Key to helicopter trust case found in car boot

A bundle of documents found in a car boot was the key to unlocking a case of conspiracy to defraud trusts operating Auckland's air ambulance services of millions of dollars, says the Serious Fraud Office.

The trial of Malcolm Beattie, Wayne Porter, Peter John Pharo and Stewart Thomas Romley opened in the High Court at Auckland yesterday with the prosecution outlining a "money-go-round" involving poker machine money.

The four are each charged with conspiracy to defraud the Auckland Rescue Helicopter Trust [ARHT] between 1997 and 2002, and one count of conspiracy to defraud the ChildFlight Charitable Trust, which ran a fixed-wing aircraft service for children.

The prosecution says the group ran a pokie racket where funds from machines in pubs in which Pharo and Porter held a financial interest were granted to the rescue services on the agreement that half the money would go back to the pubs for advertising.

The pokie licences were held by the GoldTimes charitable trust, of which Pharo and Porter were trustees, as were members of the ARHT and ChildFlight trusts who benefited from the grants.

The Crown says that between 1995 and 2002 GoldTimes granted $13.6 million to the two trusts, but $5.8 million of that was directed by agreement back into advertising.

Nicholas Davidson QC, representing the Serious Fraud Office (SFO), said it was alleged that Pharo and Porter lined their pockets with the advertising dollars flowing back to the pubs.

The Crown says the cost of billboards outside pubs was inflated and some advertising never existed.

Mr Davidson said Beattie did not directly financially benefit but he was a driving force in the scheme and Romley's hand was all over the activities of the group.

He said other trustees at GoldTimes were kept in the dark and it was only when helicopter trust staff began asking questions about advertising costs that Internal Affairs started looking into the trusts.

Mr Davidson said the investigation led to a search warrant being executed at Romley's home in March 2002.

When Romley was asked for the keys to his vehicle he said he would like to go out and get some milk first.

Mr Davidson said the car was searched and documents in the boot showed attempts to cover up dishonest advertising costs.

"The Crown says Romley removed these from his workplace and hid them because they showed the true story.

"Without the discovery of these it is highly unlikely the SFO would have unlocked the underlying basis of these [advertising] calculations."

He said the documents referred to the "50-50 principle" and an "advertising split" where half of the grant money was to go towards advertising.

Lawyers for Beattie and Romley said the men had not lined their own pockets or drawn inflated salaries. The jury had to determine whether they intended to defraud anyone.

John Billington QC, representing Beattie, said his client was a pioneer of the helicopter service and questioned whether he would prejudice its finances and defraud the trust.

"It is not a crime to make a mistake. It is not a crime to get it wrong," he said.

The trial continues today.

The case

* GoldTimes charitable trust was established in 1990 with Peter Pharo and Wayne Porter as trustees. It held the gaming licences to operate machines in five pubs - the Birdcage, Palace Tavern, Strand Tavern, Cazino Bar and Goldie's Casino - in which Pharo and Porter held a financial interest.

* GoldTimes granted most of its poker machine proceeds to the Auckland Rescue Helicopter Trust, which operated the Westpac Rescue Helicopter, and ChildFlight, a fixed-wing service for children.

* The Crown says half the grant money was given back to the pubs in advertising costs that were inflated.

* ARHT was established in 1990. Malcolm Beattie was elected chairman in August 1990 and Porter as deputy chairman in May 2000.

* ChildFlight Trust was set up in January 2000 with Porter and Beattie as trustees, Stewart Romley as finance director and Beattie as executive chairman.

* Beattie joined the GoldTimes board as a trustee and became chairman in December 1998.

* Romley became secretary in June 1999.

The accused

* Beattie, Porter, Pharo and Romley each face two counts of conspiracy to defraud.