South Canterbury prosecutor confusion

The South Canterbury Finance fraud trial has been diverted into arguments about correct disclosure

Who is the prosecuting authority in the South Canterbury Finance fraud trial in the High Court in Timaru?

The trio on trial are former chief executive Lachie McLeod, and directors Bob Whyte and Ed Sullivan, following the finance company collapse in 2009 owing investors nearly $2 billion, which was paid out to them under a Crown bailout.

The roles of the Serious Fraud Office and the Financial Markets Authority have come under scrutiny.

The issue has arisen during evidence in the trial that has run for two and a half months and is due to continue until the end of June.

It emerged in the cross examination of Bryan Pearson of Woodnorth Myers who was giving evidence about his auditing of South Canterbury Finance accounts.

The court heard how he had been interviewed by someone from the Financial Markets Authority but a transcript of that interview had not been disclosed to defence lawyers.

It also transpired that another witness, Ernst & Young director Bruce Loader, who was responsible for conducting a peer review of one of the audits, had also been interviewed by the FMA and that had not been disclosed.

These revelations led Justice Paul Heath to inquire overnight whether there were any further transcripts of interviews or documents that might be relevant to the trial that were conducted by the FMA, and next day defence lawyers raised more concerns about disclosure.

Crown prosecutor Colin Carruthers QC told Justice Heath there was only one other prosecution witness whose transcript has not yet been disclosed because of a confidentiality agreement.

“There is a question of jurisdiction in relation to the disclosure obligation. The initial prosecuting authority was the Serious Fraud Office. It is apparent from evidence  given  by  one  of  the  witnesses  involved  in  the  South  Canterbury investigation at SFO that there was a degree of collaboration between SFO and FMA in respect  of  some,  at  least,  of  the  investigation.  

“The question is whether the ‘prosecutor’ for the purposes of the Criminal Disclosure Act 2008 encompasses both SFO and FMA, or only SFO,” Justice Heath says in a ruling over the matter.

He ruled the issue requires an application by defence counsel for additional disclosure from the prosecutor under s30 of the Criminal Disclosure Act 2008, together  with  any  alternative  application  for  a  non-party  disclosure hearing against the FMA.

Submissions in support of the applications and in opposition were to be filed by the end of today and debated tomorrow.

Justice Heath noted that these latest issues will delay the schedule of witness cross examination.