Investors fined millions for illegal purchases in Warkworth
Posted at 3:46pm Friday 05 Jul, 2019
The High Court yesterday ordered the overseas owners of two rural properties in Warkworth to pay $2.95 million to the Crown after an Overseas Investment Office (OIO) investigation found they were bought without consent.
The properties are chestnut farm at 185 Sandspit Road, and Kourawhero Lodge at 471 Wyllie Road.
The overseas owners – Chinese businessmen Zhongliang Hong and Xueli Ke, and IRL Investment Limited and Grand Energetic Company Limited – should have applied to the OIO for consent to buy both properties because they are rural land of more than five hectares.
The court ordered the owners to sell the properties and pay penalties, costs and the gain made on the investment.
Land Information New Zealand group manager Vanessa Horne said the penalties recognised the significant breach of the Overseas Investment Act.
“Our rural land has special protections under the Overseas Investment Act to ensure that overseas investors meet certain requirements to be able to buy it,” she said.
In January 2014, IRL (ultimately owned by Mr Hong and Mr Ke) bought the land at 185 Sandspit Road for $4,480,000. On June 18 this year, the property sold for $10,100,000, following the OIO investigation. A gain of $2,335,256 was made on the sale after deducting expenses such as legal costs and interest.
In July 2012, Mr Hong and Mr Ke bought Kourawhero Lodge for $2,550,000 through an associate. In April 2014, they transferred the land to Grand Energetic Company (ultimately owned by Mr Hong and Mr Ke). The lodge is due to be sold on September 16 for $3,250,000. No gain will be made on the sale after deducting expenses.
The OIO began its investigation of the transactions in October 2016.
During the investigation, Mr Hong and Mr Ke applied for retrospective consent to buy the properties.
However, the OIO declined to grant consent because the investment did not provide enough benefits to New Zealand under the test to buy rural land.