Ex-public servants tried to illegally make money out of post-quake Christchurch

Two former public servants have been found guilty of using official information for their own financial gain in post-quake Christchurch.

Gerard Gallagher and Simon Nikoloff were accused of corruptly using public information they obtained during their time at the Canterbury Earthquake Recovery Agency (Cera), and its successor Ōtākaro, between 2014 and 2016.

Each man faced three charges, and their five-week trial at the High Court in Christchurch, which began in February, heard from 27 witnesses.

The charges, laid by the Serious Fraud Office (SFO), related to obtaining a commercial advantage from having access to information because of their inside knowledge.

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On Friday, the jury found Gallagher guilty of all three charges and Nikoloff guilty of one, clearing him of the other two charges he faced.

Nikoloff and Gallagher were both found guilty over a deal related to the Youth Hostel Association building, while Gallagher was also found guilty on charges related to a piece of land known as Stonehurst.

“The defendants were employed to help a damaged city recover and rebuild. Instead, they abused the power they had been entrusted with and put considerable effort into furthering their own commercial interests,” said SFO director Karen Chang in a statement after the verdict.

Jurors had been told the pair were employed in 2014 as investment facilitators for Cera and later Ōtākaro.

Their jobs, paying approximately $150,000 a year, were to find investors who could commit to redeveloping the post-quake city.

However, within months of their employment – later revealed in a 2017 Stuff investigation – Gallagher and Nikoloff started a private company and appeared to use their insider knowledge from Cera to their benefit.

The investigation prompted a State Services Commission inquiry, which led to a Serious Fraud Office probe and ultimately charges being laid.

One deal, if successful, could have seen Gallagher, from Ashburton, and his sons become the owners of $13 million worth of prime land in central Christchurch, undercutting the sale of public land in the meantime, the Crown said.

The prosecutor also alluded to email correspondence and witness testimony that accused Gallagher – with Nikoloff’s help – of using his Government job to suggest he would give a private business a discount on public land for that business to work with his and his sons’ private enterprise.

Their defence lawyers told the court they couldn’t be guilty of corruption if they had no idea what they were doing was wrong.

If the duo intended to be corrupt, they would not have used the same lawyers as Cera in their private business dealings or involved their boss, the lawyers argued.

The duo were reportedly encouraged by their boss, longtime friend and business associate Murray Cleverley, to pursue business opportunities while working for Cera, as it was widely known Cera would be disestablished within a couple of years.

Defence lawyer James Rapley described Gallagher as “bumbling along” trying to secure future work for himself.

Quoting Cleverley from his time on the witness stand in February, Rapley said investment facilitators like Gallagher were “kissing frogs to see if one of them would turn into a prince” and, if successful, the facilitator could leave Cera early to pursue it.

“Nikoloff and Gallagher knew how much owners were willing to sell for, what investors were willing to pay and what was planned for the city,” Chang said.

“Rather than use this information to get the best outcome for Christchurch, they attempted to set up private business deals in an effort to profit by hundreds of thousands of dollars.

“Seeking to profit personally from information obtained in a public role is corrupt, regardless of whether they were successful.”

It took the jury four days to deliver their verdict. The trial concluded on Monday morning after the judge’s summing up of the case.