Startling revelations of bad lending practice, dangerously high debt ratios and unsecured related-company loans were revealed this week in the High Court trial of three Nathans Finance directors.

In a previously confidential and damning report for the Securities Commission, HFK consultant David Crichton – one of New Zealand’s leading insolvency and forensic accountancy specialists – told of a chain of transactions between Nathans and parent VTL which fell well outside good lending practice.

Nathans directors Donald Young, Roger Moses and Mervyn Doolan have denied 12 charges of distributing an advert containing untrue statements an six chares of signing a prospectus which include an untrue statement.

Director John Hotchin (brother of Hanover Finance’s Mark Hotchin) pleaded guilty in March to three Securities Act charges relating to making untrue and misleading statements in Nathans prospectus.

Full details of what Mr Crichton uncovered in his investigation and analysis of Nathans books appear exclusively in National Business Review’s print edition this week.