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Sir Douglas Graham – “best for me to drop dead”

Sir Douglas Graham talks for the first time about his shame and ordeal and why it would have been best for him to drop dead.

In his only media interview, the Lombard Finance chairman opens up tearfully to NBR Online on the eve of his sentencing about his “dark thoughts” and his fear that tomorrow he will be sent to jail.

He was left facing criminal charges after the $127 million collapse of Lombard in 2008.

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More by Rod Vaughan

Comments and questions
52

yes what a great idea but first pay back the money you owe. I never lost any money to any of these finance companies but then I am not stupid and greedy

Doug Graham is a great New Zealander in terms of the work he did on the treaty issues. The judgement against him clearly shows he was convicted of a so called crime without actually knowingly breaking any rules or attempting to defraud anyone. He is a good man caught in the wrong place. The people who lost money in finance companies should stop their blaming and realise they were invested in a stupid business model where even the best of directors could not have helped.

You cant be serious? Graham should hang his head in shame.

Absolutely right. Too many people who were prepared to invest in finance companies AND take the high rates of interest lost sight of their responsibility to be totally aware of the high risk of their investment. They can't blame the directors alone, especially as there was not one scerrick of criminal or reckless behaviour for the directors' personal benefit. This is a tragic case of a good man doing his best for investors in the middle of the GFC where investors were expecting godd plated returns with zero risk. In the real world this simply doesn't happen.

Above two comments seem to be from people that have never made a mistake in their lives. Perhaps they should reveal their names so we learn from their exemplary lives to date.
I personally believe that the judgement was wrong, and there should be an appeal. Clearly though we have a judiciary that with hindsight look at everything with the view of hindsight. Stephen Franks seems to view the lack of commercial brains on the judiciary as a real problem.

I am certain that neither Bill Jefferies or Sir Douglas sought to mislead and would have in honest belief done what they thought was the right thing throughout the Lombard Directorships.

I intend to approach their legal counsel to help fund an appeal.

Get real, no one should feel sorry for these people, feel sorry for the oldies that either now have to visit the food bank and or are otherwise dead-through worry!!!

Feel sorry first for the victims of this man's negligence.

At the least it was gross negligence, negligence is a crime. Especially so when the sum of the loss is $127 million and sales staff were still soliciting after Lombard was put in receivership.
Spend your money more wisely.

Without wishing to defend the man, I think both of your comments above are detestable to fellow human being. You have obviously never been in a position of trust when unknowns spiralled out of your control. Let him take it on the chin, but don't put the anonymous boot in.
I've been caught in company collapses before as a creditor, but there is stuff all you can do about it. You pick yourself up and start again.

bottom line is many many people invested on back that he (& co's) were people who knew what they were on about - plainly they had no idea of book keeping nor how to run a bussiness; people in power can not take on one hand without being accountable

Roger - ignorance is no excuse. If you put your name to something as important as an Annual Report, you better be sure of the facts within it. “Mr”. (and I use that title deliberately) Graham was paid handsomely to know and understand the facts of the business he was involved. The end

Lots of different views her. These finance companys wre dealing with funding property and few directors had a good understanding of the industry and the people involved. In Lombards case they loaned a fortune on a few bad deals and flakey operators. There job as directors is to limit risk i would have thought.

As far as Sir Douglas goes he did recieve payment for being a director. Sadly the head of Lombard was looking for people of a high standing to give Lombard credibilty. So what about the likes of Pine Tree Meads? and Richard Long?, they in my view took fees for misreprsenting the real facts.

Yes that is true, however they were not director's.

Thats true. But they too had their heads in the troff and promoted the investments as secure. did a fee for promoting not take precedent over the risks.

There should be no going soft. Graham has been hoisted by his own petard. As Minister of Justice in power during the 1990's and in the wake of the 1987 debacle he had the the opportunity to change the regulatory environment. He failed utterly to investigate any wrong doings during his term - just ask the offshore loan borrowers who were defrauded by the banks in the 1980's. His laissez-faire attitude has left a legacy of finance company collapses (not just Lombard) with incalculable collateral damage. ... and the knighthood should go!

just as an aside....can someone provide a list of the finance companies that actually survived the last few years and name the directors and explain what they did differently?

yes " just saying " above...instant finance, which has moneylending branches throughout nz and has been in biz for 39 years survived the whole crash...in fact, they never partook of the govt. g/tee, always remained in profit even though their funding lines were through Fortess as were Capital and Mechant and BCorp .

It's a family owned biz. by Nigel Nausbaum and run by his son Simon...so it can be done and without any assistance....and they pay a regular dividend

Great to hear!!!

Think only 12 Survivors left:

Marac
UDC
Finance Direct
Fisher and Paykel
etc etc

Looks to me like the fallen finance cos in the main have been property developers disguised as Finance Companies wherby the above and others making up the remaining 12 in the main offer principal and Interest Loans rather than Capitalised interest type property deals and have a reliable cash flow and sustainable business models. Talking to suviving directors would be very interesting I agree and Its a wonder a news story hasnt been done from a surviving directors perspective.

Thanks Anonymous 5.48pm....so it would seem that the common denominator is actually what the money was on-lent to rather than the performance of directors. Nathan Finance was obviously a sham ...and then Lombard at the other end of the scale...

But!!!! Where are those property developers who probably bullsh****d everything to the finance comapnies now?

feels like easy targets to become scape goats so in the eye of the public some sort of justice has been served. yes he should have been more careful, but also the regulatory environment has a lot to be desired - NZ the Wild West! it does feel harsh when the likes of Hanover & Strategic seem to have made the way to escaping punishment

Personally I think Max Bradford should be locked up for his electricity reforms several decades ago. That was one of the most ill-conceived and disastrous economic 'con-jobs' I've ever witnessed - and I'm a National supporter! Generations of New Zealanders have paid, and will continue to pay, for Bradford's foolish arrogance. Doug Graham has just been plain stupid and wallowed in the baubles of a profile directorship without properly exercising his legal obligations as a director.

Lock him up and throw away the key

If he lost a $2 million shareholding and now has only a pension then (a) he must have owned most of the company! (b) he had no idea of how to balance and spread risk in investments and should not have been running a finance company (c) he must have put in everything he had when this company was high risk - greedy for a big return? There are retired people who now have only the national super pension having lost all their savings by trusting him and the other directors - his pension will be twice theirs. There are also people who tried to warn him of this company in advance and over several years but he did not and would not listen.

What a wimp some of these public figures are when being forced to take responsibility for their actions. I've made mistakes and had to pay for every one of them and never tried to garner sympathy, paying financially and emotionally, never being bailed out by taxpayers etc. We have to pay for this crowd's mistakes because more will be on benefits through their negligence. So just suck it up and quit trying to make people feel sorry for you Sir Douglas.

Stop getting people to feel sorry for you Sir Douglas. We all make mistakes and most of us pay for them financially and emotionally without sympathy.

Be honourable and give back your honorifics.

He did terrific work as treaty minister and deserved respect and admiration. He seems to have done no work as a director beyond pocketing fees paid for by hapless investors and for that he deserves scorn and contempt. No money to make reparations - of course not, his assets are probably all tied up in convenient family trusts.

Crocodile tears from a man who still clings to the delusions of entitlement. If he was truly contrite he should have the decency to relinquish the honorific title.

Doug forgot to mention he's entitled to National Superannuation on top of his $26K pension from parliament. So he's pulling in well over $40k a year in cash. Doing better than a lot of old folk ripped off by Lombard.

Many people willingly take on directorships for the money, the perks, their egos and status and they pay no heed to the responsibilities associated with the position. It is simply not before time that these people were bought to account and made to answer for their actions. After all shareholders and investors have entrusted their funds to be looked after wisely and professionally.Often directors are appointed by "old boy networks" or on recommendations of the Directors Institute(bunch of fuddy duddy's) and their competence and credentials to do the job in many cases that i know of, are very dubious. If directorscan't do the job to 100% then they should never take on a directorship in the first place. And as far as some directors holding several directorships in sometimes quite large companies, well that has to stop. As a director myself , you simply cannot do justice to more than 2 or 3 companies .....as you have to have inside knowlege and know exactly how the company works . This whole business of directorships needs an overhaul .But its tough bikkies for Doug Graham as obviously he wasn't up to speed with what was going on at Lombard. which is unacceptable ......do the crime do the time .

I personally am very very tired of "well known" peeps cashing in on their high profile by allowing their character be used as, "sucker bait", be it as front man on television ads, or as "Directors".
I would suggest an education program aimed at the "suckers", but unfortunately there is no educating a sucker other than relieving him/her of a substantial amount of their money. And even that doesn't work every time. Sigh, Oh, what is to be done????

What people on this thread seem to be ignoring, or perhaps they're ignorant of the facts, when they say things like "do the crime, do the time," is that in this quite remarkable case we have a situation where the prosecution, the defence, and the judge all agree that all four men found guilty believed the document they signed was correct, and had no dishonest intent. Furthermore, despite believing they'd done the right and proper thing, and neither the prosecution or judge arguing with that belief, the prosecution and the judge have undertaken a hindsight review of this document and said, "it could have been better, and as a result, we're going to call you a criminal." I'm sorry ladies and gentlemen, but regardless of your view of the company, the sector or the business model, that's just wrong. It's crazy. And it's no wonder Sir Douglas is at his wit's end. This is New Zealand we're talking about, not Russia, not some South American banana republic where expect the courts to respond to the will of the ill-informed mob. This is ridiculous, and I bloody well hope they appeal, and win. Because that would be justice.

Excellent points made. People also forget that these documents, prospectus, prior to making it into the public domain, are vetted by the trustee & securities commission. The trustee was there to ‘protect’ the investor, the securities commission to protect all. Where is their part in this. Many wonder just why the trustees have escaped investigation like the directors.

JP - very good point. The Trustee and the Securities Commission have a hell of a lot to answer for in this and other finance company collapses (there were 62 of them after all).

The vetting process by the Trustees & Securities Commission failed the investors and it is they who should have some light shone on them.

Who were the Trustees - let's have their names so that people can see who advised the board; why haven't they been hauled into court like the directors.

Justice in this country is failing. Particularly when you see the legislation changing which has the potential of civil charges being laid instead of criminal charges.

It is completely understandable how Sir Douglas and the other directors feel agrieved by being hung out to dry by the FMA and Colin Curruthers QC who think its appropriate to seek a custodial sentence.

I hope Curruthers is whiter than white.

when you have been robbed you are the victim of a criminal act,accept the fact that these 4 convicted criminals committed $127 million dollars worth of criminal acts on over 4000 people .
maybe your holding some of the loot,if you condone their crimes you are as much a crim as them , 'get over it'' they should be in jail facing the music

Individuals are appointed to boards to overseee the governanace of the organistion. They are not there for the prestige, glory or access to the money trough.

Their role is to ensure that the CEO and other staff are performing in a manner, and to the standrads whcih the board sets.

They are not rubber stamps for the organisation, they are there as part of a series of checks and balances whcih ensure the company runs in a financvially sound manner.

Mr Graham did not do this.

It just reinforces one of my investment principals - DON'T invest in companies that have ex politicans on their boards!!!!!

...and/or, lawyers.

Tears of fear from a person who has difficulty facing up to the fact that he did not have the skills to be chairman of a finance company, took the perks ,title and lots of remuneration, feels no guilt about the losing other investors money only his own and loss of face.Has not got the balls to front up and take his medicine.
He is a convicted criminal.
End of story.

JP, your point about the trustee is a particularly good one in this case, because what hasn't been well reported is that the judge actually threw out 80% of the charges - including the outlandish ones by the Securities Commissions that the loans were impaired - and found them guilty on one thing four times, i.e. the same explanation of liquidity in four documents. The judge said this explanation wasn't a fulsome enough, i.e. it didn't paint an explicit enough picture of the company's liquidity position and history of liquidity. But anyone who reads the Securities Act which they were prosecuted under will see that the Trustee is established as the clear proxy for the investor in these situations, and while it's been argued in hindsight that Lombard didn't say enough about liquidity in its documentation, it was providing its Trustee with liquidity information WEEKLY! So what did the Trustee say to the directors about the quality of the information the company was providing? Nothing. What did the Trustee say to investors? Nothing. I repeat, no wonder Sir Douglas is at his wit's end. This has been an unfair shambles.

Well said, Sir.

Why hasn't CURRENT politician, the Minister for Regulatory Reform, latest Leader of the ACT Party, ACT MP for Epsom - John Banks been charged as a former fellow Director of Huljich Wealth Management (NZ) Ltd for signing Huljich Kiwisaver Scheme registered prospectuses dated 22 August 2008 and 18 September 2009, which contained untrue statements?

Oh - that's right.

John Banks - an arguably yet-to-be charged/convicted 'white collar' criminal is holding the balance of power in NZ 'perceived' to be the 'least corrupt country in the world'.

How DODGY is THAT?

Penny Bright
'Anti-corruption campaigner'.
waterpressure@gmail.com

could not agree more glad to see others not afraid to put the truth out there

Just another greedy crook.LOCK HIM UP.

So poor Doug has lost 2 Mil, question did he really invest 2 mil?, or did he just value his worthless share stock at 2 Mil?, probably in which case cost him not much for starters??, either way he make a piss poor job by losing it all anyway.

Like Richard Long, "Sir" Doug Graham was happy to lend his supposed mana and pocket the cash. Let's not waste sympathy on these chancers; save your sympathy for the financially naive who thought companies fronted by these poseurs would be a safe investment.

Roger Armstrong expressed my own thoughts perfectly. New Zealand owes a debt to this man and the investors need to stop looking for someone else to blame for their naivety

This is living proof (again)that lawyers and politicians usually do not make good busines people. Take the medicine like the investors have had to, and stop feeling sorry for your self Mr Graham

Dougie done, wrong; he know'd it.

This is a good man who believed he had done his job with the information he was provided. Investors in failed finance companies need to look in the mirror, the higher the return, the higher the risk! There is always a risk with any investment and only a foolish man would invest his money in finance companies, especially all your money. Thought kiwis were smarter than this.

It would seem to me that a lot of commenters are saying that anyone who loses money in an investment, particularly a finance company investment is a fool - does it not then follow that if doug graham lost everything in his shareholding then he is a bigger fool? does a fool deserve to hold a knighthood? but my main concern is that this article seems remarkably well timed so as to ensure the sentencing judge has a time to read his uninterupted remorse (no journalistic querying of his earlier statements) prior to his sentencing. Does any other person get to publish a pr piece the day prior to his sentencing for criminal matters

He gave away half the country to the maoris and gave away all the investor's money to developers. He should be made to give away everything he and his family trust has to the poor investors.