Sir Douglas Graham - best for me to drop dead

In his only media interview since the $127 million Lombard Finance collapse, company chairman Sir Douglas Graham tells NBR Online of his shame, ordeal and calamitous fall from grace.

"On the first day of the eight week trial I said to Paul Davison, my QC: The best thing that could happen now would be for me to drop dead..." Sir Douglas said.

On the eve of being sentenced for giving misleading information about the state of Lombard's loan book just before the company fell,  Sir Douglas Graham is on an emotional roller coaster ride.

He fears the book will be thrown at the Lombard Four and he will go to jail.

This week the man, many believe is still a decent New Zealander, broke down as he told his story.

One moment defiant, the next in tears, it is clear he's still struggling to come to terms with a guilty verdict which could see him and fellow Lombard directors Bill Jeffries, Lawrence Bryant and Michael Reeves go to jail - or at the very least face a hefty fine and community service.

Tomorrow morning he and the other directors will stand before Justice Robert Dobson in Wellington High Court to be sentenced for the crime of misleading investors.

Sir Douglas opened up to NBR Online on the dark thoughts which have been going through his mind as he continues to struggle with the consequences of Lombard's failure.  

His voice falters as he recalls saying the best thing that could happen would be for him to drop dead, before burying his face in his hands and weeping when describing the shame and embarrassment he's brought upon his family and friends.

"I'm finished", he says, "but it's been tough for them, especially my wife and children knowing that I have a criminal conviction. I've written to each of my children apologising for what's happened."

The former justice minister invited NBR into his modest Remuera townhouse, a property far removed from the gracious and well appointed $2 million lifestyle property he formerly owned at Drury.

The man who opened the door was still the charming and affable Doug Graham of old, seemingly unscarred by the turmoil that has engulfed his life since the collapse of Lombard.

But over a cup of tea at the dining room table, the once urbane and unflappable politician let it all hang out; his anger and frustration at the way in which the court case had played out plain to see.

These are dark days for Douglas Arthur Montrose Graham, the onetime MP for Remuera, minister, Privy councillor and Knight: not that the 4400 Lombard investors who lost $127 million - an average of about $29,000 - have much sympathy.

Their views are best summed up by investor Paul Wah who said at the conclusion of the court case Sir Douglas should "lose his knighthood by lunchtime."

"If I can't trust Sir Douglas Graham, then who would I trust?"

The man himself has given much soul searching to the issue of the knighthood.

"I've thought a lot about handing it in but I haven't made a decision yet. If we decide to appeal the convictions I will make a decision after the outcome of the appeal is known."

During our 90 minute encounter it was evident Sir Douglas was itching to talk about the way in which the Lombard trial was conducted and the nature of the evidence that was presented. He offered tantalising insights into what he saw as a deeply flawed process, only to clam up and say everything was "off the record" because he didn't want to influence ongoing legal proceedings.

Then he would relent and volunteer information which was "on the record."

He would not allow a camera or tape recorder and occasionally would not allow notes to be taken.

He alluded to "misleading and erroneous" information which was produced without warning by the prosecution at a very late stage in the proceedings which had an impact on the outcome.

And he said he was unrepentant about his role in Lombard, vowing that if he faced the same set of circumstances he would do the same again.

"We weren't at all like some of the other companies where the directors gave themselves fat dividends and engaged in related party transactions. We grew the business and didn't reward ourselves at all."

There is no doubt in his mind that he and the other directors did not mislead investors in the company's 2007 prospectus and did not give them a false impression of the company's liquidity risks.

The guilty verdict took him completely by surprise, even though he acknowledges the offence is one of "strict liability" under the Securities Act.

But he says he was heartened by some 85 messages of support after the trial, mostly from complete strangers "who think I am an honest guy."

"A lot of people just don't understand how this could happen to me. I've had an embarrassing amount of support from all sorts of people and I'm very grateful to them."

That said, he realises that "deep below the surface there is a blood lust and I've seen this."

Asked whether such public opprobrium was hurtful he said: "Look, I spent nine years doing Treaty negotiations and what I'm getting from some quarters now is nothing compared to that. I regularly got told to go hang yourself with a rope, so I can handle this but it's not nice.

"These people are not interested in facts, they're just interested in reading the headlines."

The stress of the trial has taken its toll on the 70-year-old who says he has now withdrawn completely from public life.

He is no longer a facilitator in the Tamaki Makaurau Treaty settlement negotiations or deputy chairman of the New Zealand Superannuation Fund and has resigned as a justice of the peace as well as trustee of numerous charities.

Apart from the damage to his reputation Sir Douglas has also taken a big hit on the financial front, losing a $2 million dollar shareholding in Lombard .

His only source of income now is a tax free parliamentary pension of $26,000 a year which means there's "next to no money in the kitty" if the High Court orders him and the other directors to make reparations.

"I am not able to earn anything and any talk about reparations is a nonsense," he said.

His straitened circumstances also make it unlikely that he, and the other directors for that matter, can afford to lodge an appeal against their convictions, an exercise that could set them back at least $300,000, so they may have no option but to take their punishment on the chin.

What form that takes will be learnt tomorrow. 

Justice Dobson has already indicated  a community based sentence is likely but has not dismissed the possibility of imprisonment, something which Crown prosecutor Colin Carruthers QC appears to be pushing for.

Mr Carruthers, a relentless independent prosecutor whose case against Nathans Finance directors saw two of them jailed last year, is understood to want at least  a two and a half year jail term for all four men.

It is a prospect Sir Douglas Graham does not find appealing - the law maker is now the law breaker and he can expect to be dealt with no differently to anyone else in his predicament.

It is an inglorious way to end many years of exemplary public service as a parliamentarian, which may explain why he plans to "disappear and get away from everything, perhaps writing a book and studying some theology" once the sentence is served.

As we bid farewell on the steps of his townhouse, I can't help remembering something he told me the last time I interviewed him in 1999, several months after he was given a knighthood.

"Whatever you do, don't call me Sir Doug in your story, please make it Sir Douglas. Sir Doug makes me sound like a bloody racehorse."

I was only too happy to oblige but next time around he may just have to settle for plain old Doug if his detractors have their way.

Even one of Sir Douglas' political adversaries on the Left, Jim Anderton, could not bring himself to pillory him or Bill Jeffries.

While acknowledging they had failed in their duty, Mr Anderton said he doubted "that either of them has a dishonest bone in their body."

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