Tamihere says elders in homes scams

By JAMES GARDINER and MARTIN JOHNSTON

Maori kaumatua are being used to give credibility to housing scams, Associate Maori Affairs Minister John Tamihere said last night after the Government moved against eight companies running controversial "buy-back" schemes.

After a special meeting of senior Cabinet ministers yesterday, Commerce Minister Lianne Dalziel said the companies would be placed in statutory management to prevent fraud or other reckless trading behaviour and to protect the public.

Mrs Dalziel said that by moving immediately on the recommendation of the Securities Commission, 10 further house sales were blocked.

Some of the companies and the people behind them were already under investigation by the Serious Fraud Office, she said.

Mr Tamihere said many of the elders who promoted the schemes did not know what they were fronting at "evangelical" meetings.

Some later became victims themselves, losing title to their homes.

Mr Tamihere said Maori families on low fixed incomes, sometimes pensions, but with significant equity in their homes were the main targets of the scams.

The firms named by Mrs Dalziel were: CH Finance, ICMG Leasing, The Independent Creative Management Group, Toi Te Atatu, Sleinad Finance, Opol, ICMG Holding, and ICMG Property.

She urged home-owners affected by these or similar buy-back schemes to come forward.

"There may be other companies that we don't know about. We can't investigate unless complaints are made."

The commission had identified more than 30 properties involved but Mr Tamihere said he was aware of at least 80 before the 10 sales that were blocked yesterday.

Some home-owners were won over at evangelical-style meetings featuring a Maori kaumatua who had little or no knowledge of what was being promoted.

The positives were played up: the chance to help a family member - a son, niece or grandchild - to obtain a deposit for a home of their own.

People would be told they were getting a once-in-a-lifetime opportunity to extract cash from the equity they had - something most banks would baulk at because the home-owners did not have enough income to increase their outgoings.

Warnings about buy-back schemes were broadcast for more than a year by TVNZ consumer programme Fair Go.

Reporter Simon Mercep said he had investigated three separate firms, none of which was among those named yesterday.

He was delighted the Government had finally stepped in, saying a co-ordinated approach was needed to outlaw some of the practices.



Auckland lawyer Catriona MacLennan, who has acted for several buy-back victims, including one family this week who lost their home of 40 years, said the Government needed to go even further.

"These schemes should be made illegal. I haven't seen them benefit any families I have been involved with and lawyers shouldn't be signing people up to these deals."

Mr Tamihere agreed: "Your last bastion of support for vulnerable people is the legal profession, who have a monopoly on conveyancing."

He had complained to the Law Society about two law firms and three lawyers, but said he had to threaten to name the lawyers in Parliament to make the society investigate.

A typical target, with $120,000 equity in their home, would sign ownership of the property over to the finance company and simultaneously sign a lease-back agreement.

They would then be loaned $25,000 to use as a deposit on another home for a family member, with agreement that title would be restored when the loan was repaid.

But people were signing agreements, which often included power of attorney, without getting legal advice or even meeting the lawyers, said Mr Tamihere.

The lawyers supposedly acting for them were also acting for the finance companies. Mr Tamihere said this was wrong.

"You don't transfer land from one client into the hands of another who's a finance company, and take a rent-back scheme without knowing why that's happening because normally you'd take a mortgage.

"That must set alarm bells ringing as soon as you see a transfer coming up.

"Also, you don't transfer land from one client to another unless you've met both.

"Thirdly, before you do anything you've got to commit yourself to the Credit Contracts Act, which is to explain the deal. They did not do that so there is no disclosure."

* Statutory management, like receivership and liquidation, is a way of dealing with at-risk companies, but it is used rarely and as a last resort.

It can be imposed when a corporation is operating fraudulently or recklessly, or to protect the public's or creditors' interests.

Case by case, the Government invokes it by an Order in Council, on the advice of the Commerce Minister following a recommendation from the Securities Commission. The statutory managers who are appointed have complete control of the companies concerned.

Famous cases include the Development Finance Corporation, Equiticorp, and Chase New Zealand Property Group.