Dominion Finance trial hinges on luxury property

WILLIAM MACE
Last updated 13:41 11/02/2013

Relevant offers

Industries

Tourism core part of Canterbury economic strategy Flexi Buy truck shop former director Vikram Mehta charged by watchdog New agency to unlock potential of $1b worth of Auckland Council land OceanaGold boosts production forecasts for 2015 Rural Equities says lower milk price impacts earnings Former All Blacks captain David Kirk backs Straker Translations Enviroreel left out of Waste Minimisation Fund NZ dollar tumbles below US64c on back of low business confidence John Key claims mood 'reasonably positive' as optimism hits six year low Vector Arena concerts to increase in size and frequency

A luxury Auckland property development initiated by ex-Kiwi league star Matthew Ridge is at the centre of allegations against executives of failed finance company Dominion Finance.

The trial of three people associated with Dominion Finance began in the High Court in Auckland today, with 12 Crimes Act charges of theft by a person in a special relationship alleged.

Former Dominion Finance director Robert Barry Whale faces five charges, former chief executive Paul William Cropp faces four charges, and another person who has name suppression faces two charges.

All three accused have pleaded not guilty and are being represented by defence lawyers including Paul Davidson QC and John Billington QC.

Dominion Finance collapsed into receivership on September 9, 2008, owing more than 5900 public debenture investors $176.9 million, and a further $56m to ASB and Bank of Scotland International.

Receivers estimate investors could receive between 10 cents and 25c in each dollar they invested but with no prospect of recovery of any interest owed.

Crown prosecutor Brian Dickey has spent the morning opening his case and outlining loans advanced by Dominion to related-party companies where Dominion directors were on both sides of the transactions.

In 2002 Ridge's property development company M3 Developers secured a $2.58m loan from Dominion Finance to buy the land for an 11-apartment complex at 2 Basset Road in Auckland's upmarket Remuera.

However it stalled at an early stage leaving a "big hole in the ground filled with water".

Dickey said that by 2004 about $6m was owed on the development and Ridge was looking to sell it.

Dominion director Terence Butler organised a sale of the development to a third party, John Williams, who he then formed a joint venture with, and a further $6.6m in loan funding was secured from Dominion.

Butler's joint venture relationship with Williams was not declared and the lending increased over the following years to over $8.2m.

In separate charges Dickey alleged Dominion had used another subsidiary called North South Finance, which it bought in 2006 and had the same directors and management, to fund other instances of related-party lending.

The alleged "highly imprudent" related-party lending and lack of documentation to back up the transactions was in direct breach of the trust deeds that both Dominion and North South were founded on, Dickey said.

North South Finance was also put into receivership in July 2010 when the Securities Commission announced charges against the companies' directors.

Ad Feedback

North South owed 3900 investors $31m as well as $15m to two banks.

Receivers estimate North South investors could see between 65c and 70c in the dollar.

Dominion director Butler was also due to stand trial but has terminal cancer and argued in August last year that he could not afford to defend himself as well as buy the drugs which were keeping him alive.

The trial continues. 

- BusinessDay.co.nz

Special offers

Featured Promotions

Sponsored Content