KEY POINTS:
Investors' main hope of getting at least some of their money back from Bridgecorp is tied up with the fate of one of the South Pacific's most ambitious developments.
The Momi Bay Resort, 35km south of Nadi, was to have notched up many firsts for Fiji - the first over-water bungalows, the first public-private infrastructure partnership, the first Marriott resort, the first Ritz-Carlton and, once completed, the first investment of its kind to be owned by Fijians themselves through their national superannuation fund.
It was anticipated that up to $500 million would be spent on the development. According to Bayleys, which has been marketing it, Momi is destined to become "one of the world's most spectacular resorts". It was originally expected to open this month, with the first stage including six beaches, seven restaurants, an infinity pool, a spa, a nine-hole Thomson Perrett-designed golf course, and 60 villas with state-of-the-art technology such as wireless high-speed internet access.
The developer, Matapo Ltd, is a joint venture between Bridgecorp and Real Estate Assets Finance Ltd, which until March was known as Urwin Fernandez (Fiji) Ltd. So far, Matapo has borrowed nearly $50 million from Bridgecorp for the project - making it the biggest outstanding loan by far.
In May 2005, the Securities Commission granted Matapo a five-year exemption from the requirement to provide potential New Zealand investors with a prospectus and investment statement.
The commission's general counsel, Liam Mason, says the decision was a technical one to do with the body corporate structure, and in line with normal practice. Given that property sales in New Zealand do not require such documentation, it is not logical that sales outside New Zealand should have different criteria, he says.
However, New Zealand investors, who are believed to make up a significant chunk of the buyers so far, might have been interested to learn a bit more about Gary Urwin and John Fernandez, the names behind the joint venture.
Urwin, a Kiwi now living in Australia, has been a director of Bridgecorp since 2003. He is an accountant who in the late 1990s was linked to a scheme in which investors lost millions on both sides of the Tasman.
The Digitech "black box" scheme prompted the Serious Fraud Office to charge four New Zealand businessmen with fraud and money-laundering. In the end, the men were all acquitted of the charges, although the judge said he had no doubt the scheme was a tax-avoidance structure.
It had been alleged in an Australian court case in 2002 that the "whole arrangement" was put together by Urwin and NZ investment banker John Reid, and that Urwin stood to make A$3.9 million ($4.4 million) by recruiting investors into the scheme.
Urwin later claimed to be a victim of Reid but, curiously, records show that in 2005, he and Fernandez sought a patent with the World Intellectual Property Organisation for a similar device which they had supposedly invented - a method of distributing a recyclable video camera. The application appears to have come to naught.
It was Urwin who got Marriott onboard at Momi. The plan was to help finance construction of the five-star hotel, and the rest of the resort, by selling residential lots to investors.
By last December, $85 million in residential sales had been made. However, $35 million worth of lots remained unsold, and Matapo still hasn't seen much of the money, as the conditions required for settlement have not yet been met.
From the beginning, the project was dogged by political and technical dramas, including a row with the Fijian authorities over the payment of tax on land sales.
In December, the coup by Frank Bainimarama halted the issuing of land titles. Then in March, a major payout the developers were due to receive from the Fijian Government was withheld, after an argument over the quality of a public road the developers built as part of the project.
While the Fiji Development Bank has been sympathetic to Matapo's woes, the Unit Trust of Fiji, which has lent it a further $12 million, has not been so patient. The trust, which got several new board members in May after the previous ones were sacked as part of a crackdown on corruption, is now trying to wind up a company linked with Matapo, and to force the sale of land earmarked for stage two of the project, in cases that were still being decided at press time.
The only hint given to Bridgecorp investors that there might be problems in Fiji was a note in its prospectus, dated December 21, that the Fijian military had staged a coup two weeks earlier. "As a result, the political and governmental situation in Fiji may adversely affect Bridgecorp's cash flows or lead to a reduction in Bridgecorp's earnings or in the value of Bridgecorp's assets," it warned. The directors said they believed stage one would proceed to completion "albeit with a delayed timetable, the extent of which delay the directors are unable to ascertain at present".
In fact, problems at Momi began long before the coup.
According to Fiji's current finance minister, Mahendra Chaudhry, difficulties arose during ousted Prime Minister Laisenia Qarase's time. "The project got into trouble around October last year, with contractors pulling out because they were not being paid on time by the developers," he told the Government website in May.
Chaudhry told The Business last week that although work had resumed on the resort, "there is not much happening at the moment, as they seem to be cash-strapped. However, there are others who are willing to take over the project, so we are working on that now. They are prepared to come in right away."
New Zealand companies, including Herbert Construction and Downer Construction, are believed to be among creditors demanding payment before they resume work.
Bridgecorp receiver John Waller is optimistic about the resort's future, but says it is impossible to say how long it is likely to be before investors will get any money back.
The managing director of the Fiji Development Bank, Tukana Bovoro, has been reported as saying he hopes the resort will be completed in August or September next year. But Waller notes that the political situation in Fiji remains "very fluid". "It's a lovely spot. There are a number of people who are interested in the site as well, but we just need to figure out what is the best way to go forward."
Meanwhile, the fate of dozens more developments in New Zealand, Australia and Guam to which Bridgecorp has been linked remains unclear. They include:
* Manukau Towers, a 15-storey apartment development in central Manukau.
* Marriott Courtyard Hotel in Manukau.
* Ocean's Hotel and apartments in Tutukaka.
* A townhouse development at Albany.
* Bendemeer Lodge and villas at Lake Hayes.
* A townhouse development in Te Atatu South.
* A residential subdivision at Mangawhai.
* Pacific Palms International Resort and Golf Club at Papamoa.
* A townhouse development at Blockhouse Bay.
* Te Pania Hotel in Napier.
* Fraser Waters, in Hervey Bay, Queensland.
* Marriott Courtyard Hotels at North Ryde, Parramatta and Surfers Paradise.
* Marriott Resort and Spa in Guam.
Of the 69 loans on Bridgecorp's books, just 25 had first or second mortgages. Fifteen were unsecured and 10 are the subject of legal dispute.
Around a third were for developments in Auckland. A quarter of the money was for projects outside New Zealand and, say the receivers, "loan provisions appear to have been understated".
