Failed courier firm accused of pocketing wage subsidy

Tuesday, 5 May 2020

Receiver Damien Grant says Kiwi Transport Services staff will receive only a fraction of what they were entitled to.

A courier company that received more than $70,000 from the government wage subsidy scheme allegedly used the money for business expenses instead of paying staff.

Kiwi Transport Services Limited went into receivership on April 17 and Damien Grant at Waterstone Insolvency was appointed as receiver by Ignite Finance. Kiwi Transport operated under contract to New Zealand Post.

Grant said Kiwi Transport Services director Nitin Nand spent the majority of the wage subsidy payout on bills and business expenses, while 10 staff had not received anything.

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Grant told staff in a letter that Kiwi Transport Services received $70,296 from the wage subsidy scheme on April 14.

A liquidation application by Inland Revenue against Kiwi Transport Services was to be heard at the High Court in Auckland on April 30.

After three days just under $3000 was left.

As a result the staff would receive only 'a fraction of what they were entitled to', Grant said.

Then on April 17, $64,642 was transferred back into the account from another account that had a $20,000 ASB overdraft and a payment from NZ Post of $44,642.

Grant said Nand claimed that the $64,642 transferred from his second account into the original account was part of the wage subsidy.

As the money came from NZ Post and not the wage subsidy programme, that money was owed to other creditors of the company and had priority over staff wages, the letter said.

Grant said employees were only able to be paid from the $20,000 overdraft money.

Staff had not been paid for four weeks before the receivership, Grant said.

So far at least $17.5 million of wage subsidies was being repaid by more than 1200 companies, MSD records show.

An application to liquidate Kiwi Transport Services was filed by Inland Revenue on February 27 and was due to be heard at the High Court in Auckland on April 30, according to documents seen by Stuff.

Kiwi Transport Services had been served with a statutory demand to pay tax arrears on January 23.

The firm owed the tax department $94,390, most of which was for PAYE and GST, the documents showed.

Nand denied Grant's events of what happened.

Nand claimed while his business had been 'struggling' for about a year, after downsizing his fleet and not replacing drivers who left, the company was set to make a profit of at least $20,000.

Nand claimed when his business went into receivership there was $110,000 in available, of which $70,000 was the wage subsidy money.

'Hand on bible I left the business with $110,000. Where has that money gone?'

Grant said this was not true. When he was appointed the company had $67,000 in its account.

Nand said that after receiving the wage subsidy he made a $3000 'important finance payment,' from his allocation of the subsidy, for his company van.

He planned on paying his staff the wage subsidy on April 20, but said it was too late as the company had been taken over by the receiver.

'I have 10 people that haven't been fed and can't feed their families and this is so sad at a time like this when we have a pandemic going on.'

Nand said he had received a two-week notice from Ignite Finance that it was appointing receivers if he was not able to pay back a $50,000 loan.

Nand would not provide proof to support his claims as the matter was being investigated by the Ministry of Social Development (MSD).

Grant said he would be reporting Nand to MSD for the breach.