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A second-hand car finance firm that collapsed owing $25 million to investors is the subject of an official inquiry.
Two years ago National Finance 2000 was the first of more than 20 major finance companies throughout the country to go into receivership, owing millions to more than 2000 "mum and dad" investors. A liquidator was appointed last month.
Run by high-profile second-hand car dealer Allan Ludlow, National Finance is now under investigation by the National Enforcement Unit of the Companies Office - along with other failed finance companies Bridgecorp, Blue Chip and Five Star Finance.
A Ministry of Economic Development spokeswoman confirmed the investigation, hinted at in receiver reports from PricewaterhouseCoopers, which has been completed and referred to the Crown Law Office.
The Herald on Sunday understands the charges being considered relate to allegedly misleading statements in the company's prospectus.
Herald on Sunday attempts to contact Ludlow were unsuccessful.
More than 2000 debenture bond holders are owed $25 million after National Finance and a related firm, Payless Cars, were placed in receivership in May 2006.
National Finance had loaned $27 million to car dealers and customers purchasing vehicles from Payless Cars, also headed by Ludlow, which ran four Auckland car yards.
Ludlow touted for business in television commercials, even as the companies were struggling, and the Payless group is also in liquidation.
Last October the company's loan book was sold to 80s high-flyer Alan Hawkins' Cynotech Holdings for $7.7 million - a third of its face value.
The most recent PWC report says secured investors could get nearly half of their money back.
Unsecured investors and creditors would get nothing.
Two auditors of National Finance have been censured and were fined $133,000 in June after pleading guilty to breaching the Institute of Chartered Accountants' code of ethics.
Bruce Mincham and Michael Wood, of Queen St accountants O'Halloran HMT, admitted they failed to check the finance company's assertion that advances of $5.8 million to motor vehicle dealers were secured over the trading assets of the companies and by personal guarantees, when this was not the case.
The pair also failed to report in writing to the Covenant Trustee Company of breaches to the trust deed.
However, PWC accountants Colin McCloy and John Waller uncovered a "number of matters that have come to our attention" regarding the operations of National Finance and the Payless Cars group.
"We have referred concerns to a range of government authorities who continue to conduct investigations," McCloy wrote in his August report.
