Pub owners drove scheme, court told

Two pub owners accused of large-scale fraud in the Rescue Helicopter case held the "whip hand" in the scheme, the Auckland High Court was told yesterday.

Wayne Porter and Peter John Pharo had influence in all three corners of a triangular arrangement that produced millions of dollars in gaming revenue for the Auckland Rescue Helicopter Trust and the ChildFlight Trust but also returned millions of dollars to the pair by way of a bogus billboard advertising arrangement, Serious Fraud Office prosecutor Nick Davidson, QC, said during his summing up in the six-week case.

They owned pubs that housed the gaming machines and were trustees of the GoldTimes Trust, which received revenue and distributed money from the machines. Porter was a founding trustee of the helicopter trust which, with ChildFlight, received most of the money paid out by GoldTimes.

Porter, Pharo, Malcolm Beattie and Stewart Thomas Romley, all in their 60s, are accused of conspiracy to defraud the two ambulance trusts. They deny the charges.

Beattie and Romley, at the other two corners of the triangle, held management roles at the ambulance trusts and GoldTimes. They were willing participants and involved in covering the tracks of the advertising arrangements, the court was told. Their gain was the receipt by the trusts of funds needed for their survival, Mr Davidson said.

It was up to the Crown to prove that the payback of up to 55 per cent of the grants to the pubs was a conspiracy rather than an honest mistake.

Mr Davidson said the back payment was a set rate agreed among the parties and bore no resemblance to actual cost or value of the advertising.

Advertising costs were never properly considered from the inception of the scheme in 1995 until 2002, when investigations by Internal Affairs and the SFO began.

Examples included the helicopter trust paying $154,000 for advertising at one pub a year after DB Breweries paid $20,000 for a billboard at the venue; payment by Childflight of $500,000 (over three years) for a billboard that didn't exist; and by the helicopter trust of $900,000 (over six years) for a single billboard.

Mr Davidson said the "conspicuous absence" of the word "advertising" in company minutes was to shield the scheme from outsiders, including its own board. "The Crown says only a small group of people knew the reality."

Threats made to a former employee when she started to question the advertising payments, the attempt by Romley to hide key documents, and an email outlining an intention to deny investigators certain information were other examples.

Summing up for the defendants is expected to begin today. The judge is likely to sum up on Thursday.

The case

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

The accused

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

The charges

Each man faces two charges of conspiracy to defraud.