New Dominion Finance trial underway

MARIA SLADE
Last updated 12:32 18/02/2013

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A new trial for three men accused of theft over the collapse of Dominion Finance has begun in the High Court at Auckland.

Former director Robert Whale, former chief executive Paul Cropp and a third man who has name suppression face charges under the Crimes Act of theft by a person in a special relationship.

Three days into the first trial last week Justice Pamela Andrews was forced to step down due to a "perceived bias" towards Whale. Both she and Whale were partners at law firm Kensington Swan.

A new trial began this morning before Justice Graham Lang.

Crown prosecutor Brian Dickey did not re-deliver his opening address, however lawyers for the accused restated their defences.

Dominion Finance failed in September 2008 owing $177 million to more than 5900 debenture holders, and another $56 million to ASB and Bank of Scotland International.

The Crown says the charges arise from the failure of Dominion Finance and its sister company North South Finance, and the case revolves around the issuing of loans to parties related to Dominion Finance's directors.

The proceedings follow an investigation by the Serious Fraud Office. Whale faces five charges of theft, Cropp faces four charges and the other man faces three charges.

The Crown says the three men entered into "unauthorised and highly imprudent related party transactions" in breach of the finance companies' trust deeds.

Before the first trial was aborted the court heard about a Remuera property development involving former rugby league star Matthew Ridge.

In 2002 Ridge's property development company M3 Developers had secured a $2.58m loan from Dominion Finance to buy the land for an 11-apartment complex in Bassett Road, but the project stalled.

The court heard that by 2004 $6m was owed and Ridge was looking to sell the development.

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, the court was told.

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

The court also heard that Dominion had allegedly used North South Finance - which it bought in 2006 and had the same directors and management - to fund other instances of related-party lending.

However the lawyer for Whale, Paul Davison QC, told the court this morning that his client had no knowledge of the finance companies' trust deeds and there was no intention to act in contravention of them.

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"Mr Whale relied upon others within the company to adhere to the requirements of the trust deed," Davison said.

Cropp's lawyer John Billington QC also told the court his client did not intentionally deal with investors' funds against the trust deeds' requirements.

- BusinessDay.co.nz

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