Trends Publishing sues Callaghan Innovation over cancelled grant

UPDATED: Related party debts trigger Callaghan complaint

Trends Publishing, a publishing company that found itself under investigation by the Serious Fraud Office over its use of a government-funded business growth grant, has lodged proceedings in the High Court against the government's innovation agency, Callaghan Innovation, saying it's "horrified" by its treatment.

David Johnson, chairman of Trends Publishing, said in a statement the company was "reluctant to take action against Callaghan" over the suspension last September and then cancellation in April this year of a three-year growth grant, which the company says it was using to develop "new web-based browser technology being used to socially engage users through content and to connect them with other relevant parties", including new methods for developing business leads.

However, legal action was necessary "to correct the inaccurate and seriously damaging information that has been put into the public arena," said Johnson in a statement, which sought face-to-face meetings with Callaghan to negotiate a settlement that would avoid court action. "I wish to ensure no other company is put in a similar situation by Callaghan."

A spokesman for Callaghan Innovation declined comment, saying the matter was now before the courts.

Johnson declined to elaborate on what a satisfactory settlement outcome might contain.

The incident relates to what Trends claims was the unlawful suspension of a three-year growth grant that was supporting Trends, a 20 year-old Auckland-based publishing company with interests in New Zealand and offshore markets, including Australia, the US, China, India, South East Asia and the Gulf states, according to its website.

"Trends has shown itself to be an innovative company for over 20 years and I'm horrified that we could be treated in this way," said Johnson, who enumerated a series of events in which he said Callaghan sought first to audit Trends' use of the growth grant, then involved the Serious Fraud Office, and then cancelled the grant, all at short notice and without detailed discussions with the company.

"Callaghan has been under public and political scrutiny about how it administers its hundreds of millions of dollars of funding, and we've been made a scapegoat," Johnson said. "If Callaghan had any concerns about the eligibility of any aspects of the claim, I would have expected them to have met with us and discussed any issues and how they should be addressed in future claims."

Trends had not been shown even a draft version of the audit report on which its concerns were based, and did not see press statements issued by Callaghan until after they were received by news media.

Callaghan had failed to follow procedures outlined in the terms and conditions for the growth grant, Johnson said.

"While I'm reluctant to go through all the stress and expense of taking legal action, I'm not prepared to see the company be a sacrificial lamb as a result of the inept actions of others that have got us to this point," he said in a statement.

(BusinessDesk)

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