Court told of phantom ChildFlight ads

A senior gambling inspector investigating grants given out by GoldTimes Trust became concerned after discovering an Auckland pub was being paid for ChildFlight advertising that did not exist, a court heard.

Department of Internal Affairs inspector Robert Barrett was giving evidence yesterday in the Rescue Helicopter case in the High Court at Auckland.

Malcolm Beattie, Wayne Porter, Peter John Pharo and Stewart Thomas Romley are each charged with conspiracy to defraud the Auckland Rescue Helicopter Trust between 1997 and 2002.

They also face one count each of conspiracy to defraud the ChildFlight Charitable Trust, which ran a fixed-wing aircraft service for children. They deny the charges.

The Serious Fraud Office alleges grants from gaming machines at five Auckland pubs were dishonestly returned to the pubs in the guise of "advertising costs".

Mr Barrett said he started investigating the GoldTimes Trust in June 2001 after concerns were raised about $12,000 of a $60,000 grant being given as commission to the person who applied for the grant.

A month later, after looking into the matter, he started an audit into GoldTimes Trust.

The trust was set up to distribute profits from gaming machines in five Auckland hotels and gave most grants to the two rescue trusts.

In September Mr Barrett met in secret with helicopter trust employees Julie Helson and Pauline Horan, who passed him advertising invoices for hotels.

Mr Barrett said it was when he went to the hotels to look at the level of advertising that he noticed it did not match up with what was being paid for.

"Some of the information that I had was that there was a billboard being paid for that wasn't actually there.

"The Palace Hotel, situated in Victoria St, had a picture of a helicopter but there was no advertising for the ChildFlight Trust at the site."

Mr Barrett said the concerns about the advertising, as well as other information he had gathered, led to a decision to audit the helicopter and ChildFlight trusts.

By November, he said, GoldTimes chairman Malcolm Beattie had become worried about how rumours about the audits would affect support for the trust.

In an email to Mr Barrett, Beattie wrote: "We are continuing to field calls from people in and outside of the gaming industry all stating ... a full-scale DIA [Internal Affairs] investigation is being carried out against the trust and that the department is 'out to nail us'."

Under cross-examination, Mr Barrett was asked if he ever came straight out and asked the trust about the advertising money during his inquiry.

He replied that his job was to gather information, then ask questions later. He added that it would be "plain stupid to forewarn them".

Mr Barrett handed the case to the Serious Fraud Office on January 14, 2002.

The case

Four men are accused of defrauding the Rescue Helicopter and ChildFlight trusts by diverting millions of dollars from pub gaming machine takings.

The accused

Malcolm Beattie, Wayne Porter, Peter John Pharo, Stewart Thomas Romley, all of whom had roles in the GoldTimes Trust which distributed grants to the Helicopter and ChildFlight trusts.

The charges

Each man faces two charges of conspiracy to defraud, which they deny.