Four men, including two former Cabinet Ministers have been found guilty of charges relating to the collapse of Lombard Finance; Stuff reports:
Former cabinet ministers Sir Douglas Graham and Bill Jeffries, and two other former Lombard Finance directors, have been found guilty of four charges of making false statements.
The verdicts, delivered in the High Court at Wellington this morning, also included one set of not guilty verdicts for Graham, Jeffries, Lawrence Bryant and Michael Reeves.
The charges they were found guilty of were:
Count one: Between December 24 2007 and April 3 2008 Authorised Reeves to sign on behalf of the defendants a registered prospectus that was distributed and included an untrue statement. The amended prospectus omitted significant adverse liquidity issues, including the company's deteriorating cash position since September 30 2007.
Count two: Distributed an advertisement that included an untrue statement relating to investment opportunities in unsecured subordinated notes dated December 28 2007.
Count three: Distributed an advertisement that included an untrue statement relating to investment opportunities in unsecured subordinated capital notes dated December 28 2007.
Count four: Distributed an advertisement that included and untrue statement relating to investment opportunities in secured debenture stock dated December 28 2007.
The were found not guilty in the fifth count of distributing an advertisement that included an untrue statement by sending a letter to investors on or about March 3 2008 enclosing a DVD that included and untrue statement.
The charges carry a maximum penalty of five years' imprisonment or fines of up to $300,000.
Lombard Finance was put into receivership in April 2008, owing $125 million to 4400 investors. Secured creditors were expected to be repaid less than 24 cents in the dollar.
These are indeed serious charges, with serious consequences. However the Judge has indicated that non-custodial sentences will be considered when the men appear for sentence at the end of March.
Lombard Finance collapsed in 2008 with debts of around $120 million. Secured creditors are expected to get around 24% of their investments back, but unsecured creditors are unlikely to receive anything. We're sure that those affected by collapse of Lombard will have strong feelings about the adequacy of any sentence passed by the Court.
And there's a salutory lesson for anyone who becomes a director in a public company; even a lifetime of service will not excuse proper checks and balances taking place, and due diligence and responsibility being exercised. Sir Douglas Graham and Bill Jefferies gave many years or service to the people who elected them; this morning, that service is forgotten, and their reputations have been tarnished. Oh, how the mighty are fallen.