Alpha Laboratories owners say they expect to be cleared in tenancy inquiry, and hope to continue donating money to politics to support small businesses
A business couple say they had no idea their tenant was using their home as an unlawful hostel for up to 30 migrant workers – they had agreed only to him subletting it to Airbnb guests.
They understand MBIE Tenancy Services is now investigating him for other similar operations in Auckland, and insist the accountability lies with him – though they acknowledge they never inspected the property.
Auckland Council has lifted an abatement notice for operating a boarding house without consent, after they evicted the tenants, and Alpha Laboratory owners Lian Seng Buen and Jean Shim say they expect MBIE's compliance team will also clear them.
The couple, who are among the National Party's biggest donors, have given an interview to Newsroom about the investigations into tenancy conditions at the five-bedroom Del Mar Court house in east Auckland that was their family home, but they've since rented out. They address questions about how they treat their 300-plus workers, and explain why it's import to them to contribute to politics.
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The couple say they have donated $350,000 ($200,000) this year alone – in the hope a National-led Government would support small businesses tangled up in excessive regulations, and back exporters to add value to their raw products. They welcome leader Christopher Luxon's promises to fund more cancer drugs, to crack down on crime, and to support school education.
"We are extremely concerned about the economy," says Shim, 55. "It affects people because, when you go to do the grocery shopping, you would be so shocked. It's very expensive."
The National Party posted photos on its local Facebook page of Luxon visiting Alpha Laboratories, a month after he was named National's candidate for the Botany electorate. He is shown inspecting the facilities clad in a white coat, hairnet and face-mask, and posing with the owners.
"This year and next year, the whole world economy is very, very worse and bad," adds Buen, 53. "So you have to choose the right person."
They are not concerned that the tenancy investigations may embarrass Luxon and the National Party, or undermine their relationship with the party.
Tenants have told neighbours and media that the house at Del Mar Court didn't initially have smoke alarms in the bedrooms, and sometimes there was no power – they had to pay to hire a generator. Shim and Buen say they weren't aware of those complaints, and that the house had smoke alarms in the corridors when they leased it out in March this year.
They say they didn't know their tenant was renting out beds at $160 a week to 20 to 30 south-east Asian migrant workers, until they read it in the media; they had agreed he could sublet it to Airbnb guests.
They leased the house to him for $1500 a week; the agreement, which they showed to Newsroom, requires him to ensure any subletting arrangement complies with the law.
After Auckland Council served them an abatement notice in June, they evicted their tenant and everybody else living there. The house now sits empty, and the gate is padlocked, as they await the outcome of the more extensive MBIE Tenancy Services investigation.
Starting from scratch
The big house was a long way from how the couple started out. Shim, who is from Korea, first visited New Zealand when she was in her 20s, on an OE of sorts. Despite having no family or friends here, she fell in love with the country and decided to stay. She got a job in health products. She liked the industry but not the company so, after five years, she decided to go out on her own.
At a social function, she'd met Buen, who had moved here from Malaysia to be closer to his sister. In 1999, Shim registered the company and together, the newlywed couple launched their first business.
How many staff did they have when they started? Buen laughs, and points to the two of them.
"We were doing all our production," Shim explains. "I was packing product. Because we were just starting, it wasn't a problem."
They say they've tried to contribute back to their community, and their political donations are just one part of that.
Both Buddhists, they are involved in that faith community, but say they also value the diversity of all the different races and religions employed in their factories. Buen says one small facility, employing perhaps 20 people, may support 20 families. And they will support migrant workers in finding jobs for their family members.
Employment relations
Over the years they've expanded their business empire.
They now employ more than 300 workers contract manufacturing nutraceuticals and health foods at 22 sites, including two big high-spec factories in east Auckland. "Too much headaches," Buen says, laughing again. "Seven days, seven nights, we have to work."
In 2014, Prime Minister John Key opened their flagship facility in Crooks Rd, East Tāmaki – and ahead of that year's election, they made their first donations totalling $50,400 to the National Party.
But their growth has not been without its problems – including managing such a large workforce. In 2016, Alpha Laboratories was fined $44,000 by the Employment Relations Authority. An employee who had asked for an hour and a half off to go see her sick mother was told the company was far too busy; she was later dismissed.
Shim refused to answer media questions at the time, but she says now that the authority didn't have all the facts.
"If somebody's actually going through hard times for themselves, or their family, we're sure to be kind and sympathetic about the situation and give them space to deal with it," she says.
The authority found Alpha had failed to provide the employee with sufficient details about its claim of serious misconduct, and the investigation undertaken by the company was unfair. "In this case, when the judgment was put out, I was very shocked," says Shim.
The couple now has about 43 companies, though some are just holding companies or inactive. They own the land, and the factories. They export nutraceuticals in hard and soft capsules, pills and liquid form to Australia, Singapore, Malaysia, Thailand, Vietnam, Taiwan, and a small amount to China that they market under their own brand.
While they won't name the clients for whom they contract manufacture, their products include Vitamin E, fish oil, evening primrose oil, deer extracts, seafood products and canned milk powder.
Nearly 95 percent of what they produce is shipped offshore.
It's with obvious pride that they offer a guided tour around their big Crooks Rd factory. The airlock-sealed, sterile production area is entirely built with stainless steel, Buen points out. The office area is lined with a marble the couple chose from China.
Shim says the two of them essentially designed the big factory themselves, with an architectural drawing programme.
But they draw the line at being photographed sitting in the big high-packed leather chair at the top of the long boardroom table. “It’s too grand,” Buen says. “We’re just working people.”
A house is not a home
The couple moved out of the Del Mar Court house in late 2019, just before Covid – their three children were all grown up and had left home, so they decided to downsize to a smaller house, nearby.
"It was our family home. And we'd been there quite a long time, about eight years or 10 years," Shim says. "Initially, I thought that we would move back to the house after Covid because I really missed living there, because we'd lived there so long. But we didn't move back. And so, we just decided to just lease it out. Then this thing happened."
They leased it to the most recent tenant in March. At the time, it had brand-new smoke alarms in the corridors. "We did a big clean-up and some fixing and renovations to make sure that it was in the right standard to lease out. We did that. So there were smoke alarms, in all the corridors."
"We leased it out to this person and this person was operating his business there. And then he moved in and soon after, neighbours complained to the council" Shim says. "We were contacted because of that. I wasn't involved in sending workmen to do things, to rectify things."
They were dismayed to discover how many migrant workers were renting beds there, and the conditions in which they were living – though they accept they never inspected the property, as landlords. Nor did they have a property manager.
Shim says they had required, in the lease agreement, that the tenant take responsibility for all compliance requirements when he sublet the property. He was an independent third party, she insists, not an agent for them.
She contacted MBIE Tenancy Services this week. "I rang the tenancy agency to understand better, have we ever been in breach of the requirements. And secondly, if we were in breach, are they now satisfied? Or is there something we still have to do to satisfy them?
"I'm advised that they will be sending me a closure letter, because they do not think I'm in breach of the tenancy agency requirements.
"There is an investigation still going with the tenant because the tenant may be doing the similar thing in other properties as well. He seems to be doing this for other properties as well."
Newsroom has asked MBIE to confirm whether Tenancy Services has widened its investigation beyond the one property at Del Mar Court.
