Defence: Loan was disclosed
A $25 million loan to purchase an Auckland hotel, which is at the centre of eight charges faced by the three South Canterbury Finance accused, was disclosed, the defence says.
As it reaches its final days in the High Court at Timaru, the trial of former SCF directors Ed Sullivan and Robert White, and former chief executive Lachie McLeod has attracted large numbers of supporters of the three accused.
The trio face 18 charges brought by the Serious Fraud Office following SCF's collapse and the resulting $1.58 billion payout under a Crown guarantee.
The trial is being heard alone by Justice Heath and is likely to be wound up on Saturday, with a verdict to be delivered in October.
A loan of $25m was made from SCF's parent group, Southbury, to Hilltop Hotels, in anticipation of a private buyer purchasing the Hyatt Hotel in Auckland. This deal fell through and the Quadrant company was set up to purchase the Hyatt instead.
The sole director of Quadrant was Sullivan's brother-in-law, Peter Symes. In earlier evidence, the late Symes said he had no involvement in the hotel and the Crown argues he was a puppet director used to hide a related-party loan.
As a result Sullivan faces four charges of failing to properly declare the loan in four prospectuses, and White faces a charge of not properly declaring the Hyatt lending in prospectus 59.
All three face a charge of breaching the Crown deed of guarantee by not declaring the "related-party lending", as it was more than 1 per cent of SCF's assets.
All three also face a charge of not declaring the related-party lending properly and gaining access to the Crown guarantee, while McLeod faces one charge of making a false entry, for recording the loan as $25m to Southbury instead of to Hilltop Hotels.
Defence lawyer Marc Corlett said the loan was declared.
"The defence case is simple; it was included and properly disclosed as related-party lending to Southbury. Note 19: related party lending transactions records post balance date $25m was advanced to the company's parent company Southbury.
"The Crown is simply mistaken; the prospectuses are not false and there can be no intent to induce potential investors."
The loan was missed "inadvertently" in one prospectus, Corlett said, but former SCF accountant Terry Hutton admitted in evidence that was his mistake.
The defence said the Crown deed was not breached as the Hyatt loan was not a new loan, it was simply reorganised from three loans into one.
McLeod had not made a false entry regarding the loan, the defence said.
The defence continues its closing today.
The Timaru Herald