Simon Nikoloff, left, Gerard Gallagher, second left, and lawyers James Rapley QC and Kathryn Dalziel, pictured in 2020. Photo: RNZ / Nate McKinnon
Two former public servants who corruptly tried to profit from the Christchurch earthquake rebuild have been sentenced to home detention.
Former Canterbury Earthquake Recovery Authority (CERA) and Ōtākaro Limited employees Gerard Gallagher and Simon Nikoloff were sentenced at the High Court today after being found guilty of of corrupt use of official information in March.
At CERA, the Serious Fraud Office (SFO) said Gallagher and Nikoloff were tasked with attracting investors to the central Christchurch, including connecting property owners to potential buyers to speed up the inner-city rebuild.
The men had access to official information, including how much landowners were willing to sell for, what investors were willing to pay, and plans for the city.
They used the information to secure a sale and purchase agreement for their own company and then tried to set up private business deals through which they would personally profit by hundreds of thousands of dollars, the SFO said.
Gallagher was later employed at Ōtākaro Limited and managed the team responsible for finding buyers for surplus Crown land.
The SFO said he used and disclosed commercially sensitive information about a developer's plans for a multi-million-dollar piece of Crown land in an attempt to broker a deal that would see him personally profit.
The developer ultimately withdrew when Gallagher's offending came to light, leaving a large empty plot that remains undeveloped.
Gallagher was sentenced to 12 months' home detention and 200 hours of community work, while Nikoloff was sentenced to seven months' home detention.
SFO director Karen Chang said the court identified the harm the men's offending caused their colleagues and employers, and potentially to New Zealand's reputation and public sector trust.
"Despite being unsuccessful in their efforts, the offenders' actions were corrupt and caused real harm to the city's rebuild efforts," she said.
"Mr Gallagher's offending contributed to missed opportunities in the city's regeneration, including a potential new retirement village on an inner-city site that remains undeveloped today.
"Their offending was particularly egregious given how much Christchurch had already suffered. They exploited their roles as public servants employed to help in its recovery."
Chang said it was important that organisations had robust internal controls when administering public funds, particularly in emergency situations or recovery phases, because quick distribution funding methods were more vulnerable to exploitation.
"A reminder of the need for these controls is particularly relevant as New Zealand faces another post-disaster rebuild following Cyclone Gabrielle and the flooding," she said.
"When CERA needed to get off the ground quickly following the earthquake, a number of other government departments came together to help implement key policies.
"This included ensuring there were clear guidelines around conflicts of interest. Ultimately this helped to hold the defendants accountable for their actions by showing they knew they were acting corruptly."
The SFO said it was focusing on misappropriation of targeted government funding, including money earmarked for emergency recovery or rebuilds.