Lawyers for five people connected with Bridgecorp today questioned why the failed finance company's prospectus was registered in 2006 despite a solicitor saying one loan looked "Enronish."Five Bridgecorp directors – Rod Petricevic, Rob Roe
Lawyers for five people connected with Bridgecorp today questioned why the failed finance company's prospectus was registered in 2006 despite a solicitor saying one loan looked "Enronish."
Five Bridgecorp directors – Rod Petricevic, Rob Roest, Bruce Davidson, Gary Urwin and Peter Steigrad – each face 10 charges brought by the Securities Commission.
The charges allege the directors lied in the December 2006 prospectus.
Among the commission's allegations were that Barcroft Holdings, whose $76 million loan was Bridgecorp's largest borrowing by a single borrower, was a related party to Bridgecorp and that this was hidden in the financial statements.
The prosecutors say Barcroft was a conduit through which loans could be advanced to seven entities connected to Urwin.
At a depositions hearing which resumed at Auckland District Court today, lawyers for Roest and Petricevic questioned John McPherson, the manager of securities and corporate compliance at the Companies Office, who oversees the registration of company prospectuses.
Mr McPherson told the hearing that Ian Ramsay, a solicitor his office frequently engaged to look at prospectuses, had said in an email in November 2006 that the Barcroft loan "seems very Enronish."
He said that this would have been a reference to the Enron scandal of 2001, in which the US company collapsed and faced allegations of accounting fraud.
Mr McPherson said the reference would have been about possible "off-balance sheet activity" and that Mr Ramsay would have been suggesting Barcroft was a related party.
Mr McPherson said attempts were made to find out more information, but they were unable to prove that Barcroft was a related party.
Mr Ramsay later wrote on December 14, 2006 that "it looks like form does win over substance. I think it will come home to bite us in the bum".
Questioned by Petricevic's lawyer Paul Davison as to why the prospectus was registered, Mr McPherson said that path would only have been taken if there was evidence to show the prospectus was misleading,
"We got to the point where there was residual suspicion that Barcroft was a related party," he said. "But we could not demonstrate that because ultimately the entity was a trust in Fiji and we had no way of knowing what that trust represented."
Bridgecorp collapsed in 2007, owing 14,500 investors almost $460 million.
Steigard had already accepted there was a prima facie case to answer, and Petricevic, Roest, Davidson and Urwin were today also committed to trial.
