Du Val-linked company paid for house manager, cleaner, nanny

Thursday, 5 September 2024

An initial receivers’ report suggests Du Val Group NZ purchased “intellectual property” from a trust associated with Charlotte and Kenyon Clarke for $15 million

A new report shows a Du Val-linked company employed the Clarkes’ house manager, nanny and cleaner.

The details are contained in the receiver’s initial report into the property group’s affairs, released on Thursday.

The report was produced prior to the group entering statutory management last month.

A company linked to the troubled Du Val property group appears to have paid for Charlotte and Kenyon Clarke’s house manager, cleaner and nanny.

An initial receiver’s report on the group, released Thursday, lays bare evidence of irregular accounting and transactions that warrant further investigation.

The PWC report spurred a decision to place the companies associated with Du Val into statutory management. Until now, it had not been released.

Are you an affected Du Val investor? Contact nick.truebridge@stuff.co.nz

Investors in the Du Val Mortgage Fund are starting liquidation action

It reveals the group’s portfolio and facilities management activities are run through Investment Portfolio Management Limited Partnership, known as IPM.

Among its employees are a CEO and portfolio managers. However, other employees listed include the Clarke residence house manager, nanny and cleaner.

The report also reveals concerns around an Information Memorandum for the offer of shares in Du Val Property Group Limited (DVPG), released last December.

“A number of professional advisers were listed in the Corporate Directory included in the Information Memorandum,” the report stated.

“We have not yet been in contact with all of the advisers but note that, following a request to provide information on their role, two of the listed advisers have advised they did not have any involvement in the preparation of the Information Memorandum.”

The memorandum referenced an internally produced valuation, agreed by the directors of $306 million to $431m.

However, an independent, external valuation was not included.

“The absence of formal independent opinion within the Information Memorandum, raises concerns over the robustness of representations made in the document, on which Mortgage Fund and Opportunity Fund investors may have based their decision to participate in the DVPG share offer,” the report states.

Concerns have been expressed about about transactions and balances involving a trust connected to Kenyon and Charlotte Clarke, pictured.

Despite a series of concerns traversed in the report, Du Val founder Kenyon Clarke suggested to Stuff the group is in good shape.

While he was unable to speak about the Financial Markets Authority’s investigation, due to confidentiality orders, he was free to talk about his business affairs, offering limited comment on those matters.

“I can say that our accountants have supplied information to the shareholders, where we believe we’re a solvent and good business, that has $5.1 million in its corporate bank accounts and we have the support of its lenders,” he told Stuff.

Meanwhile, receivers have also raised “particular concerns” about transactions and balances involving the JK & CM Clarke Trust.

“There is evidence of irregular accounting entries that have created assets that may not be legitimate and/or for which the recorded value is insufficiently supported,” the report stated.

A previous Instagram post by Kenyon Clarke, who believes the property group is in good shape.

It goes on to show Du Val Group purchased “intellectual property” from a trust associated with Charlotte and Kenyon Clarke for $15 million, creating a loan balance owed to the trust.

The balance was subsequently reduced to $5.5 million.

“As Du Val Group NZ Limited (in Receivership) does not have financial records in Xero we have been unable to determine the associated funds flow supporting these positions,” the report states.

“Further investigation is strongly recommended in this regard, including the basis for the initial purchase transaction and value attached.”

It all comes after the Government placed companies associated with Du Val into statutory management.

“Du Val Group has recently gone into interim receivership, leaving significant liabilities. The situation is complex and of such a scale that immediate intervention is required to prevent broader harm,” Commerce and Consumer Affairs Minister Andrew Bayly said at the time.

“Statutory management is the option of last resort used to deal with complex corporate failure where ordinary insolvency law is inadequate. It is intended to protect investors and creditors from further losses, and to enable the orderly administration of a company's affairs.”

The FMA made that recommendation based on its ongoing investigations and following a report from the Court-appointed interim receivers.

The order applies to four core Du Val Corporations and 20 associated persons (all limited partnerships), along with 46 subsidiaries. One subsidiary is excluded as it is 50% owned by a third party and operates independently of the Du Val Group, Bayly said.

The Government appointed John Fisk, Stephen White and Lara Bennett of Price Waterhouse Cooper (PwC) New Zealand as statutory managers.

Minority shareholders of Du Val later wrote a letter to the Government urging for the business to be taken out of statutory management, fearing the worst for the company if that didn’t happen.