Two directors of finance company Capital + Merchant Finance say they will vigorously defend charges against them laid yesterday by the Serious Fraud Office. Wayne Douglas and Neal Nicholls say the charges appear to relate to a loan transaction made in 200
Two directors of finance company Capital + Merchant Finance say they will vigorously defend charges against them laid yesterday by the Serious Fraud Office.
Wayne Douglas and Neal Nicholls say the charges appear to relate to a loan transaction made in 2002 on a Palmerston North property in which a fully secured loan was repaid in full in 2004 without loss to Capital + Merchant or its investors.
In a press statement issued today the pair said the loan “met normal business lending criteria, and the SFO charges are baseless.”
“Given that the investigation was launched in March this year and we have been co-operating fully with the SFO investigation team, we are surprised and disappointed that charges have now been laid in relation to this particular transaction” say the former directors.
“We see no other option but to vigorously defend these charges and our reputations.”
Yesterday the SFO laid six charges under the Crimes Act against the two men, one a current director and one a former director of CMF
The charges involve nearly $14.5 million of related party lending dating back to 2002.
The SFO said the charges concerned loans made between April 2002 and September 2004 to three companies that converted two Palmerston North high-rise office blocks into student accommodation.
The SFO alleges that as directors of CMF Mr Nicholls and Mr Douglas held investors’ funds subject to a special relationship with investors and that they used their position to apply those funds in a manner inconsistent with that relationship.
The SFO also alleges the directors falsely stated the true extent of related party lending in annual CMF prospectuses and associated financial statements in July 2003 and September 2004.
They pair was remanded on bail and will next appear on 16 December 2010.
The SFO began investigating CMF in March following a complaint from CMF receivers, Grant Thornton.
When the company was placed into receivership it owed $167.1million to approximately 7000 investors.
