Crown adopted "divide and conquer" tactic in Lombard case

Thursday 2nd February 2012

The Crown succeeded in its attempt to split up the directors of Lombard Finance & Investments, who are being defended by three different counsel, according to the defence.

In his closing argument, counsel for executive director Michael Reeves, Stuart Henderson, told the High Court in Wellington the prosecution divided the directors over the Bayswater development on Auckland’s North Shore, and effectively caused them to lose their faith in one another.

Henderson said he broadly supported the closing argument put forward by Paul Davison QC, counsel for Doug Graham and Lawrence Bryant, but differed in the opinion put forward that Lombard Finance’s management team withheld information on the Bayswater loan.

“The Crown has succeeded where six years of working together in the Lombard business failed, in making the parties here doubt each other,” Henderson told the court today. “Two directors have fallen fully into the trap of the Crown.”

Henderson said the Crown’s case was predicated on the benefit of hindsight, and that the credit crunch encountered in New Zealand in early 2008 was something that sapped liquidity from the entire market and couldn’t have been foreseen.

Like other financiers, Lombard Finance’s management and board had to rely on the advice of others, because of the highly specialised nature of the business, he said.

Henderson said auditor KPMG was more heavily involved in reviewing Lombard Finance’s statements, with invoices showing a wider degree of work completed by the firm than just audit services.

He said the Crown failed in its duty to give the accused the opportunity to properly defend themselves by not specifying particulars of what caused the offer documents to contain misleading statements, and had changed its position through the course of the trial.

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

Davison, who represents Graham and Bryant, wrapped up his closing argument today, saying the small number of new investors during the period showed those people recognised the risks involved, and the reinvestment was based on investors’ previous good experience with Lombard Finance.

He stressed the burden is on the Crown to show the accused breached the Securities Act beyond reasonable doubt, and urged Justice Robert Dobson to apply the higher principles required in criminal law.

Henderson will continue his closing argument today, with counsel for Jeffries set down for tomorrow.

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

(BusinessDesk)

BusinessDesk.co.nz

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