Is Kiwis' 'love affair with trusts' to blame for Petricevic's lifestyle?

  • 29/02/2016
Rod Petricevic
Rod Petricevic

There's outrage that the former director of Bridgecorp, Rod Petricevic, is living in an Auckland townhouse valued at $1.5 million.

The finance company collapsed in 2007, taking $459 million belonging to 14,500 investors with it. Petricevic was sentenced to six-and-a-half years in prison in 2012 for misleading investors but was granted parole last year after serving just half of that.

Petricevic hit the headlines at the weekend after it was revealed he was living in the million-dollar house, something that caused outrage as nine years after the company went under investors have only recovered 12 percent of what was lost.

Petricevic is not believed to be paying rent for the house himself, and it is not known how he is funding his lifestyle.

University of Canterbury's Dean of Law, Professor Chris Gallavin, says Petricevic is most likely living off money from a trust,

"Simply because so many New Zealanders do," Dr Gallavin told the Paul Henry programme this morning.

"If you're an entrepreneur, if you're going to run a business, if you're going to be a director then you would be listening to your advisers and he's probably had a trust for many years, 20 or 30 years, for his whole professional life, which really does make it difficult for anybody who wants to challenge it through the courts, his financial position in order to pay back some of those hundreds of millions."

Dr Gallavin says any money in a trust effectively makes Petricevic "immune".

"Unless they can really show that that's a sham trust that's been established for the purpose of evading the creditors then he's probably immune in a sense."

New Zealanders have a "love affair with trusts", says Dr Gallavin.

"We construct our financial lives in ways that are prudent. Our financial advisers say 'look there a mechanisms there'  whether it's a limited liability company, which is all in the name, or whether it's a trust, we organise our affairs in prudent ways in order to be able to minimise any liability that we might personally have."

Prime Minister John Key says people are understandably upset about revelations of Petricevic's lifestyle.

"They lost nearly half a billion dollars, there was a lot of them," he says.

"I don't really know all the details of where the money's coming from but people lost huge amount of money. The challenge here is a) we don't know all the facts, who's paying the bill and how's that happening, the second issue is ultimately while people do their time eventually they have to come back into the community. But who's paying, [and] how, I don't know."

Petricevic is now barred from giving financial advice or handling money matters for anyone.