Bankrupt brothers evade litigation.
Legal action to recover more than $17 million in damages from a South Auckland family accused of fraud in the collapse of Provincial Finance has been discontinued.
Brothers Abdul Kareem Osman, Abubakr Osman, Mohammed Imran Osman and their father, Mohammed Farook Osman, have all been made bankrupt – a development that automatically halts civil proceedings slated for a court hearing in April next year.
Chapman Tripp lawyer Michael Arthur, acting for Provincial Finance receivers, said that although the High Court could still grant permission to pursue the case, there was little point in continuing action against people who could not be located and who were judged by the courts to have no assets.
Their bankruptcies were formalised by the High Court at Auckland on February 20 and April 17, proceedings at which each was listed as having no known address. The Sunday Star-Times understands Westpac, which had loaned money to enterprises controlled by the Osmans, petitioned for the bankruptcies.
The Osman brothers ran a used car yard in a downbeat area of South Auckland. The receivers allege the Osmans conspired with a female Baycorp (now Veda Advantage) employee to provide Provincial with falsified credit reports so that customers could borrow money to buy used cars.
Most of those customers quickly fell behind in their loan repayments.
When Provincial Finance went into receivership in May 2006 it had around 14,000 mum and dad investors, many from the South Island, who had bought debentures. They have so far received 72.5 cents back from each dollar they had invested.
Provincial Finance receiver John Waller from PricewaterhouseCoopers has said a successful outcome for the civil suit would have returned only 1-2 cents extra to investors.
It looks increasingly as though the Osman brothers will face no criminal charges over the allegations either. Arthur said no charges had been laid, and the disbanding of the Serious Fraud Office did not give him confidence that any would eventuate.
