Lund tells of takeover tangle
Prominent Timaru building contractor Ross Lund denies he was a puppet director for friend Edward Sullivan.
Former South Canterbury Finance (SCF) director Sullivan, another former director, Robert White, and former chief executive Lachie McLeod, are on trial before Justice Heath in the High Court at Timaru, facing charges laid by the Serious Fraud Office (SFO).
Lund gave evidence yesterday that he was paid a director's fee for his role in a company which allowed former SCF chairman Allan Hubbard to obtain a majority stake in Wool Services International.
In 2006 Hubbard owned 44 per cent of Wool Services. He had been offered a further 20 per cent but buying it would trigger takeover regulations.
Sullivan approached his friend and client Lund about his company, Carrick Park.
"Carrick was my personal investment company. Ed and I were both directors," Lund said. "He approached me to purchase shares in Wool Services and I would have asked ‘why do you want me to purchase those shares?'."
He agreed to as long as Sullivan arranged the finance and Lund did not have to personally guarantee the borrowings.
"I understood it was a very short-term arrangement and a takeover bid was going to be made in the very near future, and there would be a small amount of profit I could benefit from."
Woolpak Holdings was formed with Lund as sole director. Sullivan sent a letter explaining Woolpak was set up so Lund owned the shareholding personally rather than Carrick Park, in which Sullivan had an interest.
"I signed a lot of documents but the management of it was done by Edward Sullivan."
SCF then loaned Woolpak $6.9 million. Lund requested a document outlining his indemnity.
"Verbal contracts, verbal discussions and verbal guarantees mean very little when the whatsitsname hits the fan. If something happened I wanted it in writing.
"My idea of buying the shares and making a quick return disappeared out the window. It became obvious there was not going to be a takeover bid."
He was paid a dividend of $400,000, which he gave back to Sullivan to pay off interest.
"I was quite aware the interest was mounting and it was accruing at an amazing rate."
He said he requested a director's fee from Sullivan for all his, "effort, time, worry and thinking," and was paid $3000. He remained a director until SCF went into receivership and the receivers called in the loan.
SCF prospectuses signed by White and Sullivan failed to declare the lending to Woolpak, which the Crown argues is a related party. As a result both men face a charge of making a false statement as a promoter.
Sullivan also faces a charge of obtaining by deception.
The trial continues today.