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September 5, 2024 3 mins

PwC has identified accounting irregularities, complexities and a lack of auditing at failed Auckland property development group, Du Val.

This first receiver's report says one area of concern is related-party transactions.

BusinessDesk reporter Maria Slade says PwC has identified a $15 million intellectual property transaction between a trust belonging to founders Kenyon and Charlotte Clarke - and another entity.

"It was a loan, and apparently there's no accounting records or anything to show where the funds came from. The loan is now $5 million - where did that other $10 million go and what was it for? Nobody knows."

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Episode Transcript

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Speaker 1 (00:01):
Togever Do for z Ellen. Right.

Speaker 2 (00:03):
Well, the hotly anticipated receiver's report into the duval Group
has been released. As expected, it's quite complicated in there
there were no consolidated accounts, no financial records for the
Duvile Group companies that never been audited. Rather, and receivers
have questioned the group's valuation of more than four hundred
and thirty million dollars. Now Business Desk journalist Maria Slade
has been looking into this and it is with us
now how Maria, hello, Okay, Now, the business bought fifteen

(00:27):
million dollars worth of intellectual property off the couple. That
sounds like a lot of money just be spending on IP,
is it.

Speaker 1 (00:32):
Well? This is one of the things that the receivers
have pointed out is one of the main concerns are
these related party transactions that have sort of washed about
this very large group of seventy odd entities. And one
of the things that they identify was a fifteen million
dollar intellectual property transaction between the Clark's family trust and
one of the entities, and it was a loan and

(00:53):
apparently there's no zero accounting records or anything to show
where the funds came from the loan is now five million,
but with that other ten million dollars go and what
was it for? Nobody knows, So that that's an indication
of the kinds of transactions they're very concerned about.

Speaker 2 (01:08):
What about the valuation of the company. Was this just
something they made up? Where did they have evidence to back?

Speaker 1 (01:13):
This came out a while ago, actually, so they wanted
to do a public listing, a float on the stock exchange, supposedly,
and so they produced an information memorandum, which is what
you're supposed to do if you're going to do something
like this, and they put this valuation of four hundred
and thirty one million, a top end valuation on the group.
But that was their own finger in the wind valuation.

(01:33):
There was no independent valuation, so who would know whether
that had any validity because it wasn't based on a lot.

Speaker 2 (01:41):
So was it a hot mess in there? Well?

Speaker 1 (01:43):
The receiver, John Fisk, described it as a bowl of spaghetti,
And you certainly start to get that sense when you
look into things like, for example, one of the developments,
the proposed Edmonton muse out in Henderson, nice little strip
of land overlooking the two Eeglyn reserve. I might add,
nice spot, but that probably had four mortgages on it,

(02:03):
no less, and the investors were the third or the
fourth in the rankings. And one of those mortgages was
to one of their other developments. So one of their
other entities mortgaged their own entity.

Speaker 2 (02:17):
Okay, John Fisker's got a job on his hands.

Speaker 1 (02:19):
He certainly does. And as you identify all the accounting problems,
they never did consolidated accounts, so that's when you look
at the whole group together, never done. None of the
accounts were audited. I mean, you know, anyone knows. That's
just kind of basic. You've got to have ordited accounts.
And the significant number of related party advances including transactions,
they said that didn't appear to have anything to do

(02:40):
with the actual operating purpose of the entity that advanced
the funds.

Speaker 2 (02:45):
Well, Maria, I'm sure you're going to see a lot
and there. Thank you so much for your time. I
really appreciate is Maria Slade, journalist from Business Desk. For
more from Heather Duplessy Allen Drive, listen live to news talks.

Speaker 1 (02:55):
They'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
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