War of words flares as Hartner man returns

By ANNE GIBSON Property editor

A former Hartner director, who has returned to the company to help recover $13.1 million disputed debts from developers, has defended it against criticism.

Mike McQuarrie, former finance director of the collapsed Hartner Group, lashed out at Auckland quantity surveyor and arbitrator Geoff Bayley for his statements to regulatory authorities and his criticism of the company.

Mr McQuarrie, who went to Gaze Construction when Hartner collapsed this year, has returned "to try to recover the money outstanding from developers."

Receiver John Waller has listed $13.1 million in disputed book debts for Hartner, which he has been trying to recover since being appointed in February.

Mr McQuarrie says he has returned "to help Wayne Hartner recover his money."

"But several of the senior management of Hartner Construction have been on my case about all this in the press by Mr Geoff Bayley," he said.

Mr McQuarrie and former senior Hartner Construction management wanted the right to respond "to the media reports of allegations of fraud and corruption made by Mr Geoff Bayley."

Since the receivership of Hartner Group and Hartner Construction in February, Mr Bayley has sent information on the Hartner collapse to the media, the Official Assignee and the Securities Commission.

He has consistently called for Government intervention in the collapse and for a statutory manager to be appointed to Hartner Construction, saying it would allow a full investigation of the collapse to take place.

But Mr McQuarrie said that now the Securities Commission had rejected this idea it was time for the truth to come out.

In response to Mr McQuarrie's statements, Mr Bayley said it was unhelpful for a "trial by media" to take place.

He acknowledged that the Securities Commission had rejected the idea of a statutory manager, but said it had asked the Official Assignee to consider at least 14 points about the collapse. These included:

* The role of the bank.

* Whether Hartner Construction was involved with voidable transactions, possible reckless trading or trading while insolvent.

* The need to investigate accounting records.

* Undervalue transactions.

* The possibility of banning Hartner Construction directors from acting as directors again.

* Possible breaches of legislation.

* Allegations of fraud.

Mr Bayley said the recommendation that these aspects be considered was the result of his efforts, along with those of Subcontractors Federation executive officer Peter Degerholm.

He had raised these points for the good of the industry, he said.

But Mr McQuarrie criticised Mr Bayley's "misguided campaign," saying it did no good.

"The main point I would like to make is that Mr Bayley has never requested any information from the directors, management or staff of Hartner Construction, in order to confirm or deny any of his allegations.

"All his so-called evidence is based on hearsay and conjecture."

He criticised Mr Bayley for asking creditors and subcontractors to contribute $200 each.

In an e-mail to subcontractors asking for the money, Mr Bayley said he needed it "for fighting for the unsecured creditors and investigating all the Hartner companies and some of the assets outside the control of the bank, receiver and liquidator."

With about 1200 creditors, Mr McQuarrie said, Mr Bayley stood to make $240,000 from this.

In response, Mr Bayley said not all the creditors or subcontractors sent him money.

"I have barely covered my costs, in terms of my own time. I spent three or four months with no income and turning away work because I have been doing this, so there's no personal gain," Mr Bayley said.

Mr McQuarrie criticised Mr Bayley further.



"Some of the unfortunate subcontractors and suppliers of Hartner Construction may be misled into believing in Mr Bayley's crusade but one can only hope for their sake that they won't easily part with their $200."

Mr McQuarrie also said Mr Bayley's work advising clients involved in disputes against Hartner would reduce the money flowing to subcontractors and creditors.

"None of the directors or management of Hartner Construction has ever acted in a fraudulent or reckless manner," he said.

"Wayne and Gaile Hartner decided more than a year ago to risk all their wealth in an attempt to protect the creditors and staff from ruin.

"Many hundreds of thousands of dollars were spent by the Hartners on legal fees, trying to recover money owed by clients, through Hartner Construction, to its creditors."

Mr Bayley responded: "I have been so moved by the dozens of tragic stories of destitute subcontractors and families affected by this collapse that I turned away fee-earning work for months in order to make comprehensive submissions calling for an investigation that would cost creditors nothing."

This was the only hope for many people and it was only after prompting from subcontractors that he asked for "a contribution towards my costs."

Mr Bayley said he too had to make a living but no one was under any obligation to contribute.

During the past 18 months, Mr Bayley said, he had been encouraging the Government to introduce the Construction Contracts Bill "that will soon provide some protection for cashflow, fast-track dispute resolution and secure enforcement procedures for payment."

"I am pleased that the Government has had the courage to move swiftly to introduce this to ensure collapses like Hartners will hopefully never happen again."