An Auckland property company that took millions in taxpayer funds to house the homeless has left Inland Revenue (IRD) and landlords out of pocket after going into liquidation.
File photo. Photo: RNZ
Silverfern Property Services has received more than any other outfit for emergency housing - $14.7 million - and charged nearly $2000 per client per week to house people in rental properties it managed across South Auckland.
Tenants who stayed there described many of the homes as substandard.
Social worker Alastair Russell, who worked with families staying in the properties, said what he saw was not fit for people to live in.
"Debris around the outside of the houses, the houses were in many cases unclean, without proper and functioning utilities etc," he said.
But despite the complaints, the Ministry of Social Development (MSD) continued to use Silverfern Property Services and it was paid $12m in the 18 months to June 2020.
Silverfern got $53,000 in wage subsidies during the level 4 lockdown.
But after lockdown lifted MSD moved its clients out of rental properties and into other motel rooms.
It stopped providing emergency services midway through last year and the company went into liquidation last week.
In its liquidation report, Silverfern said it became insolvent when the government cancelled its emergency housing because it had long term leases with landlords which it could not meet.
It also claims that emergency housing tenants damaged the leased properties which it had to fix.
The company's only listed shareholder Zubeen Andaz refused to be interviewed for this story but last year told RNZ the $2000 cost per week of each tenancy was necessary, given the situations they had to deal with.
"It shouldn't be going out of the company's pocket. The amount of rubbish that we see, the stolen items and lots of damages ... and we look after the utilities, everything," Andaz said in February 2020.
She said the money was well-used and not mainly just for profit.
But Russell said that attitude was astounding given Silverfern's own behaviour.
"The bad behaviour of some individuals in emergency housing pales into insignificance versus the bad behaviour of these people who have made a fortune out of the misery of others."
He said MSD, or the relevant agencies, should pursue fraud charges.
"These guys have ripped off the system by essentially going bankrupt and are walking away with the money probably stashed away in bank accounts and laughing all the way to the bank."
Creditors are already starting to come forward to make claims over failed payments. Liquidator Grant Reynolds said so far it included about half a dozen landlords and the IRD, although how much was owed to them was yet to be determined.
He said he was still waiting on all of the company's financial records but based on the amounts it was being paid, he expected it to be profitable.
Last year Silverfern Property Services told Checkpoint it would be returning its wage subsidy payment but has yet to do so.
In a statement, a spokesperson for the Social Development Minister Carmel Sepuloni said the Auditor-General was investigating MSD's use of private rentals for emergency housing, which included properties associated with the Silverfern Property Group.
It said any suggestions of fraud on the behalf of Silverfern Property Group was a matter for the police.
