Inventor claims conspiracy in Deep Video saga

By PETER GRIFFIN IT writer

Hamilton inventor Peter Witehira claims a conspiracy involving Warehouse founder Stephen Tindall and a senior Technology New Zealand official sought to push him out of the company he helped to found.

Civil proceedings initiated by Witehira's company, PowerBeat, in the High Court at Auckland this week continue an acrimonious battle for control of 3D screen technology company Deep Video Imaging (DVI), which uses cutting-edge technology co-invented by Witehira in the late 1990s.

The first ended in PowerBeat losing a court case that claimed Tindall and DVI's management had used "oppressive" tactics to bar PowerBeat from putting more money into DVI.

PowerBeat sold its remaining 10 per cent stake in DVI, ending Witehira's involvement.

Part two of the saga started in a courtroom yesterday with 10 lawyers and a complex paper trail of emails, faxes, board meeting minutes, telephone records and letters dating from late 1999 to mid 2000.

The defendants include Tindall, failed venture capitalist IT Capital, its former managing director, Keith Philips, Technology NZ investment sub-committee member Rick Christie and IT Capital's subsidiary, DVI Investment. Their lawyers are seeking a summary judgment and to have their clients discharged.

PowerBeat alleges breach of contract and of the Fair Trading Act, along with misfeasance in office by Christie. Its case centres on the granting of Technology NZ funding to DVI in 2000 and alleged manoeuvring around the approval of the grant that effectively forced PowerBeat to sell its 34.6 per cent stake in DVI to then-thriving investment company IT Capital.

A cash-strapped DVI had applied to Technology NZ for funding in late 1999 but was declined because the Government body had concerns about the PowerBeat-Tindall joint venture making up DVI, referring to PowerBeat's patchy commercial record and poor reputation.

The $506,000 grant was eventually given to DVI on the basis that Tindall gave several guarantees.

In the meantime, however, PowerBeat had agreed to sell its shareholding to IT Capital for $800,000 in cash.

The situation is complicated by the role of Christie, who helped make investment decisions about technology grants for Technology NZ.

Christie was also chief executive of Rangatira Investments, a company that had a sizeable investment in IT Capital through subsidiary Wainui Investments.

PowerBeat claims that amounts to a major conflict of interest.

Its lawyer, Brian Henry, claimed Christie took control of the information being fed to the Technology NZ board, which has overall say on who receives grants.

"Information is power and Christie is controlling the information going to the board," he said.

Witehira wants the court to reverse the 2000 DVI share transaction.

Christie denies he made PowerBeat's share selldown a condition for the funding being granted.

His lawyer, Queen's Counsel Alan Galbraith, said Christie had no idea IT Capital had any interest in getting into DVI.

Galbraith also claimed that Wainui had been selling down its IT Capital stake in February 2000, which made accusations about Christie trying to further the company's interests by aiding IT Capital's move into DVI nonsensical.

"You'd be taking a ridiculous chance to take this one on. [And] here's Wainui in the middle of this selling shares."

But there seems to be some discrepancy in the affidavits of the key players.

Tindall's financial adviser, Brian Mayo-Smith, said in his statement that Christie told Tindall in late 1999 that the grant application was unlikely to proceed with PowerBeat's involvement.

If the case does go to trial, key players like Tindall, Christie, Mayo-Smith and Witehira may be subpoenaed to give evidence in what could be a very public airing of the activities at DVI in early 2000, when interest in the fledgling technology company was intense.

It's unknown whether Technology NZ has investigated Christie's involvement in issuing the grant to Deep Video Imaging. The agency yesterday refused to make any comment. IT Capital chief executive David McKee Wright was unavailable for comment.

The proceedings continue today.