Lombard defence: "not business as usual"

Friday 3rd February 2012

Lombard Finance & Investments issued the offer documents that have landed it in trouble in recognition that it wasn’t “business as usual”, according to the defence.

In his closing address, counsel for Bill Jeffries, David Hurd told the High Court in Wellington that the directors of Lombard Finance issued the amended prospectus because they wanted to raise their disclosure to investors in recognition of the changing environment.

“I would say it was not business as usual,” Hurd told the court. “The whole reason it was put out was to recognise things were approaching and we have a very different business environment and we are going to put that to you.”

Hurd said the offer documents weren’t required to impart the same level of information to investors that was available to the directors. Rather the intention of the legislation is to ensure material information is passed on to let an investor make a reasoned decision on whether to accept the level of risk.

The Crown contends Lombard Finance directors Doug Graham, Jeffries, Lawrence Bryant and Michael Reeves made untrue statements in a 2007 prospectus, investment statement and advertising material.

Hurd said the Crown’s approach to testing for impaired loans lacked evidence to support its assertion the deteriorating environment meant the loan book had to be written down in value, and should have relied on expert witnesses which could then have been tested by the defence.

“The Crown’s case has been lost in the quicksand of vagaries,” he said.

Hurd criticised the prosecution shifting its case throughout the proceedings, and urged Justice Robert Dobson to meet the principles of criminal law, in that it’s up to the Crown to prove beyond reasonable doubt his client’s guilt.

Lombard Finance’s directors didn’t shy away from facing up to their obligations, nor did they try to lay the blame on others, he said. There was no suggestion of dishonesty or a lack of integrity on their part.

Hurd said the outcome of case will be closely watched because it comes down to the criminality of the directors’ judgement.

“It’s difficult to imagine any directors being able to avoid being to avoid conviction under that situation,” he said.

Hurd is continuing his closing argument this afternoon.

The trial is continuing, and is heard by judge alone.

(BusinessDesk)

BusinessDesk.co.nz

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