Ross Lund is one of Ed Sullivan’s best mates.
In 2006 Mr Sullivan, then a director of South Canterbury Finance, approached him about taking part in a deal involving a new company, Woolpak Holdings.
Mr Lund was told it was a short-term arrangement pending a takeover deal by an Allan Hubbard-associated company.
The funding for the deal came from South Canterbury Finance.
Woolpak’s accounting fees were posted to Mr Sullivan and passed on to South Canterbury Finance founder Mr Hubbard’s accounting firm.
Mr Lund sought and obtained an indemnity from South Canterbury director Mr Sullivan and chief executive Lachie McLeod for any liability over the Woolpak debt to South Canterbury Finance.
These facts were presented to the Justice Paul Health in the Timaru High Court yesterday in the continuing fraud trial of South Canterbury Finance former directors Ed Sullivan and Rob White and former chief executive Lachie McLeod.
But South Canterbury businessman Mr Lund insisted in the High Court in Timaru yesterday he was not a “puppet”.
He owned the shares legally in his own right and could have sold them at any time, theoretically anyway, because the value of the shares fell while the debt rose, he said under cross examination.
The Woolpak deal is one of about six main transactions that form the basis of charges brought by Crown prosecutor Colin Carruthers QC against the South Canterbury trio.
The court heard that the background to the deal was when Hellaby Holdings told Mr Hubbard in early 2006 it planned to sell a 20% holding in Wool Services International, an NZX-listed company.
Mr Hubbard already owned 44% of Wool Services and purchasing the additional 20% would have triggered compulsory takeover provisions.
Mr Hubbard’s long-term strategy was to merge Wool Services with another company.
The Crown alleges that Mr Sullivan essentially set up Woolpak to hold the shares temporarily by a friendly unrelated party – Mr Lund.
Mr Sullivan, 72, is facing nine charges, the most of the three defendants.
Five charges are for failing to declare related party transactions in South Canterbury Finance prospectuses, including a $6.9 million loan to Woolpak.
A summary of this week’s hearings will be available on NBR’s online Weekend Review