New Zealand property tycoon Ron Hoy Fong to be prosecuted for ‘bid rigging’ and ‘cartel conduct’
- Fong is a third-generation New Zealand-born Chinese, according to his company website. By 2017, he owned 34 investment properties worth NZ$25 million (US$16.5 million)
- New Zealand has in the past decade endured a housing affordability crisis, driven by low interest rates, limited stock and purchases by wealthy immigrants
Fong is a third-generation New Zealand-born Chinese, according to his company website. His biography says he first started investing in properties in 1969 and by 2017 had 34 investment properties worth NZ$25 million (US$16.5 million).
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The study indicates the average family would need to save for nine years without spending a single dollar to afford a home in the country, compared to 21 years for Hong Kong, seven years for Australia and just under five years for Singapore.
The commission said it had entered into a settlement with Ronovation Limited to resolve the proceedings, with a penalty hearing to be scheduled.
“Ronovation [trading as Ronovationz] was set up in April 2009 and conducted business advising members on how to acquire and improve investment properties in Auckland. By March 2018, Ronovation had over 400 paid members,” the commission said. “The commission alleges that Ronovation developed rules in September 2011 to govern the conduct of members, including rules that prevented Ronovation members from competing for properties.”
These rules, the commission concluded, “amounted to cartel conduct”.
“Agreements not to compete at auctions or on tenders are also commonly known as ‘bid rigging’. ‘Bid rigging’, or collusive tendering, occurs when there is an agreement among some or all of the bidders about who should win a tender or auction. Bid rigging is a form of cartel conduct.”
Some places are already a bargain … That’s simply because the vendor’s a dummy
Ronovation declined the South China Morning Post’s request for comment on the court proceedings.
The prosecution follows a two-year investigation by the commission into Fong. Local media revealed in early 2017 details of a real estate investment tutorial video made by Fong, instructing people to “look for the seven Ds”.
According to The New Zealand Herald, the video encouraged people to target deceased estates, desperate homeowners facing foreclosure, developers on the brink of bankruptcy, divorcees and “dummies” who did not know the value of their home. The video told people to work in groups to drive down property prices and provide false names when making repeat offers.
“Some places are already a bargain … That’s simply because the vendor’s a dummy. He doesn’t know what it’s worth,” Fong said in the tutorial video, according to the Herald.
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The promotional video was supplied free to members of the Auckland Property Investors Association (APIA) at the time.
Contacted by the Post, APIA president Andrew Bruce said he had cut ties with Fong immediately after learning the details of the investment guru’s tutorial video.
“APIA has no association with him [Fong] or his company any more,” Bruce said. “As soon as we became aware of the DVD, and we saw what the DVD was, we parted ways.”
The Ronovationz website says the company has “a community of over 600 ordinary New Zealanders seeking financial independence”, resulting in more than “1,700 properties owned by Ronovationz members worth NZ$1 billion”.
