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Illegal doss houses flotsam of loans scandal
By TONY WALL - Sunday Star Times Last updated 05:00 01/11/2009
Photo: Michael Bradley
Inside one of the illegal conversion properties in central Auckland.
Photo: Phil Doyle
Station Lodge in Pt Chevalier, which is properly consented despite its poor condition.
A FINANCE company chaired by former Prime Minister Jim Bolger has been collecting rent from tenants of doss houses in Auckland that are either squalid, overcrowded or illegal.
Trustees Executors Ltd (TEL) says it is working to bring the buildings into line with council and fire regulations after it inadvertently became landlord of the properties in the wake of a $50 million loans scam.
Auckland City Council planning and building compliance officer Bill Smeed said the council had learnt of at least four office buildings that had been illegally converted into boarding houses. It had immediately closed down one, in Upper Queen St, and given TEL three months to rectify another before it, too, would be closed. Smeed said people's lives were at risk and the council would take a hard line as it identified further properties in the portfolio.
"It's disappointing to see this type of conversion, that has not been done through the proper channels – it's people's safety we're talking about."
TEL began taking possession of the boarding houses last year when loans to two of its favoured clients, Simon Turnbull and Malcolm Mayer, began defaulting. The pair had drawn millions of dollars against the buildings using frontpeople with no money or assets. Instead of money being invested in the buildings to bring them up to residential standard and getting the necessary building consents, they were left as they were, with tenants living in potential fire-traps.
TEL executive director Deepak Gupta said the company discovered the state of the buildings only after it took possession and was taking steps to rectify them as it prepared them for sale.
"Unknown to TEL, Mr Mayer and Mr Turnbull clearly set themselves up as slum landlords," Gupta said. "TEL is putting right the mess they created."
Mayer, who in September admitted to the Sunday Star-Times he made "crimes of omission" in his loan deals, denied he was a slum landlord and blamed Turnbull for not putting money into the properties. He said TEL's "exorbitant" penalty interest rates meant he hadn't been able to properly maintain the buildings.
Turnbull is believed to be living in Hong Kong and could not be reached.
For the first time Bolger has commented on the loans scandal, appearing to distance himself from it in a brief statement to the Star-Times. "Individual loans do not come to the board for approval. However, the board is appraised of any defaulting loans and works with management to protect the interests of investors," he said.
The Star-Times visited some of the doss houses last week and discovered:
Tenants of a converted office building near Auckland's CBD are paying $150 a week for rooms, some of which are less than an arm-span wide. The council and fire service were called to the address by a tenant concerned there was no fire alarm system or escape plan and the lift shaft was open.
International students and backpackers are living two to a room in eighth floor office suites in Symonds St, near Auckland University, using an office shower, washing in a sink and sharing a toilet. Filing cabinets are in the rooms.
Ten people are living in a two-bedroom luxury apartment near the university, to maximise rent. Mayer lives in the penthouse.
Residents, including mental health patients and beneficiaries, are living in squalor at the 30-room Station Lodge, a former fire station in Pt Chevalier which Turnbull and Mayer bought from ex-All Black Xavier Rush. The walls of the rooms are covered in stains, one open toilet and shower area is covered in grime and another is "beyond repair" according to tenants, who pay up to $150 for rooms about the size of a prison cell. Gupta said TEL had painted and cleaned the lodge but it was in such bad condition it was "not in the interests of [our] investors to substantially upgrade". TEL was charging market rents and the building was properly consented.
Gupta said some of the properties it had taken over were overcrowded, including 23 people living at one address when it had council consent for only 12. That had been rectified.
"Some of these properties should have remained as offices or warehouses. Mr Mayer and Mr Turnbull breached council consents in converting these properties to hostels," he said. "When we discovered these breaches we emptied the properties and they remain empty, pending sale."
Gupta said TEL had introduced live-in managers to some properties to ensure they were cleaned and urgent maintenance issues addressed.
He said Mayer and Turnbull had acted "in breach of undertakings made to us at the time the loans were approved" and that the two employees who approved the loans no longer worked for TEL.
Sources say no one from TEL visited the premises when the loans were applied for, and in some cases the company lent up to twice the capital value of the building. Gupta said TEL lent $2.8m against Station Lodge in Pt Chevalier (it now has a CV of $1.55m), after being provided with a valuation of $3.46m. That document was subject to a Serious Fraud Office investigation, he said.
SFO director Grant Liddell said Mayer had not presented himself voluntarily for an interview as he told the Star-Times he would, and investigators would speak to him "at an appropriate juncture in their inquiries".
By TONY WALL - Sunday Star Times Last updated 05:00 01/11/2009
Photo: Michael BradleyInside one of the illegal conversion properties in central Auckland.
Photo: Phil DoyleStation Lodge in Pt Chevalier, which is properly consented despite its poor condition.
A FINANCE company chaired by former Prime Minister Jim Bolger has been collecting rent from tenants of doss houses in Auckland that are either squalid, overcrowded or illegal.
Trustees Executors Ltd (TEL) says it is working to bring the buildings into line with council and fire regulations after it inadvertently became landlord of the properties in the wake of a $50 million loans scam.
Auckland City Council planning and building compliance officer Bill Smeed said the council had learnt of at least four office buildings that had been illegally converted into boarding houses. It had immediately closed down one, in Upper Queen St, and given TEL three months to rectify another before it, too, would be closed. Smeed said people's lives were at risk and the council would take a hard line as it identified further properties in the portfolio.
"It's disappointing to see this type of conversion, that has not been done through the proper channels – it's people's safety we're talking about."
TEL began taking possession of the boarding houses last year when loans to two of its favoured clients, Simon Turnbull and Malcolm Mayer, began defaulting. The pair had drawn millions of dollars against the buildings using frontpeople with no money or assets. Instead of money being invested in the buildings to bring them up to residential standard and getting the necessary building consents, they were left as they were, with tenants living in potential fire-traps.
TEL executive director Deepak Gupta said the company discovered the state of the buildings only after it took possession and was taking steps to rectify them as it prepared them for sale.
"Unknown to TEL, Mr Mayer and Mr Turnbull clearly set themselves up as slum landlords," Gupta said. "TEL is putting right the mess they created."
Mayer, who in September admitted to the Sunday Star-Times he made "crimes of omission" in his loan deals, denied he was a slum landlord and blamed Turnbull for not putting money into the properties. He said TEL's "exorbitant" penalty interest rates meant he hadn't been able to properly maintain the buildings.
Turnbull is believed to be living in Hong Kong and could not be reached.
For the first time Bolger has commented on the loans scandal, appearing to distance himself from it in a brief statement to the Star-Times. "Individual loans do not come to the board for approval. However, the board is appraised of any defaulting loans and works with management to protect the interests of investors," he said.
The Star-Times visited some of the doss houses last week and discovered:
Tenants of a converted office building near Auckland's CBD are paying $150 a week for rooms, some of which are less than an arm-span wide. The council and fire service were called to the address by a tenant concerned there was no fire alarm system or escape plan and the lift shaft was open.
International students and backpackers are living two to a room in eighth floor office suites in Symonds St, near Auckland University, using an office shower, washing in a sink and sharing a toilet. Filing cabinets are in the rooms.
Ten people are living in a two-bedroom luxury apartment near the university, to maximise rent. Mayer lives in the penthouse.
Residents, including mental health patients and beneficiaries, are living in squalor at the 30-room Station Lodge, a former fire station in Pt Chevalier which Turnbull and Mayer bought from ex-All Black Xavier Rush. The walls of the rooms are covered in stains, one open toilet and shower area is covered in grime and another is "beyond repair" according to tenants, who pay up to $150 for rooms about the size of a prison cell. Gupta said TEL had painted and cleaned the lodge but it was in such bad condition it was "not in the interests of [our] investors to substantially upgrade". TEL was charging market rents and the building was properly consented.
Gupta said some of the properties it had taken over were overcrowded, including 23 people living at one address when it had council consent for only 12. That had been rectified.
"Some of these properties should have remained as offices or warehouses. Mr Mayer and Mr Turnbull breached council consents in converting these properties to hostels," he said. "When we discovered these breaches we emptied the properties and they remain empty, pending sale."
Gupta said TEL had introduced live-in managers to some properties to ensure they were cleaned and urgent maintenance issues addressed.
He said Mayer and Turnbull had acted "in breach of undertakings made to us at the time the loans were approved" and that the two employees who approved the loans no longer worked for TEL.
Sources say no one from TEL visited the premises when the loans were applied for, and in some cases the company lent up to twice the capital value of the building. Gupta said TEL lent $2.8m against Station Lodge in Pt Chevalier (it now has a CV of $1.55m), after being provided with a valuation of $3.46m. That document was subject to a Serious Fraud Office investigation, he said.
SFO director Grant Liddell said Mayer had not presented himself voluntarily for an interview as he told the Star-Times he would, and investigators would speak to him "at an appropriate juncture in their inquiries".
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