American landowner denies deceit and $1m profit

An American businessman fined $17,000 for failing to honour his commitment to develop a Queenstown property never set out to deceive the country, his lawyer says.

Lance Cornell Weller, who was also ordered to pay $5000 costs, had promised the Overseas Investment Commission he would develop a chestnut orchard and a Douglas fir plantation when it allowed him to buy the 43ha property in 2000.

But the only development Mr Weller did was for his holiday home.

He is the first person convicted of breaching rules for foreign investors.

The Overseas Investment Office, which now regulates this area, has about 30 investigations under way in Auckland and the southern lakes area.

Contacted at his Atlanta home yesterday, Mr Weller referred the Herald to his lawyer, John Troon.

Mr Troon said Mr Weller was a pragmatic man who would take the conviction on the chin and move on. He had left money in New Zealand to pay the fine.

The Queenstown District Court heard Mr Weller made a profit of $1,072,011 by selling the Queenstown property, but Mr Troon said Mr Weller made no money out of it.

Mr Weller had suffered financial setbacks when his telecommunications business in the US closed.

"He was bitterly disappointed he had to sell, I think. He was committed to this country and its economic benefit. But there's no insurance against having an economic crisis. None of us are immune to that," Mr Troon told the Herald.

"He knew that he had to provide economic benefit. So he put up a proposal that satisfied the national interest test. He was just a bit slow in doing it. He certainly didn't set out to circumvent the regulations."

Overseas Investment Office manager Annelies McClure said the prosecution of Mr Weller sent an important message.

More prosecutions could follow but such cases were often difficult because foreign investors claimed good reasons for not completing work they had committed to.

A wealthy US investor is currently facing a charge in the Wellington District Court of failing to declare a conviction to the office.

Illinois company owner Dick Schomburg was excused in negotiations on the charge that relates to the disclosure of a hunting-related conviction in his homeland when he sought to buy a $1.35 million share in Benmore sheep station, Canterbury.

Queenstown Lakes Mayor Clive Geddes said he was very encouraged that the office was taking a pro-active stance in ensuring foreign property owners met their obligations.

"I have a very clear view, that if people are able to come into this country - as they are entitled to - and to buy property and to enjoy the assets that we have here, then they need to understand they have to abide by exactly the same rules as the local people do," Mr Geddes said.

"I think offshore investors have a higher obligation if anything.

"They are accessing a residential privilege and they need to ensure that they meet all the conditions of that."

Many foreign buyers had gone on to live in the Queenstown Lakes area and proven themselves to be "exceptionally civic-minded people".

"I don't think anyone in the lakes district has a problem with people coming in from offshore and living here and contributing to the economy and community."

The penalties

* Legislation this year has increased tenfold the penalties for breaches of foreign investment rules.

* Investors can now be fined as much as $300,000 and can face up to 12 months in prison.

* The High Court can order the disposal of property owned by foreign investors and they can also lose the entire profit made on their investment, regardless of how large that might be.

- Additional reporting: NZPA