Fresh investigation into Greywolf Mining

UPDATE: on 14 December 2012, Investigate received a letter from Greywolf Resources NL director and CEO Dehong Yu advising that Edward Lancaster “is very unwell and has handed in his resignation to the company.”

On that basis, the references to Lancaster and Greywolf below can now be regarded as historic, as CEO Dehong Yu has advised Lancaster has no further involvement with the mining company.

FURTHER UPDATE, March 2013: No evidence has been provided to Investigate that corroborates Dehong Yu’s letter, and Australian readers have advised us that Lancaster still appears to be involved in Greywolf. We invited Dehong Yu to clarify but there has been no further contact. Make of that what you will. Additionally, no documents registering a change of directorship or shareholding in regards to the Lancaster family had been filed with the Australian Companies Office when we checked. On that basis, we can only presume the Lancasters remain involved.
A WOLF AT THE DOOR
The Strange Tale Of Ted Lancaster & Greywolf Mining

The story of how a former convict and con-artist almost pulled off New Zealand’s biggest mineral resources robbery

WORDS BY IAN WISHART

His name is Edward Lancaster – ‘Ted’ to his mates – and it’s been staring at me from an intelligence file in a dusty corner of the Investigate editor’s desk for sixteen years. The year was 1995. I had just published my first book, The Paradise Conspiracy, when a person came to see me with a folder full of documents. All of them carried the name, “Edward Lancaster”.

By the time I received that information, the events detailed in the documents had long passed – some of the documents concerned things Lancaster had done as far back as the 1960s. The folder might have ended up in the legendary ‘File 13’, but for a nagging feeling that one day the wide-boy whose exploits decorated the pages might one day come to notice again. And so he has:

“Giant Chinese energy company Qinghua Group – with more than $12 billion of mining assets – is assessing several billion dollar projects across the South Island, with the potential for generating thousands of jobs,” reported Dunedin’s Otago Daily Times on 3 December last year.

“The west coasts of both the North and South Islands, with onshore and offshore iron-ore deposits, are being assessed for possible sites for a port purchase and steel mill construction…

“Qinghua’s joint venture partners Greywolf Goldmining, incorporated in March [2010], are spearheading project analysis, saying Qinghua has $10 billion to spend in New Zealand in 2011.

“Greywolf is proposing a separate, more than $200 million, dual listing on the New Zealand and Australian stock exchanges in the New Year.

“Sydney-based Greywolf chief executive Edward Lancaster confirmed the Qinghua Group proposals when contacted yesterday, following widespread speculation during last week’s annual New Zealand branch of the Australasian Institute of Mining and Metallurgy conference in Auckland.

“ ‘We had hoped to make announcements in the New Year, but the [three New Zealand visits] by QInghua have been attracting attention’, said Mr Lancaster, whose company directors include brother Michael and son Jolian.

“Mr Lancaster said meetings were being sought through the offices of Prime Minister John Key and Energy and Resources Minister Gerry Brownlee, but the Pike River disaster had prompted deferral of meetings ‘for several weeks’, he said.”

The same day, December 3 last year, the Stuff website’s BusinessDay also reported on the massive story, quoting Edward Lancaster as saying Qinghua’s chairman had visited New Zealand three times and “was quite smitten with New Zealand”.

Those who didn’t know Lancaster’s background took the dapper grandfather at face value: here was a big-shot Chinese mining company teaming up with an Australian resources company to bring “several thousand jobs” and billions of dollars of investment to New Zealand during dark times in the wake of Pike River and the first Christchurch earthquake.

Those who did know Edward Lancaster just about coughed up their breakfast cereal as they read the morning papers.

Con artists and wheeler-dealers. The world is full of them. Often transient, they flit from country to country as they wear our their welcomes, or return to the scenes of their original crimes years later when they hope their victims are either dead or have forgotten them. When they do appear, they like to ride into town like bigshots, talking up their wares and their status. We’ve seen them here with Ralf Simon and his Pakatoa Island purchase in the early 1990s, or Giovanni di Stefano with TVNZ in the mid 1990s. Such is the case with Greywolf Goldmining’s chairman Edward Lancaster.
Let me introduce you to him.

He was bankrupted way back in August 1963. Upon being released from insolvency, his business skills took him to the wall yet again in 1967 when he was personally bankrupted a second time on October 27th that year. Edward Lancaster would spend the next ten years as an undischarged bankrupt, but even that didn’t stop him.

“While a bankrupt, Lancaster became a major distributor for Golden Products – a defunct pyramid selling scheme,” wrote investigative journalist Warren Berryman in the National Business Review of December 16, 1985, “and was convicted of doing business while an undischarged bankrupt.”

The Greywolf mining chairman’s trail of corporate wreckage didn’t end there either. Soon after being released from bankruptcy in 1977, Lancaster became a director of Haircare Specialties Ltd, which went bust in the early 1980s, and during Lancaster’s time at Bream Aerosol Packaging in the early 80s the company was the subject of ten winding-up petitions by creditors (the company is now a success under different management).

A check of New Zealand Companies Office records shows around 25 companies that Lancaster has directed which have been struck off.

One of Lancaster’s bright ideas – apparently successful in concept – was a high grip clothes-peg. In 1977 he set up a British company called Debbie Peg Ltd, named after his daughter Deborah Lancaster, and the following year established a New Zealand sister company called Debbie Peg (NZ) Ltd. He called his product “Le Peg”.

“Le Peg was tried out on a clothesline rigged across the aft end of an ocean-going yacht,” writes Warren Berryman in 1985. “A Force-8 gale did not tear the washing from the line.”
Lancaster managed to attract the interest of Cavalier Carpets founder Tony Timpson, and convinced him to invest money in a new venture called Debbie Plastics Ltd to manufacture and market Le Peg worldwide.

“But while Timpson focused on Le Peg,” reported the NBR, “fraud squad cops, credit managers, debt collectors and justice department people focused on the people vaunting the virtues of Le Peg on television and in public relations photos.”

Tony Timpson still remembers his ill-fated joint venture with Ted Lancaster:

“Oh jeepers, don’t even talk about him!”, he sputters. “Is he still around? He’s just a straight bullsh*tter. He’s even more bent than the pegs!

“He’s a pretty smooth operator, old Ted. He plays this ‘country boy’ to the nth degree, but he’s pretty sharp. I haven’t heard of him for ten to twelve years. He’s a straight con, that’s what he is in my view, and he’s a good one.”

The peg venture “self destructed” under Lancaster’s management, says Timpson, who acknowledges “it was a brilliant idea. It would have done really well as long as Ted wasn’t anywhere near it.”

The intelligence file given to Investigate a decade and a half ago suggests Edward Lancaster has convictions for “embezzlement, undisclosed bankrupt”, and that he served prison time in the late 1960s.
Lancaster, claims the report, “was removed from Real Estate many years ago (misappropriation of trust cheques) – reinstated – operating in an unacceptable manner – now not permitted to be a licensee”. He is listed as a regular traveller to Brisbane, Sydney, Melbourne, Bangkok, Singapore, Hong Kong, England, Amsterdam, Canada and Chicago.

The trips to Bangkok, ostensibly, involved the alleged money laundering of gemstones:

“Has travelled regularly to Bangkok for years, dealing in uncut sapphires and bearer bonds, the sapphires being counted out in a bank, the bearer bonds being brought back to New Zealand for sale in large numbers (1000’s) (and USA).”

There are also suggestions Lancaster was trading in conflict diamonds. “In mid 1994 he dealt in diamonds in Africa…Israel”.

“In December 1991, Edward Lancaster approached Leslie Martin to persuade her to open the Property Club with him. He intimated he had money (she never saw it) and that he had ‘deals’ lined up…He himself is banned from being a licensee so he needed Leslie to fill this function.”

Within six months, Leslie Martin gained an inkling of just what those “deals” involved.

“June/July 1992, a multi-million dollar deal with Brierleys was set up, to become unconditional in three months. The sale of 20 buildings worth $40 million was to be exchanged for $52 million [in] gemstones.”

Precisely why Brierleys, one of New Zealand’s biggest companies at the time, would be swapping buildings for gemstones in 1992 was not explained. Nonetheless, we have the proof – a signed letter on Brierley Investments Ltd letterhead, dated 23 October 1992, from John Brabazon at BIL confirming a deal.

The paper trail works like this. On 29 February 1992, Lancaster’s business partner Martin Hanak wrote a letter to Lancaster appointing him as a Director of a Nauru tax haven company called Precious Metals Holding Corporation (Nauru). “You will be responsible for coordinating the sale of sapphire bonds both in New Zealand and internationally,” Hanak wrote.

“For services rendered you will receive (100,000) One Hundred Thousand bearer shares being 10% shareholding in Precious Metals Holding Corporation (PMHC)…this shareholding is accepted by Mr Lancaster in lieu of commission on property transactions currently being negotiated with Brierley Properties Ltd.”

Businessman Garth Allen, who became caught up in Lancaster’s scams, picks up the story:

“Martin Hanak, the president of PMHC had moved in with Ted and was negotiating the purchase of a portfolio of 24 buildings from Company ‘X’ which proved to be BIL Properties who were negotiating with a company called Latilla, which is registered in Bermuda. They in turn were represented in New Zealand by the Tiri Trust.”

The idea was that Latilla – the mysterious Bermuda company linked to Brierleys – would sell the properties worth NZ$40 million, in exchange for A$52 million worth of “Sapphire Bonds”. Garth Allen says the size of the property commissions on reselling $40 million worth of property convinced him to get involved in the deals himself, “especially as I was led to believe that this initial deal was to be followed by other even larger deals. Latilla eventually signed an option for a further $400 million Bond deal.”

Lancaster, Hanak, Allen and others threw their energies into the Brierleys deal, but Lancaster leant on Allen – selling him $32,000 worth of shares in the Property Club that Lancaster didn’t actually own (and therefore had no right to sell). Lancaster used the money to fund his lifestyle and business trips, but didn’t register the share transactions officially despite being asked.

Ted and Martin Hanak then upped the ante by offering Garth Allen a one percent shareholding in Precious Metals Holdings Corporation in return for a $65,000 cash payment, ostensibly to provide PMHC with some much needed cashflow. Garth Allen raised a mortgage on his home to fund the share purchase – taking his total exposure to Lancaster to $97,000 in 1992 money. You could buy a house in Auckland for that kind of cash back then. But that wasn’t to be the end of it.

The Brierleys gem deal was supposed to settle in late October. It didn’t. Garth Allen’s statement records that a new settlement date of 26 November 1992 came and went:

“At the last minute there were details still being questioned by both Tiri and Precious and this was to be resolved the next day (Friday)…On Friday the deal of $40 million of buildings for $52 million of Sapphire Bonds was to have gone unconditional, but an important letter from Company ‘X’ detailing rent guarantees was still not available.”
With cash running out, Lancaster tried to palm off a $100,000 Sapphire Bond to investor Colin McKenna.

“Ted and Martin spent the whole day with [lawyer] Tony Thomas and Bruce Sheppard of the taxation accountants Gilligan Sheppard,” notes Allen’s report, trying to tie up “last minute details of the Brierleys deal.

The following day, December 9, Lancaster and Hanak “flew to Bangkok to complete what I understood was to be the final jewel purchase.”
When they returned a week later there was more bad news – Brierleys would not be settling before December 20, and possibly as late as January 28th 1993.

“This was a great disappointment,” notes Allen, the master of understatement as his tail was swinging in the wind for $97,000.

“Tuesday 5th January. Advised of need for further trip to Bangkok to save the deal. Valuations of original purchases do not all add up – some documentation missing. Ken Penfold, the jeweller/valuer from Brisbane would not certify some of the [gem] valuations by David Mitchell…The $90,000 loan from McKenna had never eventuated.”
Garth Allen says Lancaster asked him to lend the company the $90,000 they needed, “so that the deal could be finalised once and for all”:

“Ted suggested [lawyer] Tony Thomas could draw up a mortgage for one of my properties…it was stressed that the loan would only be for three weeks and then all would be paid back on settlement.”
Longtime Lancaster-watchers would have howled with laughter if they’d had a chance to read about Garth Allen’s optimistic hope of being repaid by Edward Lancaster.
Allen admits he ignored his own lawyer’s advice that this was a terrible deal, because “I had been so completely convinced by Ted that the deal was finalising and that the danger was non-existent.”

Solicitor Hugh Garlick was so concerned he insisted the Allens get a second opinion from another lawyer. “Once again we were strongly advised not to sign the commercial loan,” admits Allen. But he did anyway. Ka-ching. $187,000 and counting.

Incredibly, he signed it even though he didn’t have the promised security document in his hands:

“We were assured by Ted Lancaster that Martin [Hanak] had a A$100,000 Bond which we would receive as security, if we would like to go up to Property Club and collect it. We went to Property Club to collect the Bond but Ted did not turn up…we have never seen the Bond since.

“When Ted came back from Bangkok he claimed to have left the Bond in Bangkok as security on a deal.”

Unbeknownst to Garth Allen and his wife Penelope, Brierley Properties had advised they were pulling out of the properties for sapphires transaction on January 15. There was to be no deal, no settlement. When Garth later saw bank records he found out that Greywolf mining boss Edward Lancaster and his sidekick Martin Hanak had “continued to bleed the account dry”, and that his $90,000 loan to the company
“was used for a variety of purposes for which it was not intended”.

“It is obvious from the Westpac and BNZ statements that monies were misappropriated and that much of this was after Messrs Lancaster and Hanak knew that the deal had foundered and before this fact had been passed on to the lender,” says Allen.

Leslie Martin, the frontwoman and real estate licensee for The Property Club, has been able to shed a little more light on events leading up to this. She says that on January 14 1993 she received a phone call telling her the locks had all been changed on their offices and she couldn’t get in. Lancaster owed Leslie $20,000 and she began to feel extremely nervous. That mood wasn’t helped when a private investigator rang her that day to ask where Lancaster’s Mercedes was – apparently Ted was well behind with payments on the car.

By the time the dust had settled, Lancaster had cleaned out Leslie Martin for the best part of $40,000 and Garth Allen’s losses had climbed to $211,000. Leslie was forced to take out a second job working night shift at the Post Office, so she could pay off the debts and keep her real estate licence.

As Leslie and Garth investigated further, they found another real estate agent, Carole Withey, had fallen victim to the man, losing $100,000 in the process.

Given Lancaster’s apparent inability to rub two cents together, one has to wonder at where or who was really paying to purchase the sapphire gemstones at the centre of all these bond deals. Investigate has a signed statement from Lancaster claiming to document an A$150 million “Sapphire Bond Issue”. Investigate has no proof, this long after the events in question, but in our opinion the gemstone deals were most likely a form of international money laundering, probably to benefit either criminal organisations or tax evasion schemes.

If Lancaster had owned $150 million in sapphires himself, he wouldn’t be doing brokerage deals based around commissions, and he would have been able to pay his phone bills.
Intriguingly, the intelligence file on Lancaster hints at something else:

“Evidently 14 3-kilogram bars of gold went missing from Goldcorp…it has been stated that two people met Lancaster in the Gluepot [tavern], offering the bars of gold for sale. Lancaster returned to the office with the comment that it was ‘too hot to handle’, but soon after that he ran a standard advertisement in the Herald for gold chain. It has been stated that he received all manner of deals from people wanting to exchange launches, Rolls Royces, high priced American cars etc.”

Fourteen gold bars of that size would have been worth US$390,000 back when gold was $300 an oz, but at today’s prices would be equivalent to US$1.7 million. Tricky to launder in New Zealand, perhaps, but easy enough to melt down into jewellery for smuggling offshore to buy sapphires. Even so, it would not have been anywhere near enough to account for the A$150 million in sapphires allegedly up for grabs.

In early 1993, a North Harbour Ford car salesman is quoted in the intelligence file stating that Ted Lancaster “offered gold in payment” for a car, and that Lancaster was also “dealing in gems”.

This, then, is the character of Greywolf Goldmining (his website says it is Greywolf Resources and his answerphone gives the name “Goldwolf”) chairman Edward Lancaster, a man who applied to purchase mining licences across New Zealand this year on the promise of providing “thousands of jobs” in advance of a float of his company on the New Zealand and Australian Stock Exchanges. Talking it up, just as he always has ever since the 1960s, hoping to suck in prospective investors.

Only this time, a few members of the public remembered things about him. On May 18 this year, six months after Greywolf first shot to public attention in New Zealand, a commenter on a blogsite debating the mining proposals urged people to do a little digging into the background of Ted Lancaster. Four days later, another commenter calling himself ‘Tommo’ warned:

“I had dealings with a Ted Lancaster while I lived in Sydney where he was associated with a cashback scheme, and another company called Blue Sky Investments. We rented our house to him and his family who in the course of a year refused to pay any rent – we being one of many other victims. Edward and his family never had any intention of paying the $45,000 owing in rent despite tribunal rulings.

“He was a devious and cunning person who has a long history of bankruptcy and dodgy dealings. I would suggest that Crown Minerals check his background before proceeding any further.”
Greywolf’s own web listing in the Alibaba business directory, and a Google search, provide more entertainment. We discover, courtesy of Google, that up until last year Ted Lancaster’s most recent businesses before reinventing himself as a mining magnate included selling Fijian vegetables in a small export/import business, and operating a logging operation in Fiji. The Greywolf listing written by Lancaster states:

“Our company has been logging in Fiji for five years and recently in Papua New Guinea. Whilst recently logging on our timber and mineral concessions in Fiji we came across some valuable ore. On further investigation by the local mineral department, and searching some forgotten records from 1946, it appears that extensive investigations proved it was valuable find [sic] of precious metals.

“In 1946 the old chief at that time did not want mining on his land, so they planted trees instead which we are logging today with the new chief as our partner.”

The Greywolf website, in broken English then explains that this mineral find is backing for the company’s proposed share float of 100 million shares. “We are currently selling these [100 million] one dollar shares prior to stock each once new commissioned assay, and our mining rights, have been consolidated, and we commence open cast mining early new year the shares should quickly grow in value. This company has been formed to take advantage of these proven gold and platinum deposits.”

Understand that if you can. In reality, the offering appears to be only one step further up the food chain from a Nigerian scam letter offering to deposit $100 trillion in your bank account if you can just wire back $10,000 of your own money to them first as a sign of good faith.

The “I found gold under a Fijian coconut palm” story is only marginally different from this story told by former Goldcorp boss Ray Smith in his biography, Where’s The Gold? and expanded on by me in The Paradise Conspiracy:

“[Smith]wrote in his autobiography of being called in by the Cook Islands Government in the mid 1980s to help launder 1200 tonnes of gold – apparently on behalf of [Philippines dictator Ferdinand] Marcos. When the Japanese were beaten at the end of WW2, they reputedly left behind billions of dollars worth of bullion plundered during their Asian campaign. Ferdinand Marcos found it. At least, that’s Ferdie’s version of the story.

“According to Smith, however, the laundering plan involving his company Goldcorp was simple: ‘There were proven traces of gold in certain areas of the Cooks. A bogus mine would be set up and the gold would be ‘mined’. Our role was to set up the mine, build a small refinery to process the gold from 99.5% to .9999 and then to deal the now legitimate gold onto the world markets. The total value of the metal was about US$15 billion. Our commission was to be four percent [US$600 million].”

Ray Smith says the deal was dependent on Marcos being able to get the gold physically to the Cook Islands, and he was still working on the deal when he was fired from Goldcorp in 1988.

No matter how you slice and dice it, the Greywolf mining claim about discovering gold while “logging” in Fiji sounds dodgy. Little wonder then that people started becoming suspicious. The Nelson Mail’s Naomi Arnold managed to get an exclusive when she got Lancaster to admit in a phone interview that his claimed partnership with China’s Qinghua group (you read the quotes at the start of this article) actually wasn’t real:

“It’s not Qinghua group so much, but many companies like Qinghua.”

Just a few days later, Greywolf’s application for 10 oil, gas coal and mineral exploration licences were refused by the Ministry of Economic Development, which then called in the Serious Fraud Office as its news release confirms:

“The Serious Fraud Office (SFO) has commenced an investigation into Australian exploration and mining company Greywolf Resources NL (formerly Greywolf Goldmining NL), following allegations that fraud may have been involved in its application for exploration permits.

“SFO Director, Adam Feeley, confirmed that the Ministry of Economic Development (MED) has passed information on to the SFO relating to applications made by Greywolf for petroleum and mineral exploration permits.

“ ‘From the information received to date, it appears that false representations may have been made in support of these applications,’ he said.

“Mr Feeley said that the focus of the SFO investigation would be to determine the authenticity of certain statements made in the applications and, if there was false information, to also determine who was responsible for making those statements.”

If Lancaster is true to form, he’ll go to ground, out of reach of the NZ or Australian authorities for the time-being, leaving others to take the rap. We’ll keep you posted.

The full version of this story, with supporting documents, was published in the July 2011 Investigate HIS/HERS magazine and is available from our subscriber area on Facebook