City accountant suspended on interim basis over $1m client fund allegations
Friday, 23 August 2024
The New Zealand Institute of Chartered Accountants has ordered interim membership suspension for David Matthew Waine following allegations of misappropriating more than a million dollars of client funds, including allegedly using the fund to pay a former partner for a relationship property settlement.
Waine told Waikato Times that he has no comment “other than that I will cooperate with the Institute in their investigation”.
The Professional Conduct Committee (PCC) applied on July 26 to suspend Waine from membership of the New Zealand Institute of Chartered Accountants until further order of the Institute’s Disciplinary Tribunal.
Waine, represented by counsel Jesse Savage, accepted the seriousness of the matter and the suspension before the Disciplinary Tribunal on August 1, but opposed the publication of the rulings, particularly to the news media.
However, the tribunal ruled that there is clear public interest in publishing Waine’s interim suspension and ordered its release.
“The subject matter of the complaint is of the most serious nature,” the written ruling states. “It involves the misappropriation of in excess of $1 million, by a Chartered Accountant in a position of trust. The Tribunal is satisfied that there are no exceptional circumstances, and that publication is both necessary and desirable.”
A complaint against Waine was filed to the Institute by client [AB]’s lawyer on July 19, alleging Waine had misappropriated $1,090,000 from the client’s family trust.
Evidence submitted by the PCC showed Waine had received the funds from AB in late 2022 for investment on behalf of AB’s family trust. A company was formed as the vehicle of this investment, and Waine was set up as the sole director and shareholder.
However, AB’s solicitor alleged that instead of investing the money as instructed, Waine applied it to other purposes including paying over $400,000 to his former wife as part of a relationship property settlement, and spending more than $500,000 on various businesses that either Waine or his other clients have an interest in.
A letter dated June 10 from Waine appeared to show that he has not applied the money according to AB’s instructions. Including acquiring a bee business for $400,000, which was contrary to AB’s express instruction.
Another deed provided by AB's solicitor from June 19 also saw Waine acknowledging he and his company Matley Ltd are indebted to AB and AB’s family trust in the sum of $1,090,000.
However, the Tribunal noted that there is no evidence of repayment made, or immediate prospects for AB to be repaid.
“The evidence strongly suggests that Mr Waine’s financial position is not good,” stated the tribunal.
A debt totalling $278,000 owed to Inland Revenue Department for PAYE and GST arrears means any money Waine makes, IRD will be paid before any to AB.
The Tribunal considered whether allowing Waine to continue to practice would put his other clients at risk.
The Tribunal has found that Waine is a director and shareholder for a large number of companies, many of them appear to be client-related, a structure similar to the company that Waine has set up for AB’s investments.
The companies register shows Waine is either the shareholder, director, or both for 44 companies.
Savage told the Tribunal that none of the many other companies that Waine has an interest in are set up similarly to AB’s investments. Which means Waine does not have sole signing authority to access the bank accounts of those other companies.
But the Tribunal said it is unable to accept the assurances without proper investigation. .
Savage argued publication would destroy the value of Waine’s business - which has a main office in Hamilton, branches in Tokoroa and Auckland, and practice entities in Tauranga and Christchurch trading under the Matley name.
This would reduce the prospect to recover funds and repay AB, said Savage. Currently, Matley’s Tokoroa branch is in a selling process and settlement is expected on October 1, but the Tribunal said regardless of publicising the decision the buyer would be informed of Waine’s suspension. And evaluating how much Waine owes IRD, it is unlikely there would be much of any proceeds left to repay AB.
The tribunal has also not found any other of Waine’s assets that can be used to repay AB. While Savage said funds may be recoverable from other businesses that Waine had an interest in, it is unclear how much of it would be recoverable.
“In any case publicity about Mr Waine's suspension will not materially affect those companies and their ability to repay.”
Waine, owner of Matley, had been a Chartered Accountant since January 2003, and has held a certificate of public practice since June 2007.
He had also run as a candidate for Waikato Regional Council, Waihou General Constituency in 2022.