Sir Owen Glenn had a short but tumultuous business partnership with Eric Watson, including a 50 per cent stake in the the Warriors rugby league team. Photo / Dean Purcell
Sir Owen Glenn had a short but tumultuous business partnership with Eric Watson, including a 50 per cent stake in the the Warriors rugby league team. Photo / Dean Purcell
Sir Owen Glenn, who won the latest round in UK courts last night of his bitter dispute with Eric Watson, says he has spent more than $40m in legal fees pursuing his former business partner.
Watson was last night sentenced to a four-month jail term after a High Court judgein London found him in contempt of court for withholding information about his assets from Glenn.
The pair had a short-lived business partnership - encompassing international investments and co-ownership of the New Zealand Warriors league club - before the deal and relationship fell apart in bitter acrimony and led to a tidal wave of litigation.
The titanic legal struggle has raged for more than six years in courtrooms across three countries - the UK, New Zealand and the British Virgin Islands - and with Watson flagging an appeal against his sentence for contempt of court looks to still have a little way to run.
In a brief comment yesterday Sir Owen, understood to be in Australia, said: "I have spent over £20 million in legal fees."
In a statement to the Herald today, Glenn said:
"Eric Watson was given the opportunity two years ago to make a financial settlement and enable us both to get on with our lives.
"Instead he chose to spend the intervening years concealing assets and trying to put them beyond reach thereby putting himself in contempt of a court order. I am sorry it's had to come to this but he only has himself to blame and I am glad that the court has at last been able to make it clear to Mr Watson that he can't carry on defying the judicial system.
"I sincerely hope that he will see the error of his ways and start engaging properly with the legal process."
A spokesperson for Watson said no statement would be made today on the contempt sentence of four months' imprisonment.
Watson's legal counsel has requested to apply for an appeal and requested that the sentencing not be immediate.
Earlier this month, the High Court in England and Wales ruled Watson committed acts of contempt by failing to comply with court orders after earlier being found to have deceived Glenn during their business dealings.
After a lengthy trial, Watson was declared liable in 2018 for £43.5m ($85m) and interest compounding at 6.5 per cent per annum in compensation to Glenn's company Kea Investments (Kea). He was ordered to pay an interim sum of £25m ($48.8m) plus costs of £3.8m ($7.4m).
Watson, who formerly owned the Warriors league club with Glenn, appealed the ruling, which was dismissed by the UK's Court of Appeal in October 2019.
Kea, however, accused Watson of being "deliberately reticent" over providing information about his assets as part of a strategy to frustrate compensation recovery efforts.
Hanover hangover
Watson's sentencing marks the latest chapter in a controversial career spanning several decades.
Eric Watson, Alexa de Puivert and Jon Ledecky enjoy a day at Ellerslie races in 2009. Photo / Michael Craig
He had developed a reputation in the 90s and early 2000s as a playboy who dated lingerie models, owned the New Zealand Warriors NRL team and engineered backdoor sharemarket listings.
Included in that was the downfall of Hanover Group and its three finance companies that froze $554m of investor funds in 2008. Investors voted for a moratorium but when that failed the loan assets were sold to Allied Farmers, which then liquidated the assets in a fire sale with heavy losses for former Hanover retail investors.
Eric Watson never fronted investors in Hanover. That was left to Mark Hotchin, Hanover's other 50 per cent shareholder.
One major bone of contention at the time was the sizeable dividends paid by Hanover to the pair in the two years before investor funds were frozen.
Hanover paid dividends of $86.5 million in the two years ending June 2008, even though it had net earnings of only $54.3 million during this period.
Hotchin later said he and Watson put more into the companies than was taken out.
In 2002 Watson relocated to London, with his finances undergoing an international restructuring utilising Cayman Island vehicles that would draw the attention of Inland Revenue investigators and more than a decade later see one of the country's largest tax avoidance awards.
In 2015 Watson was one of six former Hanover-affiliated people sued by the Financial Markets Authority, which alleged untrue statements in certain Hanover offer documents.
The FMA's case had nothing to do with the deal that saw Hanover investors swap their investments for shares in Allied Farmers.
Watson was not a director of any of the three companies, Hanover Finance, Hanover Capital and United Finance and he also refused to admit he was a promoter of the company as claimed by the FMA.
Eric Watson at his central Auckland office in 2005. Photo / file
In the end an $18m settlement was reached although Watson's name was omitted from the settlement documents and therefore he didn't have to contribute.
A Rainy Day account
Watson, formerly one of New Zealand's wealthiest men, now claims to be impecunious. He said in a court statement the "small amount I spend on living is given to me by my mother".
However, an analysis of Watson's bank statements for September 2018 to September 2019 showed more than £500,000 ($976,987) coming into his account, much of it from what was described as a "Rainy Day" account.
It was this Rainy Day account, held in his mother's name, that Watson was found guilty of withholding information on from the court.
In his contempt decision from earlier this month, Lord Justice Christopher Nugee said Glenn was not pursuing the court action "out of a desire for revenge".
"In those circumstances I do not think it is relevant to know, nor am I tempted to speculate, whether Sir Owen would gleefully rejoice to see Mr Watson committed to prison, or merely wants Kea's judgment debt paid."
Watson has also "not voluntarily paid a penny" of what he was ordered to by the British court.
Kea has managed to identify and obtain comparatively small sums towards the judgment debt but is "still owed the vast majority of it" and has found it difficult to locate any substantial assets, Justice Nugee's decision reads.
The case with Glenn represents the second major court debt Watson's companies have accrued in recent years.
In March 2019 the High Court ruled in favour of the taxman over claims from the Commissioner of Inland Revenue that Watson's Cullen Group had utilised a "web of entities" to avoid paying non-resident withholding tax.
The ruling triggered a $112m claim from Inland Revenue against Cullen, which then went into liquidation.
