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Jean Jones demise caught up in latest SFO probe

Jean Jones demise caught up in latest SFO probe

By Pattrick Smellie

Dec. 10 (BusinessDesk) – The swirl of official investigations surrounding failed finance company Rockforte is growing, with the Serious Fraud Office confirming a probe that will almost certainly shed light on the failure of the Jean Jones clothing chain.

The Gisborne-based lender was placed in receivership in May, owing $3.25 million to 77 investors, all of whom were covered by the Crown Retail Deposit Guarantee Scheme.

“Although not large in dollar terms, this is a case that has had a large impact on a local community,” the SFO’s chief executive Adam Feeley said. “Therefore the investigation fits well with the SFO’s objective of restoring public confidence and improving financial security of New Zealand investors, within that community.”

At the heart of the Rockforte collapse is a series of partially disclosed events involving the Rockforte principals, accountant Nigel O’Leary and Gisborne businessman John Gardner, who are both close friends and distant relatives.

O’Leary was also a close business adviser to Michael Ward, the Gisborne-based owner of the Jean Jones women’s’ clothing franchise, which had 20 retail outlets and, unusually for New Zealand in the 21st century, a local manufacturing base.

Bernard Montgomerie, liquidator of two of the Jean Jones companies, has said advances to the Jean Jones retail business accounted for around a quarter of Rockforte's $6.8 million loan book.

In April last year, O’Leary to Gardner seized the assets of the Jean Jones company, leaving Ward – a founding family owner – and creditors owed at least $4 million, including a little under $1 million to the Inland Revenue Department.

The Securities Commission, IRD, Rockforte’s trustee Covenant Trust, Companies Office, the National
Enforcement Unit of the Ministry of Economic Development, and the Institute of Chartered Accountants are also all conducting investigations either into Rockforte or the conduct of O’Leary, a long-time friend and financial adviser to Ward.

Ward says O’Leary was virtually running the business at the time of the assets seizure.

The New Zealand Herald reported in October last year that the liquidator had sufficient evidence to take a complaint to the SFO, with Montgomerie saying: “In my opinion, this has been an orchestrated campaign over at least three years…progressing on to money-washing through the company, and the final seizure of all the assets and failing to account.”

Rockforte is the seventeenth finance that has been investigated by the SFO since 2007. Of these, nine investigations are ongoing and, to date, five have resulted in criminal charges.


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