UPDATED: Court finds McLeod, White not guilty of fraud at SCF
UPDATED 11AM: While focusing on three specific deals that formed the basis of the proved charges against Mr Sullivan, Justice Paul Heath dismissed any ideas of conspiracy.
"in my view the Crown's suggestion of an underlying culture of concealment between 2004 and 2010 does not withstand scrutiny."
Instead the judge referred to the period of rapid growth between 2004 and 2008 when the management procedures used by South Canterbury Finance were inadequate.
However, there were three deals in particular that led to the convictions against Mr Sullivan. They involved Kelt Finance, Woolpak and the Hyatt Auckland deal.
After the judge discharged Mr White and Mr McLeod, he called on sentencing reports for Mr Sullivan including the suitability for home detention, although he said this did not mean he had made up his mind about the sentence.
There were scenes of jubilation and tears outside the courtroom as well wishers and relations of the discharged men hugged and greeted them.
When NBR asked Mr McLeod if he had expected the verdict, he said "well, it all seemed to come together in the last three weeks of the trial."
He said it had been incredibly tough over the past three years and he thanked his family, the community and his lawyer Jonathan Eaton.
Mr McLeod said he felt sorry for Mr Sullivan and he was a good guy.
EARLIER 9:30AM: Former South Canterbury Finance director Robert White and former chief executive Lachie McLeod have been found not guilty on all counts of fraud, following a five month trial in Timaru.
Former director Edward Sullivan has been found guilty on five charges brought by the Serious Fraud Office and not guilty on four charges.
Justice Paul Heath delivered his verdict in the High Court at Timaru this morning.
A pale Mr McLeod slumped backwards in his chair when pronounced not guilty.
Mr White showed little reaction.
Sullivan frowned deeply throughout the judge’s address.
The public gallery was packed.
Justice Heath quickly read through the counts declaring each man guilty or innocent.
He then spent considerable time backgrounding the case, including the charges and explaining reasons why he made his decisions over the guilt or innocence of each man.
The three men faced a total of 18 charges under the Crimes Act, including theft by a person in a special relationship, obtaining by deception, false statements by the promoter of a company, and false accounting - each carrying maximum penalties ranging from seven to 10 years' jail.
Charges against Timaru chartered accountant Terry Hutton and former South Canterbury Finance chief financial officer Graeme Brown were withdrawn last year.
South Canterbury Finance collapsed in 2009 owing investors nearly $1.6 billion, which was paid out to them under the Crown retail deposit guarantee scheme set up a year earlier to protect the New Zealand financial system. The company’s loans were mainly on various property developments that also collapsed.
The finance company was founded by the late Allan Hubbard, who was charged with 50 counts by the SFO but was spared the indignity of the trial after he was killed in a car crash, aged 83.
Former statutory manager Sandy Maier, who took over as chief executive of South Canterbury Finance for a period after 2009, testified the company would have collapsed regardless of the global financial crisis.
But it was the deposit guarantee scheme that provided potential for the scale of the failure.
When investors realised the company had a Crown guarantee after November 2008 they piled money in.
South Canterbury Finance accepted the deposits and in turn lent it to more risky ventures – remarkable given the evidence of crisis in international markets by that stage.
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