The Companies Office has decided against taking a case against the Optimus Group for filing a false declaration of ownership.
One industry figure said the decision over the controversial owner of vehicle companies showed there was one rule for large companies, and another for ordinary motorists.
The Companies Office told Newsroom its enforcement strategy was “underpinned by the philosophy that as far as possible it aims to assist users to achieve compliance with their statutory obligations”.
These obligations include an expectation that companies update the Companies Office within 20 days of an ownership change. Failing to do so is punishable by a fine of $10,000.
The Companies Office also expects declarations of ownership to be truthful. A false declaration, If proven, can be punishable with a prison term of up to five years or a maximum fine of $200,000.
The Optimus Group broke both rules, but will not be pursued.
JEVIC and VINZ, companies owned by the Optimus Group, failed to notify the Companies Office of an ownership after they were rolled into the group in March 2015. VINZ waited until August 2015 to declare an ownership change, JEVIC waited more than a year, filing its change in July 2016.
When they eventually filed a notice of ownership change, the companies did not list the Optimus Group as their ultimate owner. Instead, the companies both falsely claimed their ultimate owner as Japan Export Vehicle Inspection Centre Company, rather than the Optimus Group.
Had they listed the Optimus Group as their ultimate shareholder, it might have raised alarm bells with the regulator NZTA, as the Optimus Group also owns Nichibo, a Japanese car importer.
There is a standard that vehicle testers like JEVIC and VINZ do not test vehicles they have a financial interest in to make sure testers do not feel pressure to pass cars that are unsafe.
It would take two years before the companies office had correct information. This timeline has been revealed in letters sent to the regulator, NZTA by JEVIC and VINZ after complaints were made from the industry that the two companies were circumventing regulations by making false claims of ownership.
In this time, the Group imported thousands of used Japanese vehicles to New Zealand many of which were imported, tested and certified by what was essentially the same company, in violation of those standards.
JEVIC and VINZ deny motorists have been put at risk. A Deloitte report said the companies had strategies in place to manage conflicts of interest.
NZTA’s initial letter of rebuke to the companies also noted it was satisfied by conflict of interest mitigation strategies.
But the Agency appears to be taking a harder line. Transport Minister Phil Twyford has ordered NZTA to tighten up its enforcement of testing regulations.
Conflict of interest regulations look to be among the first to feel the force of this new, tougher approach.
NZTA announced last week that it was reviewing the rules around the testing of imported cars, apparently in response to revelations about the Optimus Group.
The Agency said it said it had “identified the current process as a potential risk to safety”. It said it had launched the proposed changes to address concerns.
NZTA says “risk to safety” companies office suggests “no public interest”
But the Companies Office has taken a different view, suggesting there was no public interest in prosecution.
“Enforcement action (including prosecution) for possible offending would only be taken after an assessment of various factors, including whether a prosecution would be in the wider public interest,” it said in a statement.
“In this case because the companies had updated their ultimate holding company information to comply with the requirements of the Companies Act no further action was considered necessary,” it said.
This seems at odds with the Companies Act, which specifies a timeframe in which the Office must be updated with ownership information. Such a timeframe appears redundant if the office is satisfied a company eventually supply correct information — even if it is 35 times longer than the 20 day timeframe the Act stipulates.
The Office said its decision was in line with prosecution guidelines issued by the Solicitor-General to Crown Solicitors.
The decision also seems to contradict remarks from Commerce Minister Kris Faafoi made earlier this month.
“If there’s an issue I hope they’ll deal with that,” Faafoi said. “This seems like a relatively clear cut issue, if it hasn’t been right it should be put right,” he said.
Asked whether the Companies Office should pursue the companies for making an incorrect declaration, Faafoi responded, “I hope so”.
While the Office has identified the issue has been “put right”, albeit belatedly, it has declined to pursue the companies any further.
Faafoi declined to comment on the Companies Office’s decision today. A spokesperson said the matter was operational.
One person unimpressed with the Office’s verdict is Clive Matthew-Wilson, editor of the car review website dogandlemon.com,
“If an ordinary motorist drives a few Ks over the speed limit, there’s an instant ticket and heavy enforcement if they don’t pay the fine. In this case a corporation has broken the law, but gets no penalty at all,” Matthew-Wilson said.
“The government’s response is: ‘you’ve done a terrible thing, so we’re going to give you a stern warning. And, if you do it again, we’re going to give you an even sterner warning,” he said.
Matthew-Wilson said Optimus directors were going be “laughing out loud” at the decision.
“I’m not laughing,” he said.
“This will actively encourage other businesses to copy Optimus’s example, knowing that they probably won’t be prosecuted.”
