Cross-examination latest: Petricevic ignored warning as rumours swirled
Bridgecorp managing director Rod Petricevic says he dismissed an employee's warning, that brokers were worried about Bridgecorp's cashflow, because he believed their report was wrong, a court heard.
Cross-examination of Mr Petricevic, at Auckland High Court, has returned to the topic of a delayed interest payment to investors at the end of the 2007 financial year.
Mr Petricevic is giving evidence in his defence on Financial Markets Authority charges he misled investors in Bridgecorp's 2006/2007 prospectus and associated financial statements.
Crown lawyer Warren Cathcart asked Mr Petricevic, again, about a report he received, ahead of the April 2007 meeting of Bridgecorp's executive committee, which Mr Petricevic chaired, that raised concern brokers were being mislead by rumours about the company's liquidity problems.
"The late payment of interest on debentures and notes and repayment of maturities has done damage to us this month. The exact extent of which will become apparent during the month of April," the note to directors said.
Mr Petricevic said the report, written by a junior employee, was erroneous, and the payments it referred to were not missed because they were made on the next working day (April 2).
However, he acknowledged he was aware of rumours were swirling in the broker community about Bridgecorp's cashflow problems at the time.
But he said the "issues" Bridgecorp was dealing with in March had been well documented in the media and were well known.
"These brokers, every time they saw yet another article.... they all panicked and they would ring us. This is the sort of thing we were constantly dealing with.
"No director would have been surprised. In fact, no investor would have been surprised because it was well documented"
Mr Petricevic has also told the court the company's cashflow troubles were not apparant to him despite another warning in the finance company's report to the executive committee.
The note said: "Day to day cash management taking up a lot of staff time (Answering creditor queries, splitting maturity batches, accounting for cash transfers, complex loan repayments/refinancing).
Mr Cathcart asked him why this did not ring alarm bells.
"I didn't consider that of any great consequence," he said.
"I didn't focus on it. Perhaps with hindsight, I should have, but I didn't at the time."
Mr Petricevic said he did not understand what the term 'splitting maturity batches' meant.
"There were a lot of terms I didn't understand. There is a lot of jargon in the industry."
Mr Petricevic said his general manager of finance, at the meeting "didn't alert me to anything".
Mr Cathcart suggested if Mr Petricevic had spoken up at that meeting, and asked for clarification, he would have found out debenture maturity payments had been missed in March 2007.
"I didn't ask because I wasn't alerted by it at that particular point in time."
But Mr Petricevic said even if he had asked questions at the meeting, he would "not necessarily" have found that out.
The trial, before Justice Geoff Vennign alone, continues.