 investors $4.4 million.

* It was covered by the Government's deposit guarantee scheme so investors will be paid out.

* Receivers begin recovering as much as they can for the government, but say the loan book is impaired.

* There are concerns about large amounts of related party lending to women's clothing retailer Jean Jones.

* The Companies Office is about to start investigating Rockforte.