Lombard: A case with no winners

Last updated 10:51 10/04/2012

It was a simple and unsatisfactory verdict for everyone.

The four directors, former justice ministers Sir Douglas Graham and Bill Jefferies, with Lawrence Bryant and Michael Reeves, former chief executive and company founder, were found guilty of making untrue statements about Lombard's position in its offer documents in December 2007. That cost them their good names.

Certainly the 4400 investors were losers – owed $127 million when Lombard failed like so many companies of its type which went to the wall late last decade. They would rate the accused as lucky to avoid jail. In fact, someone who knows the circumstances better than anyone – bar the four in the dock – spoke of no remorse, no plea of guilty and little reparation offered by them.

In saying that, Crown prosecutor Colin Carruthers QC cited between two and two years nine months' jail as sentences he believed matched their conviction. The judge didn't agree. Instead Justice Robert Dobson sentenced Douglas Graham and Lawrence Bryant to 300 hours' service and ordered them to pay $100,000 reparation. Bill Jefferies, along with Michael Reeves, was sentenced to 400 hours' community service. One outcome: Now they have an inkling about just what some unforeseen calamity late in your life means – despair, anger and for them remorse over past mistakes.

They can't really put themselves in the same position as their victims whose savings have been swept away with no prospect of regaining the stability they believed their decades of hard work once seemed to guarantee for them.

If someone outside the case and the commercial background had somehow gone to the wrong Wellington courtroom, listened to the defence and glanced up at the convicted men – "the Lombard Four" as the media now label them – they would think the four were specialist witnesses in another case who had somehow gone through the wrong door.

Graham and Bryant were honest and honourable men who had applied themselves diligently to the task as directors, Paul Davison told the judge before sentence was passed. They were not criminals and the sentence process was the "ultimate humiliation" for them.

Jefferies had lived a good and decent life, according to his counsel David Hurd. Having a conviction greatly outweighed any sentence the court could hand down, he said.

It was inevitable in a prosecution involving such losses that money would come into discussions even at that late stage. Justice Dobson said in sentencing that Graham's and Bryant's ability and willingness to pay reparation entitled them to a discounted sentence. The judge gave all three non-executive directors a 15 per cent sentence discount for their good reputations and high standing in the community.

Justice Dobson said that in the case of Reeves, 66, his serious ill-health was the overwhelming mitigating factor. Obligations to his family were also a consideration.

He has cancer and underwent an operation in 2007 followed by chemotherapy. His ongoing outlook is mixed. He is not in a position to pay reparation.

Fairfax News reports that Sir Douglas Graham, 70, indicated the $100,000 reparation payment would "pretty well clean him out". Bill Jeffries, 66, a lawyer, said he could not pay reparation – and had philosophical and principled objections to paying if he did have money.

Former chief executive and company founder Michael Reeves was sentenced to 400 hours community work. He could not pay reparation.

Justice Dobson said the sentence that would have been appropriate for Reeves was reduced for his ill-health and having sole care of two children and part-time care of a third child.

Lawrence Bryant, 68, sentenced to 300 hours community work and $100,000 reparation, has a small vineyard in Wairarapa.

He said he would borrow money to pay reparation.

The convictions of the four men come under a law that had been in place since 1978 and Graham and Jeffries, who had both been ministers of justice, had been responsible for that law's administration.

The judge was shown victim impact statements from 39 people, many of them retired and relying on the money they had lost.

One couple had lost the results of years of hard work that they were putting towards buying a dairy farm. Some victims alleged deceit and dishonesty – but Fairfax News says that was not borne out in the findings.

The personal reputations of the Lombard directors, especially Graham, meant it had been trusted above other finance companies.

The verdict and the sentence will cause other suspect corporate figures justifiable sleepless nights as they await hearings or carry with them fear of charges. Whose turn next?

But nothing in the Lombard case or any of the others will bring back investors' losses.

Sir Douglas Graham said in the same week as the sentence that there had been times in the investigation when he felt "it would be best for me to drop dead".

It would be reasonable to assume that, at the same time, there had been some among the Lombard losers who, like him, felt that life was not worth living – and who understandably still do.

- © Fairfax NZ News

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