A major player in the Government’s home insulation scheme has been put into liquidation by the directors of the Hutt Mana Charitable Trust – a registered charity with the Charities Commission, leaving a trail of more than $1.6 million in outstanding bills.
Three limited liability companies that are charities registered with the Charities Commission, were put into liquidation on 19 September 2011: EnergySmart Ltd, EnergySmart Distributors Ltd and EnergySmart Retrofitting Ltd. They are service providers involved in the supply of subsidised home insulation and heating and because they are registered with the EECA (Energy Efficienct Conservation Authority), they can access sizeable government subsidies.
EnergySmart Ltd, a Wellington-based company, recorded a $13.648 M gross income in the last financial year (ending 31/12/10) and of this, $2.715 M was spent on salaries and related expenses. Its recorded total liability for the financial year ending 31 December 2010, as recorded on the Charities Commission website, was $4,631,147. A net deficit of $821,018 was recorded for income over expenditure.
The Liquidators have estimated that once all the value of all Energy Smart’s assets have been realised, it will still have a shortfall of at least $1,634,335 – money owed to its creditors (largely suppliers of insulation product). However, this is clearly a very conservative estimate of its total debt and does not take account of any debt claims by unsecured creditors.
Mike Underhill, chief executive of the Energy Efficiency and Conservation Authority (EECA), which runs the Government’s Warm Up New Zealand scheme, has been reported as saying he is “appalled” with the situation. Hutt Mana Charitable Trust, which has more than $30m in assets, has chosen to walk away without paying its bills and yet EnergySmart Ltd is continuing to trade and solicit new business under the watchful eye of the Liquidators – who are seeking to sell the failed business.
Insulation product supplier Terra Lana is owed $527,000 by EnergySmart and Auckland-based supplier InsulPro Manufacturing, which employs more than 50 staff, is owed about $500,000 stretching back over 12 months.
All three EnergySmart liquidated companies, which we emphasise are all charities, are owned by HMCT Holdings Ltd which is itself a registered charity. In turn it is wholly owned by the Hutt Mana Charitable Trust [HMCT], another registered charity, qualifying as such in the opinion of the Charities Commission Registration team, on the basis that its objects are focused on: (1) the promotion of energy efficient and (2) twice-yearly grants from the Hutt Mana Charitable Trust (HMCT) to community organisations with a focus on sport, recreation and youth.
Ian Hutchings, a former Wellington City Councillor, is chairman of HMCT. He is also a director of HMCT Holdings Ltd, a registered charity that is owned by the Trust and as noted owns all three failed charities. HMCT Holdings had a gross income of $140,875 for the 2010 financial year -comprising $118,223 in investment income and $22,652 in dividends. It ran up a net defict of $168,965, after paying out $28,090 in salaries and wages to two “part time” workers who worked two hours on average in total per week, and after paying out $121,858 in interest.
Mr Hutchings, as reported by Fairfax NZ, has admitted that a significant theft of insulation stock was also discovered last year by the Trust. The theft is thought to have involved about $500,000 of product.
The Hutt Mana Charitable Trust which has assets of over $33M had a gross income for the 2010 financial year of $670,104. Its total expenses were $1,284 M, leaving a deficit of $614,020.
Roger William Styles, a Hutt Council elected member representing the Eastern Ward, is a former chairman of HMCT. He is currently listed on the Companies Office website as a director of all three of the liquidated Energy Smart failed companies owned by HMCT Holdings Ltd, despite the fact that the Charities Commission website records him as having resigned from the Board of all three entities on 2 March 2011. [see update below]
The Companies Office website (www.companies.govt.nz) provides the definitive record any claimed resignation by Mr Styles has not been registered as required by law. It also records him as having been director of Smartfit Ltd that was placed into liquidation on 19 September 2011, soon after he resigned as one of its director on 1 August 2011.
The failure of the Energy Smart company directors to notify the Companies Office of the resignation of any fellow company director, within 20 working days of a notified resignation, constitute serious offences under the Companies Act 1993. All such resignations are required under the Act to be recorded in the Company Minutes taken at a properly constituted meeting of the company directors. Such records must be made available on requested, if required, by the National Enforcement Unit of the Ministry of Economic Development.
The Society contends that this is a matter for the Compliance Team of the Companies Office to thoroughly investigate the actions of the incumbant EnergySmart company directors who were ultimately responsiblefor ensuring that the Companies Office records were properly updated with respect to any resignation(s) by fellow-directors and/or new appointments.
RESPONSE TO ARTICLE FROM MR ROGER STYLES dated 17 October 2011
SPCS web article – correction requested
I have not been a director of the energysmart companies since feb 2011… would be grateful if …. the highlighted references [ highlighted in italics – see above] can be removed from the SPCS website asap. I would also appreciate a confirmation email today or tomorrow when this change has been actioned.
Fyi I attach a copy of a letter which I sent to companies office on 2 March 2011 informing them of my resignation. Your spcs contributor is almost right – it is up to hmct [Hutt Manna Charitable Trust] to formally notify companies office following my advice to hmct as shareholder. One thing is for certain, that legally I ceased to be a director on 28 feb 2011
RESPONSE FROM SPCS TO MR ROGER STYLES DATED 17 October 2011
1. The Society stands by the article it has published including the factual accuracy of the paragraph highlighted in italics that Mr Styles seeks to have removed. In a factual and technical legal sense a person remains a director of a company until such time as their name is removed from the Companies Office website by a person authorised to use the company key to effect such a change. Directors should know that this removal cannot be carried out on line by the company director who chooses to resign, or by just sending his/her letter of resignation to the Companies Office with or without instructions to effect a change on-line. The website is set up to prevent the director who has resigned making such a change himself. It can only be done by a fellow director or a person authorised by fellow-director(s) nor by the Companies Office.
2. The Society accepts in good faith Mr Style’s claim that he did formally tender his resignation as director from all three EneregySmart companies in February 2011 and discontiued his practical duties as a director, based on a letter of resignation dated 28 Februart 2011 sent to the Board of the secretary of the Hutt Mana Charitable Trust, which he refers to, but which we have not yet seen. The Companies Office records do not document any resignation by Mr Styles from the three EnergySmart companies now in liquidation and all four listed directors had over six and a half months to put the record straight, prior to the companies being put into liquidation.