Customers say they lost hundreds of thousands of dollars to a company promising plump returns shipping Brazilian chicken meat to China.
Liquidators have laid a police complaint against an Auckland business – they say its directors breached their duties by diverting funds from customers.
Companies Office records show that the directors of Seattle Investments Ltd are Stephen Paul Douglas, Wayne Lochner and Bede Francis Roughton. Douglas and Roughton own the company through holding companies.
“It appears as though the company was operated to divert funds from customers and pay these for the benefit of the shareholders.”
– liquidators’ report
In reports filed with the Companies Office, liquidators Simon Dalton and Matthew Kemp said they had conducted an investigation into the failure of the company and were considering lodging criminal complaints against the people involved. They lodged the complaint this month.
“The investigation has revealed no evidence that the company ever traded in what it purported to do,” they report. “It appears as though the company was operated to divert funds from customers and pay these for the benefit of the shareholders. The liquidators consider this a breach of directors’ duties and results in loans due to the company.
“The liquidators worked with their advisors to determine a commercial way to recover funds, however, this proved to be uneconomic. The liquidators are required to report suspected offences and will be lodging complaints against the people involved.”
The total unsecured claims amounted to $213,398, owed to customers Australia’s Golden Food and Beverage Pty Ltd, and KK Investing Group Ltd. More money was owed to Inland Revenue and ACC. Insufficient funds were realised to enable a distribution to unsecured creditors, the liquidators reported.
The company’s principal, Paul Douglas, has hit back saying he too was “ripped off … by a crooked supplier in Korea” and the liquidator didn’t do a sufficiently thorough job. He says he has money coming into his bank account in the next few days, and intends to brief his lawyer to settle the two creditors’ claims.
In statements to Newsroom, police confirmed they were investigating the complaint.
“Earlier this month Waitematā East Police received a report relating to allegations of fraudulent activity by the directors of a company whose business is located on the North Shore,” said Acting Detective Senior Sergeant Ash Matthews, at Waitematā East CIB.
“At this stage we are not currently aware of receiving any complaints from customers of this company. Police are making follow up inquiries with the complainants to obtain further information around possible offending.”
A spokesman for Australia’s Golden Food and Beverage said the small company had lodged a police complaint nearly a year ago.
Queensland-based AGFB Ltd imports and exports premium foods, primarily Australian Wagyu and Black Angus beef, but also seafood and wines and beers. An intermediary introduced Douglas, from Auckland, who offered AGFB the opportunity to buy containers of chicken carcasses, chicken feet and other parts from a meat processing plant in Brazil, for shipment to a customer in China.
“Things started getting delayed, and I told him he wasn’t instilling much confidence that he could actually deliver the products. And after that, there were more excuses. And in the end I just spat the dummy.”
– AGFB spokesman
The company paid a deposit on five 40-foot containers of chicken feet and parts. If the first month’s five shipments went well, it agreed it would buy about 10 container-loads a month, for a year. AGFB paid a 30 percent deposit of US$85,000 (NZ$120,000) – and that was the last it saw of the money, let alone any chicken.
“At the time there was no real red flag about the company, it seemed kosher,” the spokesman said. “But things started getting delayed, and I told him he wasn’t instilling much confidence that he could actually deliver the products. And after that, there were more excuses. And in the end I just spat the dummy.”
“They just rode off into the sunset. We have come to the realisation that the money is lost. It’s a huge hit, especially during Covid times. Business stopped for us for pretty much the whole of 2020, there was so much uncertainty in the world. So to have a hit like that and not have cash reserves is massive.”
KK Investment Group director Yongnan Kang said he entered a similar arrangement, after meeting Douglas and Roughton in his Auckland offices. He agreed to purchase twice as much chicken as AGFB, though didn’t go so far as paying the deposit before it all fell over.
“The only reason I’m doing this is otherwise he’ll be doing the same thing to other people.”
– Yongnan Kang, KK Investments
He is owed penalty fees for Seattle Investments’ failure to fulfil its contractual requirements. “He was a kind of broker, he buys from someone else, and something has gone wrong and they did not tell the true story,” Kang said.
“They tried to find excuses, so that’s why we go for a lawyer to deal with it. I don’t know how much money I lost in the end, but the money I spent on lawyers is more than that.”
“I know we won’t get any money,” Kang added. “He didn’t even have a proper office, just a home office and a PO Box, he didn’t have anything.
“I asked him to sign a personal guarantee, but he rejected to sign that. So this means we can’t get anything back from him personally.
“The only reason I’m doing this is otherwise he’ll be doing the same thing to other people.”
Both customers said that as the delays lengthened, they had asked for documentation – but were not convinced by the veracity of the paperwork.
“This is a story of a very crooked supplier in Korea who screwed a bunch of us and left other people to clean up the mess. I know other people who have contracted with her to purchase product and have been left out to dry.”
– Paul Douglas, Seattle Investments
Douglas said the reason he had not been able to deliver was that his supplier in Korea, who claimed to own the chicken processing plant in Brazil, had failed to deliver the goods – and failed to return his US$100,000 deposit. “$100,000 in cash out of your back pocket, it wasn’t a good business move, no.”
That left him with no money to refund AGFB’s US$85,000 deposit.
Douglas said he hadn’t spoken directly with the liquidators, only taken a couple of calls from a woman who worked for them. “They came up with an abominable report which is subject to me taking action. We’ve already spoken to the lawyers.
“This is a story of a very crooked supplier in Korea who screwed a bunch of us and left other people to clean up the mess. I know other people who have contracted with her to purchase product and have been left out to dry.
“I can tell you from my experience that you’ll be given the most abominable string of lies…. But when you’re talking to her she’ll come across like the answer to everybody else’s prayer. The chicken was coming from Brazil, supposedly from a plant that she had purchased. But it’s all bloody lies.”
He acknowledged AGFB had lost US$85,000 plus interest; he said the loss to KK Investments was entirely in penalty fees for his company’s failure to deliver on the contract. Regardless, he said, he intended to pay them both back.
“I’ve got ongoing business in Europe right now,” he said. “We’re just waiting for settlement on it, we’re shipping product all the time. We’ll be able to make a full settlement and still make a solid dollar for ourselves.”
He declined to say what his other business was.
