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SCF five to stand trial in High Court next year

The five former directors and executives of failed Timaru lender South Canterbury Finance will stand trial in the High Court next February after losing a bid to keep the hearing in the district court.

The Crown was successful in its bid to have former directors Ed Sullivan and Bob White, and former chief executive Lachie McLeod, former chief financial officer Graeme Brown and former company accountant Terry Hutton tired in the High Court, according to a judgment today.

Justice Paul Heath "reached a firm conclusion that the trial should be transferred to the High Court for hearing" to commence either judge alone or by jury on February 10, 2014, he said. The trial may take between 12 weeks and 16 weeks, the judgment said.

The 21 charges relating to fraud, dating back to between November 2004 and February 2010, and are linked to the $1.58 billion paid out to debenture holders covered by the retail deposit guarantee.

The most serious allegations are against Messrs Sullivan and White, whom the Crown asserts "each was a party to the making of deliberately false statements in prospectuses", the judgment said. Messrs Sullivan, White and McLeod are alleged to have used false financial statements to secure cover in the government's guarantee scheme.

"An allegation that a company director has made deliberately false statements to induce members of the public to invest money in a company which ends up in receivership owing some $1.58 billion to its investors is extremely serious," Justice Heath said.

"The gravity of the alleged offending is heightened when one has regard to the allied allegation that false financial statements were used to gain entry to a guarantee scheme for which, the Crown alleges, South Canterbury was not, in fact, a qualifying applicant.

"In my view, the gravity of the alleged offending is such that it overwhelmingly tells in favour of a transfer to the senior trial court within the judicial hierarchy," the judge said.

The Executive Judge of the District Court with responsibility for Christchurch and Timaru told the judge that without "significant additional judicial resources" the district court could not accommodate a trial before the second half of next year, Justice Heath said.

Another factor in bumping it up to the High Court was the "self-evident" level of public interest in the case.

"The circumstances in which so much money was lost is a significant public concern; the more so when the allegation of false financial information to obtain entry to the guarantee scheme is added to the mix," he said.

The trial will take place in Timaru unless an order is made for a change of venue, the judgment said.


Comments and questions

The Justice system in this country is incredibly slow in bringing matters to trial.
11 months out is a ridiculous length of time to wait.

Agree. Look at Hanover. The SFO has been investigating nearly four years and still not even any charges.

Anonymous, did it occur to you that the SFO haven't laid any charges is because there aren't any to lay??

And on this historical point, Red Dog and I agree for once. That time frame is a nonsense. Say any of these guys is innocent as charged, and they all are until tried; well they've lost so much anyway through this tardiness, because they must be simply trapped in the prison of their own minds until they can have their day in court.

There is no justice in this.

Also, while I'm on it, and in reference to, say, Hotchin again: why does it take the Serious Fraud office so long to do or investigate anything. Red Dog will know as I do, even with a bad set of records and complicated accounts, you apply yourself to it, and you can get through it in a short time frame of weeks at the most - because with IRD's time penalties, we have too. Regarding Hotchin, what do they have to look at? A few years of prospectuses, a few budgets, but what else that can take an office of how many full-time, skilled employees, years and years to get through what I see as scant paperwork (in the scheme of things - all the finance cases were mainly looking at single document prospectuses, weren't they?).

I know, for once :) I'm talking from a point of ignorance, but an analysis of their time-sheets to see why these cases take so long for them to investigate is getting to me more important than interesting, because for those they finally end up charging with something, their lives are riding on it. Mark Hotchin, love him or hate him, that's irrelevant: he's closer to three years of his life frozen by the state, than two anymore. And for all of us, that's obscene in what it denotes.

The delays so far in the SCF5 case are as much about the defendants' applications for adjournments, then fighting the Crown on venue (to stay in the DC, where the trial would be around six months' later), as anything. It is not a case of defendants desperate to get to trial to get this over with.

I agree it is too slow, though. There is the issue of this hanging over potentially innocent men for so long, but it is also likely that they may be guilty and delaying the trial as much as possible to delay going to jail.

In the USA, defendants in criminal cases have the option of asking for a speedy trial which bypasses all the administrative delays.

I can assure you there is no desire to delay matters - with 5 defendants agreement is difficult, thereby confining all to the views of the minority. Our justice system is ridiculously slow, denying the timely opportunity to clear one's name.

A competent judicial process does not require two years to hear and decide on matters of where a matter will be heard. The judiciaries continutal acceptance of very long adjournments demonstrates a lack of will by the judiciary to have the matter heard.

You would think the allegedly biggest fraud in New Zealand's history could be brought to trial sooner than two years since charges were laid. This documents a further instance of an incompetent New Zealand judiciary.

With regard to Hanover, if the SFO needs more resources to get evidence against those directors and officers then it should publicly ask for it and get overseas experts brought in if necessary to leverage off overwhelming public support for justice in the finance company sector. What concerns me is that this very long delay in bringing charges may indicate errors have been made and evidence botched.

When Adam Feeley joined the SFO he said under his watch all complex cases could be completed within a maximum of 3 months. The current director a few weeks ago said he was taking the file home over the weekend to figure out if he was going to lay charges. Four years later there is still no decision. Either close the file or give it to someone like the FMA who can make the call as to whether there is fraud or not.

Why is it that the people / entities that borrowed the money from SCF and never paid it back have not been named ????

Very good point. What the asset management division did at SCF with impaired loans needs examination. Quite a few people got rich at Joe Public's expense when loans were forgiven.

Well if they get convicted of fraud which cost the Country $1.58b one would hope that the penalty, financially at least, fits the crime.

Reparation of $1.58b, or at least the net cost to the Taxpayer, must be ordered not just a slap with a wet bus ticket like so many others

How could it take 4 years to investigate a case? Seems odd.

The old truisim 'Justice delayed is justice denied' is the hallmark of what passes for a judical system in NZ. Fact is what we have here is a total lack of capacity, capability and will to bring these cases to court in a timely manner.
There is no excuse. We have been badly let down by those responsible being parliament in the first instance, the Ministry of Justice in the second and the judiciary in the third.
All are guilty of failing to provide a justice system that serves the citizens.

Perhaps the accusers they had misplaced some more boxes of evidence.

Lack of capability in the regulators, too - to bring the matters to a head for the victims. Four years is a bit much.