31 Mar 2011

Solicitor says he had concerns about Nathans

6:30 pm on 31 March 2011

A former employee of the parent company of Nathans Finance says he quit because of concerns about its financial future.

Nathans was placed into receivership in 2007 owing 7000 investors $174 million.

Three of Nathans' directors - Donald Young, Kenneth Moses and Mervyn Doolan - are on trial in the High Court at Auckland charged with six breaches of the Securities Act.

The Crown alleges cash-flow statements in the company's prospectus were out by many millions of dollars, and and investors were misled when they were told that Nathans was diversifying its loan book - when in fact its interests were dominated by keeping its parent company, VTL, afloat.

VTL's former in-house solicitor, David Steytler, says he left the company before Nathans collapsed because he had concerns about its long-term financial sustainability.

Mr Steytler told the court he was not confident there were adequate strategies in place to turn the business around.