New Zealand broker Grant Herbert has been sentenced to four-and-a-half years in jail for theft and paying secret commissions.

His sentencing last week followed his conviction in the Auckland District Court last month. The 62-year-old was found guilty of failing to remit $NZ2.5 million ($2.25 million) of clients’ premiums to insurers, in some cases leaving the customers uninsured.

He used the money to pay the expenses of his company, Herbert Insurance.

The company had 4000 clients when it went into receivership in March 2011, with a shortfall of $3.1 million ($2.79 million) owed to insurers.

Serious Fraud Office (SFO) Director Julie Read says the offences exposed clients to considerable losses and represented serious breaches of trust.

“Mr Herbert’s conduct has also had the potential to damage the community’s confidence in dealing with brokers and thereby damaged the interests of all those brokers who act honestly,” she said.

An SFO investigation uncovered a fraud in which Herbert paid secret commissions to a manager of Bunnings New Zealand to place the hardware company’s property cover through the broker, overcharging Bunnings by $NZ220,000 ($198,110).

Herbert had pleaded not guilty to charges of theft by a person in a special relationship, using forged documents and giving secret commissions.

Before the trial he pleaded guilty to using a forged document to obtain a $NZ250,000 ($225,130) credit facility.

Aon bought Herbert Insurance’s client book following the collapse and mounted an industry rescue to get clients covered.