Prominent Māori leader Sir Ngatata Love has been found guilty of a charge of obtaining by deception in relation to a property development in Wellington.
The former chairman of iwi organisation the Wellington Tenths Trust has been on trial in the High Court in Wellington.
The Crown accused Love, 78, of selling his influence in his capacity as chairman and trustee of the iwi organisation to a group working on a property development in Pipitea Street in Wellington.
It said the developers paid $1.5 million into a company run by Love's partner Lorraine Skiffington and that most of the money was used to pay down a mortgage on the couple's home.
Love had denied the charge, saying Ms Skiffington was paying the mortgage on the home and he merely met household expenses.
Delivering his verdict this morning, Justice Graham Lang said Love created an environment in his dealings with the developers in which they believed he was acting with fellow trustees.
"Sir Ngatata acted as though the money paid to Ms Skiffington's company, Pipitea Street Developments Limited, would be used for the benefit of the Tenths Trust.
"But that was clearly not correct given what transpired."
Justice Lang said Love also made false statements to his fellow trustees, recording in a deficient manner the full extent of the developers' offer.
"He represented to his fellow trustees that information in material provided to them represented the full offer but that was not so. There was no reference to the $3 million they'd offered to pay to lease the Pipitea Street land."
Justice Lang said Love had omitted to disclose information he was duty-bound to disclose to trustees.
"They had left negotiations with the developers to him and he'd concluded those on their behalf when he reached the conditional agreement resulting in the agreement to lease. He was under obligation to tell other trustees what [that] offer comprised. In failing to point that out he omitted to provide material information."
Justice Lang said given Love used the money received to pay his mortgage, he was also party to a dishonest strategem.
"The failure to disclose information to his fellow trustees [about payments from the developers to his partner's company] cannot be inadvertent. It formed an important part of negotiations with the developers. The only reason not to tell his fellow trustees was he didn't want them to know about it."
Defence submissions rejected
Justice Lang said he had rejected elements of the defence case.
The defence had claimed that Love did not know about the formation of Pipitea Street Developments Ltd by Ms Skiffington and the chanelling of funds through that company to bank accounts in the names of the couple's trusts.
Justice Lang said he found as a matter of fact that Love did know about those issues.
It was also suggested by some witnesses that by the time of the Tenths Trust's trustees meeting at the end of November 2006 the developers' offer of $3 million was no longer on the table.
Justice Lang said he found that not to be the case. He said Sir Ngatata's last communication with the developers was on 23 November when they forwarded the draft agreement to lease to solicitors instructed by Ms Skiffington.
"There is no evidence the developers ever shifted ground in offering to pay $3 million to the trust, so I have found that offer still on the table at the time of the [trustees] meeting.
The defence argued that the payment of $3m did not fit the business model the Tenths Trust had traditionally adopted, and Justice Lang said he had made no finding as to whether or not that was the case. He said the answer to that submission was quite simply that it was not for Love to make decisions about that.
"He had no mandate to make unilateral decisions on the part of trust. Decisions relating to trust assets and importantly significant assets like this were for all trustees to make on a fully informed basis. They were deprived of that in this case because Sir Ngatata did not provide them with the full information."
Justice Lang said there was a complicating factor in relation to evidence given by Love in that he now displayed symptoms of dementia.
He was found fit to stand trial but Dr Anthony Duncan, a specialist psychogeriatrician, sat through his evidence and also gave evidence for the defence.
In his written verdict, Justice Lang said Dr Duncan noted that at times Love appeared to become 'overloaded' when being asked questions and responded in a way that did not address what was being asked.
"Dr Duncan said this was likely to reflect the fact that Love's mental impairment meant he could not process the questions in a manner that enabled him to respond to them appropriately," the verdict said.
"I accept that his inability to answer some questions reflected his underlying mental impairment rather than a desire to avoid answering difficult questions ... As it happens, this particular issue is not of great moment because Dr Love was firm in his denial of the key aspects of the Crown's case."
Sentencing next month
Love will be sentenced on 6 October. Defence lawyer Colin Carruthers QC asked that a conviction not be entered, indicating he would seek a discharge without conviction for his client.
Justice Lang asked that a full pre-sentence report be prepared, including a home detention appendix.
However he said that should not be taken as a hint of what the outcome would be - he wanted to be able to consider all options at sentencing.
After the sentencing, Serious Fraud Office director Julie Read said Sir Ngatata's actions were serious misconduct by someone who had strict obligations to those involved with the Tenths Trust.
"There's a risk that this sort of activity can occur when you have property development competition for business and significant sums of money involved. As for the decision of the court in this matter found, the abuse of trust for material gain is a really serious matter."
The question of whether he should be stripped of his Knighthood would not be considered by the Prime Minister's office until all court processes were completed.