South Canterbury Finance's McLeod, White found not guilty; Sullivan guilty of 5 charges

Tuesday 14th October 2014

South Canterbury Finance former chief executive Lachie McLeod and former director Robert White have been acquitted on all charges following the collapse of the company, while former director Edward Sullivan has been found guilty on five charges and acquitted on the remaining four.

The verdicts were handed down this morning by Justice Paul Heath in the High Court at Timaru. The five-month trial which concluded in August followed the 2010 collapse of the finance company.

Charges were laid by the Serious Fraud Office against the three accused in December 2011 after a 14-month investigation. The majority of the charges related to specific transactions entered into by South Canterbury Finance involving allegedly undisclosed, related party lending. All three denied the charges, with lawyers for the three accused saying the allegations were “baseless and devoid of any merit”.

The SFO also alleged that people associated with South Canterbury Finance unlawfully obtained the benefit of the Crown Retail Deposit Guarantee Scheme by failing to disclose to the Crown that the company had entered into related party lending.

The SFO estimated the total value of the allegedly fraudulent transactions at $1.7 billion, which included an estimated $1.58 billion from entering the guarantee scheme, of which $800 million has since been recovered. All defendants were acquitted on the charge relating to the guarantee scheme.

Sullivan has been remanded on bail and will be sentenced on Dec. 12.

SFO director Julie Read said the case, which the SFO had described as New Zealand’s biggest fraud, was difficult and complex.

“While the SFO was unsuccessful in part, given the scale of the collapse and the impact it had on investors, it was clearly in the public interest to put all matters before the court. I am also satisfied that there was sufficient evidence to warrant bringing this prosecution – the court, not the SFO, is the ultimate arbiter of whether or not that evidence is sufficient to prove the charges beyond reasonable doubt.”

Read said even though McLeod and White were found not guilty she believed the case was investigated thoroughly and that the SFO’s counsel presented the best possible case to the court.

The SFO is considering the Judge’s reasons for the decisions today.

BusinessDesk.co.nz

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