Grandmother with no assets or income lent $4 million

A mortgage company chaired by former Prime Minister Jim Bolger, is being investigated by the Serious Fraud Office after allegedly lending $4 million to a grandmother with no assets or income.

The 73-year-old woman was in the country on a visitor's permit and signed the documents which were faxed to the mortgage company, Trustees Executors, by her son-in-law, property developer Simon Turnbull, the Sunday Star-Times reported today.

The newspaper said mortgage documents it had obtained showed the money was advanced to Maria de Magalhaes, a Portuguese speaker originally from Mozambique, who was only in the country on a visitor's visa.

The newspaper said it was unclear what the company was told about de Magalhaes.

The money was lent in February 2007 against an apartment building in central Auckland linked to Turnbull and his wife, architect Monica de Magalhaes.

Maria de Magalhaes has since defaulted on the loan, had been bankrupted at Trustees Executors' request and had a high court order against her for $3.8m, which she has little or no hope of paying.

The newspaper said two other loans totalling nearly $5m were advanced by Trustees Executors to Turnbull's sister-in-law, also called Maria de Magalhaes. It is understood bankruptcy proceedings have been started against her.

Monica de Magalhaes has been made bankrupt and reportedly owed millions of dollars. She was on the domestic purposes benefit and looking after their three children.

Turnbull had moved to Hong Kong.

SFO director Grant Liddell told the newspaper he would not comment while the case was being investigated.

- NZPA