Dragon's Den star under fire

Shocked creditors are questioning how one of the stars of TVNZ's new reality television show Dragon's Den can be worth $20 million when only three months ago he was banned from running a company.

In promoting the show which goes to air next month, TVNZ introduced entrepreneur Paul Webb as a former bankrupt behind the CityJet airline, which collapsed in 1999.

When the term of bankruptcy finishes, a bankrupt is free from debts owed at the time of being made bankrupt.

However, a Herald on Sunday investigation has found that Mr Webb was involved in another four failed companies which left debts worth at least $3.3m and until three months ago was banned by the Ministry of Economic Development's National Enforcement Unit from any involvement in running a business. The October 2003 banning order came three years after he was made bankrupt by a former landlord. Just days after the order expired, Mr Webb emerged as a director in the Honk! group of companies, claiming to be worth $20 million.

The money was his ticket to appear on Dragon's Den, which sees young business hopefuls pitch ideas to the rich and successful.

Property developer Sir Robert Jones, National Business Review publisher Barry Colman and CallPlus founder Annette Presley are the stars of the show. The founder of the production company making the show, Julie Christie, also features.

Mr Webb's addition to the lineup has puzzled those he has owed money to. They can't understand how he has made so much money in such a short time.

Creditor Brent Mathieson, who bankrupted Mr Webb in 2000, said he was astounded to see his former tenant put forward for Dragon's Den. He said he there were no "sour grapes". "I always found Paul quite a likeable character. I told him when he rose from the ashes next time to do it properly."

The National Enforcement Unit says Mr Webb had made deals he couldn't meet, had made "excessive and inappropriate" withdrawals from the company and indulged in "reckless trading".

The unit also examined the four other companies in which Mr Webb was involved - Pyrenees Ltd, which owned aircraft leased to CityJet; Alpha Investments Ltd, which supplied fuel and other services; the Sussex Bar & Steakhouse Ltd, and Chester Casper & Co Ltd.

The unit's investigator, Leah Wilson, found: "It was as a result of the mismanagement of these companies that they failed, owing creditors an estimated $2.8 to $3.3 million." The investigators also found "clearly excessive" withdrawals by Mr Webb of $223,161 from company accounts in the six months before it collapsed.

Investigators also considered a High Court judgment from August 2000. The case was taken by a group of pilots who paid Mr Webb and his CityJet partner Stephen Mosen $22,000 each for flying lessons, which they never got.

The High Court found Mr Webb, and his former business partners, were liable because of "misleading and deceptive conduct in trade, deceit and conspiracy to injure".

The National Enforcement Unit's report followed an earlier investigation by the Insolvency Service. A letter to creditors from the service, dated February 27, 2001, shows investigators were still trying to discover if Mr Webb had assets a year after his bankruptcy.

The service told creditors: "We are still investigating the position concerning several trusts with which Mr Webb is associated". The final report to creditors, dated August 8, 2001 said the file was being referred to the National Enforcement Unit. The Insolvency Service had already disagreed with Mr Webb over the amount of money he owed. Mr Webb stated his debts were $60,000. The service said he owed $4,764,422 - a difference of $4.7m.

Public databases show Mr Webb owns no shares in any of the companies he is a director in. Instead, the shares are held by the original director of the Honk! companies, property developer Andrew Tauber. He does not show as the listed owner of any property in New Zealand - though promoted by TVNZ as having made a comeback in "commercial property" and media. He does not own the flashy BMW he was shown driving when TVNZ's Close Up introduced the "dragons". It is registered to one of the companies of which he's a director.

Jonathan Glazier, producer of Dragon's Den, said Mr Webb used "corporate trustees" in his company structures, which was "normal business practice".

"After an extensive search, Mr Webb was chosen as a dragon because he has diverse business interests which are complementary to the other dragons and his remarkable comeback story offers hope to our viewers."

Mr Webb declined the opportunity to discuss his comeback with the Herald on Sunday. A detailed summary of the story was sent to a spokesman, who said Mr Webb would consider responding after reading this article.