13 Aug 2014

SCF charges described as farce

5:24 pm on 13 August 2014

One of the defence lawyers at the South Canterbury Finance fraud trial has described some of the charges as a farce and says they must be dismissed.

Former directors Lachie McLeod, Edward Sullivan and Robert White are facing 18 fraud charges in the Timaru High Court relating to the $1.7 billion collapse of the company in 2010.

South Canterbury Finance had been accepted into the Crown Retail Deposit Guarantee Scheme during the 2008 global financial crisis. The Government ended up paying $1.6 billion to its depositors in 2010.

The lawyer for Edward Sullivan, Marc Corlett, told the court on Wednesday the Crown appears to have abandoned two charges against his client for making false statements in two prospectuses.

Mr Corlett said the Crown started out saying that a $25 million loan was not disclosed - but now only says the right emphasis wasn't given it.

He said the farce must end and the charges dismissed, as the lending is plainly, fairly and properly disclosed in the prospectus.

Mr Corlett said the Crown has invented new theories during the course of the trial and attempted to hoist the defendants on those theories in its closing statement.

The court was told that the $25 million loan from South Canterbury Finance to its subsidiary Southbury was made in line with a long-standing practice by the company.

Mr Corlett said two of the Crown's witnesses have said they knew of a credit facility between the two companies which operated without the usual approval processes.

He said he wouldn't argue that this was a proper or efficient practice, but said the board and directors all knew of the practice and Mr Sullivan can't be blamed for happening to be the person who signed the cheque.