Wilson Neill linked to second probe

By KARYN SCHERER

A twist of fate has seen hospitality company Wilson Neill linked with allegations of insider trading for the second time in a decade.

Seven years after it settled with its former managing director over allegations of insider trading, the company is looking for a new executive director following the resignation of Paul Hyslop.

Mr Hyslop's decision to resign yesterday came after the Herald won a legal battle to name him as one of three people interviewed by the Serious Fraud Office last year for insider trading.

However, his resignation may be short-lived. He has indicated he will put himself up for election again as a director at the company's next annual meeting.

He has also indicated he will continue to work for the company as an unpaid consultant, following strong shareholder support.

The Serious Fraud Office gagged the Herald from mentioning details about its investigation by subpoenaing reporters to reveal information they had about Mr Hyslop's actions in May last year.

The office has since confirmed it has closed its file on the case, and is not pursuing charges against any of the three people.

It has not said why, although Fletcher Challenge spokeswoman Ginny Radford said this week that she believed it was because it was doubtful whether current laws applied to any of those interviewed.

The Securities Commission has used the case to suggest New Zealand's insider-trading laws need to be rewritten to fall into step with those of other countries, such as the United States and Australia, which have much stricter regulations.

Commission chairman Euan Abernethy said this week that it had decided not to launch its own investigation into the incident, as that would take too long and it was more concerned about suggesting changes to the law.

He declined to comment on whether Mr Hyslop was fit to be a director.

According to the commission's report, all three people the Serious Fraud Office investigated bought Fletcher Paper shares "to some degree" around the time a Fletcher employee accidentally leaked confidential information 18 months ago.

Mr Hyslop told the Serious Fraud Office he had made a profit of $40,000, before brokerage fees, by manipulating the share price. He admitted in court this week he had been "motivated by greed."

It is now up to Fletcher Challenge or disgruntled shareholders to take action against those involved. However, Fletcher has signalled it has other priorities.

Ironically, the commission's report into the Fletcher incident cites the Wilson Neill case in its consideration of whether the law should be changed.

The case involved Dunedin hotelier Colin Herbert, who became Wilson Neill's managing director in 1985 after buying a major stake in the company.

The allegations of insider trading arose in 1991 after five shareholders, including Business Herald columnist Brian Gaynor, bought 14 million shares from Mr Herbert's company, Herbert Group. Mr Herbert settled the claims out of court in 1993.

Mr Hyslop, who joined Wilson Neill as a director in January this year, told the Herald in September that Mr Herbert had been a "great mentor."



According to Wilson Neill's latest annual report, Mr Hyslop was the company's fifth-largest shareholder as at May 25, with around 13 million shares.

He said yesterday that he had boosted his holding to around 20 million shares.

He is a director of more than a dozen companies, including Woodfield Investments, Radionet, Onthenet Networks and South Pacific Hospitality. Many are subsidiaries of Wilson Neill and Mr Hyslop has said he will also resign those directorships.

The former pilot and real estate agent was instrumental in Wilson Neill buying Radionet, a high-speed wireless communications business, this year.

It originally tried to back the business into Australian listed shell Mount Conqueror Minerals, but it is now hoping to do a deal with Jump Capital, whose shareholders include Sir Michael Fay and David Richwhite.

Jump Capital principal Leigh Davis said he would be "very surprised" if Mr Hyslop's resignation affected the deal.

Wilson Neill's other assets include the Cobb & Co restaurant chain and the Parnell restaurant Iguacu.

Its latest transformation comes about six years after the original Wilson Neill was placed in liquidation.

The new company rose out of those ashes with $4000 worth of computer equipment and no cash for its 1200 shareholders.

Today it has about 8500 shareholders, and there has been talk the company will seek to relist on the main board.