The Blue Chip failure changed the lexicon. A 'blue-chip' opportunity will never mean the same again in New Zealand. Phil Taylor traces the decline and fall of the company.
Mark Bryers. Born the son of an All Black, 1957. Bachelor of law, 1980. Failed property developer, 2001. Blue Chip hero 2005. Blue Chip villain 2008. Bankrupt 2009. Declared assets: clothes, furniture, golf clubs.
Home is a 14th-floor apartment in the five-star Quay West Suites in The Rocks, with views to Sydney's Opera House and harbour. The marketing guff describes the heated indoor pool as "Roman-style". Nice digs.
He flies to New Zealand for court appearances and meetings with officials working on Blue Chip's collapse and his bankruptcy and he is represented by a big-firm lawyer even though he is not receiving legal aid.
Although nothing like the hedonistic early Blue Chip days of fast cars and upmarket hookers, it does suggest available funds.
The judge due to sentence him in May on bookkeeping charges has ordered that Bryers be interviewed about whether he has the means to pay a fine. If he does, his creditors will want to know where that money is coming from.
The Herald's inquiries suggest business associates in Australia are helping him financially.
The $5000 per month bill for Bryers' Quay West apartment is paid by Northern Crest Investments - the last surviving company in the Blue Chip family. It was Blue Chip's parent company and prior to the Blue Chip collapse was called Blue Chip Financial Solutions Ltd.
Bryers resigned as a director and executive of Northern Crest in May last year, a few months before he was declared bankrupt. In response to his bankruptcy, Australian authorities also disqualified him from being a company director there.
But his trusts remain the Sydney-based Northern Crest's biggest non-institutional shareholder, owning about 5 per cent.
The company is currently suspended (for unpaid listing fees) but is gearing up to be a streamlined property investment firm, similar to Blue Chip. Though the company's most recent accounts show it is in the red, it has found money when it has had to in order to stay alive. Last year it fought off a court bid by New Zealand's Registrar of Companies to have it liquidated and - under threat of a wind-up application - last month paid Sir Bob Jones $300,000 for rent owed for Blue Chip's lease of Queen Street offices owned by Robt Jones Ltd.
It is unclear where the money came from. Northern Crest's reports say that it made a loss of A$2.7m in the year to March 2009 and had "a deficiency in working capital of $8.4m and a deficiency in assets of $8.4m ... and available cash of $1000".
The Herald tried to ask Northern Crest about this and why it was paying for Bryers' apartment but phone messages left with its chairman and executive director - Australians Marc Wilson, a partner in Canberra firm WWP Accounting Group, and Laurie Eakin - were not returned. Wilson and Eakin took over the company reins after Bryers resigned.
The Herald understands that Bryers is doing consultancy work and has the backing of people in the Australian Capital Territory connected to Northern Crest.
One with business links to Bryers is Robert Hughes. Hughes replaced Wilson as director of RSZ Investments Pty Ltd which has gone into partnership with Northern Crest.
According to Northern Crest documents, RSZ has contracted to put up A$500,000 to underwrite a rights issue and had paid a licensing fee of A$784,363.
When asked who Hughes was by a reporter last year, Bryers declined to elaborate.
Contacted at his MacArthur home near Canberra, Hughes this week told the Herald the fee was for a licence "to work for Northern Crest". That work appears to be a marketing role for Northern Crest's property investment schemes.
Of his relationship with Bryers, Hughes says he has known him about a year having been introduced by a casual acquaintance and was aware of Blue Chip's history.
"He is not an employee of ours and that is probably about as far as I would like to go."
He and Bryers do, however, have links beyond Northern Crest. According to Australian Securities and Investment Commission records, Bryers transferred to Hughes his shares in three other companies - Carmoney Group Pty Ltd, Hallandale Group Pty Ltd, Nyall Group Pty Ltd - at about the time Bryers was declared bankrupt.
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Once estimated by the NBR rich list to be worth $70 million, Bryers lives less ostentatiously. Gone are the Maserati, Bentley, Mercedes and Aston Martin of Blue Chip days. He drives a lease car and his personal spending is understood to be unexceptional.
Most of the fortune he amassed when Blue Chip was on the way up is believed to have been lost as Bryers' empire foundered.
There are, however, thought to be some assets, a knowledgeable source told the Herald. "At the end of the day, is there $40 million around? No. $20 million? No. One or two million? Possibly, and it will possibly be in one or two of these trusts."
Five trusts were used as the vehicle for Bryers' interest in Blue Chip shares (see sidebar on facing page). The heavily mortgaged Remuera house he shared with his former wife was owned by the Bryers Family Trust and he has reportedly made payments since the Blue Chip collapse from the Sebastian Trust (Bryers has a son, Sebastian, who lives with him in Sydney).
The trusts are of interest to the Official Assignee who has the task of recovering available assets for creditors. Of particular interest is the sale by two of the trusts of shares worth $22m in the year before Blue Chip collapsed.
"He doesn't own anything. [Any assets] are hidden under layers." the source said.
Identifiable assets are heavily mortgaged. An example is a $3.4m Waiheke property which was owned by the Bryers-controlled Olive Grove Trust. That property carried a $5m security to Lombard Finance and Investments Ltd (now in receivership).
The Waiheke property was sold in March 2007 but GST was not paid on the sale. Receiver Vivian Fatupaito told the Herald inquiries are continuing into where the proceeds went and whose responsibility the GST was.
This wasn't the only sale at this time. One month before the sale of the Waiheke property the first package of Blue Chip shares was sold for A$11.8m.
What happened to that money?
Lombard which had also secured its loans against Bryers' trusts' Blue Chip shares and the family home (as yet unsold, mortgaged to Kiwi Bank) didn't get it, according to Lombard's receiver, PricewaterhouseCoopers partner John Fisk. He told the Herald that "it appears from Lombard's records that they did not receive any material reduction in their exposure as a result of the share sale transactions ..."
He also said that doing business with Blue Chip contributed to Lombard's failure.
The Herald understands that the bulk of money from various sales made by Bryers has been accounted for, but that questions remain about what could amount to a few million dollars. Bryers is expected to be interviewed about this in May when he returns to Auckland to be sentenced in the district court on 31 bookkeeping charges.
Under the Insolvency Act, bankrupts are required to co-operate with the OA and to account for the three years prior to bankruptcy. The OA's powers include accessing Bryers' bank and credit card accounts for that period. He can also prevent him from travelling overseas if he considered Bryers to be unco-operative.
The OA in charge of Bryers' bankruptcy, Les Currie, says he is unable to comment.
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Meanwhile, Blue Chip liquidator Jeff Meltzer says there is evidence of reckless trading and he may pursue relevant directors. He was awaiting an opinion from a Queen's Counsel about what would be expensive litigation.
Wyatt Creech was one of the first directors to have serious doubts about Bryers. Creech, who served as deputy prime minister in Jenny Shipley's Government, resigned in June 2006, a time when Blue Chip - and Bryers - were still popular with investors.
In an exclusive interview about Blue Chip, Creech told the Herald he made his concerns clear to the board in his letter of resignation. He wouldn't provide a copy because "it wouldn't be cricket" but was prepared to answer our questions.
Creech joined the board in December 2004 after being invited by Jock Irvine, a member of various boards and a former senior partner of law firm Simpson Grierson.
By the time Blue Chip launched on the Australian Stock Exchange in May 2006 Creech wanted out.
He had been concerned about the drain of money from Blue Chip to prop up Bryers' related companies but says he was given to believe that had stopped and that the company's cash problem had been rectified by capital raised by its launch on the Australian Stock Exchange.
"At the time I left [June 2006] it had just completed due diligence with Macquarie Bank [a shareholder which also helped prepare the company's launch on the ASX]. Deloittes was then the auditor.
"The accounts were up to date but I lost confidence in the chief executive [Bryers]."
The accounts may not have been up to date for long. Four months later, Creech's old cabinet colleague, John Luxton, wrote a scathing resignation letter to the board (obtained by the Herald) noting that he had considered resigning when Creech went but "felt that it would be unduly damaging to the Company to have two directors leave together at a time when it needed stability to deal with what we were led to believe to be a short-term cash flow problem". Luxton, whose portfolios included commerce and housing, wrote of Bryers: "I no longer have confidence in the advice, judgment and frankness of the Managing Director."
It appears the immediate catalyst for Luxton's decision to resign was learning the week before that far from being brought under control, "more than $17 million of related party or non-Blue Chip expenditure has now taken place this year and looks likely to continue".
Despite Bryers' reiterating during due diligence that Blue Chip was "a specialised finance company and would not be getting into any form of property development ... what has actually happened over the last nine months is that Blue Chip has come to bear the development risk by funding the MD's companies".
Though Bryers may never have intended this, Luxton wrote, "it shows at the least, muddle and lack of planning".
Luxton took no comfort that the loans were backed by "the primary exposure of the MD and his reported personal wealth.
"At the last meeting, however, it emerged that his assets outside the company could be minimal, though he continued to assert a net worth of $28m."
Both former cabinet ministers thought the company could be salvaged - even though by the time of Luxton's resignation the board had received two reports baldly setting out the seriousness of the situation. Blue Chip needed new funds immediately in order to pay bills, including tax, and the primary cause was "cash bleed" to prop up Bryers' interests.
One of those reports, titled "Uncut" and written by an unknown executive, noted that of $25m raised that year from shareholders, $17.5m had gone in payments to Bryers and his related parties - mainly hopelessly insolvent development companies contracted to supply properties to Blue Chip.
Sacking Bryers was raised under the heading "issues to be addressed". "Mark is too heavily conflicted ... to do what is best for Blue Chip - nor does he possess the skill set to do so, or the trust/support of the senior executive."
The board appears to have taken the advice. Four months later, in February 2007, tucked away near the bottom of a Blue Chip press release about a boost in profit of 51 per cent was the news that Bryers had "retired".
Blue Chip tried to address its money woes by again going to the market. It raised A$5m in late 2006 and A$24 million in a June 2007 share issue.
Those events served to boost the share price, which turned out to benefit Bryers who made his share sales soon after when the price was high. But these measures were too late for Blue Chip.
Seven months after the June share issue, the Blue Chip group collapsed.
Speaking after the collapse, Luxton told the Herald he hadn't warned the public because he thought that "would do enormous brand damage to the organisation and prevent any opportunity of trading their way through."
Creech says he had only his gut feeling about Bryers and without evidence had no basis to go public.
"You are placed in a very difficult position when you are an independent director. You only know what you get told and you are not a forensic accountant and a detective."
Of Bryers' skills, Creech says: "I'm not 100 per cent sure whether the guy was deluding himself as to what he was capable of. I feel, personally, a considerable amount of disappointment that I was ever involved."
Creech said he was aware before joining the Blue Chip board that Bryers had a chequered past.
"I wasn't aware of the detail but Jock Irvine had told me that he [Bryers] had had some issues earlier on but that he believed they were behind him."
Bryers had gone broke in 2001 over apartment developments in Auckland. Creditors claimed to be owed $44m while Bryers claimed to owe a fraction of that. Bankruptcy was avoided after creditors agreed on part-payment. Bryers later joined with former bankrupt Bob Bangerter to form Blue Chip.
A report recommending that Bryers be banned from acting as a director or in management of a company beyond the three-year term of his bankruptcy has been drawn up but is yet to be served. Phil Day, acting manager of the Ministry of Economic Development's National Enforcement Unit said the report was being reviewed at head office.
The Serious Fraud Office is expected to conclude its investigation soon.
A MAN WITH A MISSION - TO MAKE A NAME FOR HIMSELF
Mark Bryers had big boots to fill. His father was an All Black - a lock, the tall timber of rugby.
Ronald Frederick Bryers played one test for the All Blacks - a loss to Australia in 1949 - and several matches for New Zealand Maori.
His size was an attribute he passed on to his second son, Mark Ronald Bryers. By the time Mark Bryers was born (Taumarunui, 1957) his father's representative rugby days were over. Ron was a senior teacher at Taumarunui Primary School and about to move the family to Tauranga where he would take up a principal's job.
As it transpired, Taumarunui Primary had a link to more than one name that would become prominent. Tom Brown - father of SuperCity mayoral aspirant, Manukau mayor Len Brown - was also a teacher at the school and became firm friends with Ron Bryers. Brown gave a eulogy at his colleague's funeral in 1987.
"We got on like a house on fire," recalls Brown. "I was privileged to know him. He was a a great guy.
"They were a happy, sociable family. They loved sport and music and school life and social life. Party at the drop of a hat."
Brown best remembers the older two of the four Bryers siblings, Stephen, who became a lawyer and perhaps inspired his brother to follow suit - and Rhonda, the talented musician whose soprano voice and ready smile saw her become one of the country's most popular entertainers during the 1980s.
Rhonda died of a suspected heart attack in 2007, aged 55, at her home in Hawaii.
Mark Bryers seems to have shared some of his sister's charm. People the Herald spoke to described him as charismatic, personable, confident - a natural salesman. He is said to have wanted to become the first Maori billionaire. One person who did business with him recalled that Bryers had name-dropped that his father was an All Black and his sister a famous singer. He, too, has made headlines, though not the sort he would have envisaged.
Bryers' other sister, Lynda, left teaching to work for and invest in Blue Chip. Brown understood she and her husband had had to move to a smaller property "when tragedy struck - when Mark's bomb went up".
THE TRUSTS
Odonn Trust: Sold 8.5 million Blue Chip shares February 2007 at A$1.25 for a total of A$10.629m.
Blue 2006 Ltd: Acts as a bare trustee for Bryers. Sold 942,000 Blue Chip shares February 2007 for $1.25, receiving A$1.177m.
Hobson No 2 Trust: Sold 5 million Blue Chip shares 13 July 2007 at $1.50 for A$7.5m; owned further 9.46 million at same date.
Hobson Trust: Owned 6.26 million Blue Chip shares, July 2007.
Seddon Trust: Owned 2.2 million Blue Chip shares at July 2007.
The Bryers Family Trust: Owns 11 McMurray Rd. Purchased January 2006 for $3m; mortgage facility to Kiwibank, $4.1m.
Olive Grove Trust: Owned $3.4m Waiheke residential property. Sold March 2007. Bryers was sole director and shareholder of Olive Grove Trust Ltd, which acted as trustee. Various parties had security over the property. GST was not paid on the sale. Liquidator Vivian Fatupaito said she was continuing to gather information.
Sebastian Trust: Assets unknown. Bryers son's name is Sebastian. Payments by Bryers to another former Blue Chip executive after the group's collapse reportedly came from this trust.
