Social Development Ministry got hotel contractor liquidated for ‘improper’ Covid cash claim

The Park Hyatt Auckland in Wynyard Quarter. Photo / Park Hyatt Auckland

The Ministry of Social Development has gone to court to get liquidators appointed to a builder after a Covid cash claim for working on a five-star Auckland hotel was found to be “improper”, according to a report.

Stephen Keen and Adele Hicks, of accountants Grant Thornton, issued their initial liquidators’ report on SDCIC NZ Construction, one of many contractors that worked on the waterfront’s $300 million Park Hyatt Auckland, which opened in 2020.

“The company had improperly obtained circa $246,000 in wage subsidies stemming from the Covid pandemic,” their report said.

The Park Hyatt Auckland at Wynyard Quarter. Photo / Stephanie Holmes

“Due to the overclaimed wage subsidy, the Ministry of Social Development applied to the High Court to initiate liquidation proceedings. On July 26, the High Court ordered the company into liquidation,” the liquidators said.

SDCIC NZ Construction was incorporated in 2018 and did commercial construction, including a contract on the Park Hyatt Hotel, they said.

In February 2020, the project was halted and the company failed to generate revenue because it had no other revenue streams, the accountants said.

Hua Wu became the sole director in March that year, but there was a dispute with former employee Huiyun Ling for unpaid wages and holiday pay.

Ling successfully claimed $125,000 in unpaid wages, notice period entitlements and compensation for breaches of employment standards.

The ministry had a preferential claim against the business and the liquidators had asked Inland Revenue to quantify outstanding amounts.

SDCIC NZ Construction was one of many contractors that worked on the waterfront’s $300 million Park Hyatt Auckland. Photo / Getty Images

At this stage, it is not known if there will be any money for preferential creditors.

Unsecured creditors are claiming $306,000, the report said.

“The liquidators are aware of vehicles that may have been previously owned by the company. We will investigate to understand what assets remain in the name of the company and will investigate the status of vehicles previously owned by the company.”

They will also investigate transactions involving property control, unauthorised bank accounts, and the company’s management history, including the actions of previous directors.

Those investigations will determine if any recoverable actions can be taken, such as pursuing claims against former directors for breaches of duty or improper conduct.

That will also include examining the sale and transfer of company assets and any potential misconduct in the time leading up to the liquidation.

Cash in the bank of $52,000 was identified, as well as employees’ outstanding wages and holiday pay of $25,000.

Huiyun Ling, the ministry, Inland Revenue and the ACC are listed as known creditors.

In 2021, the Herald reported hotel developer Fu Wah, headquartered in Beijing, was in discussions over final payments for work on the hotel.

Richard Aitken, local general manager, said: “We’ve got a couple of disputes with a few people but we’re working our way through it.”

The business was proud of the 195-room hotel in Halsey St, but Aitken acknowledged some outstanding financial issues were then yet to be resolved.

In 2018, Fuh Wah was reported to be flying in up to 200 tradies from China due to skilled worker shortages. About 300 residents were working on the project, but it was not enough.

“There’ll be a number of skills mainly around fine decorating including stonework, tiling, wallpapering, painting, veneer work — there’s quite a lot timber veneer within the hotel, so they’ll bring those skills to us,” Aitken said then.

In 2022, the Herald reported the ministry had ramped up investigations of wage subsidy scheme scams, doubling numbers of those criminally charged.

The scheme paid about $14 billion to businesses that could prove a loss in income due to the pandemic and related restrictions.

Along with public pleas for businesses to return funding they did not need, the ministry used many benefit fraud investigations staff to monitor the scheme.

The construction company in liquidation is unconnected to the hotel’s management company.

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.