Former justice minister Sir Douglas Graham says he does not know what else he could have done to better protect investors in the collapse of Lombard Finance and Investments, of which he was chairman.
He told the High Court at Wellington yesterday that he had personally lost retirement savings of $12,000 he had reinvested in secured debentures in October 2007 and could "ill afford to lose". He was also a small shareholder in the then-listed Lombard Group.
"That was my retirement fund. Those shares are now worthless."
Graham and fellow director and former Cabinet minister Bill Jeffries, managing director Michael Reeves and director Lawrence Bryant are accused of making false statements in two investment documents and three related advertisements between December 24, 2007, and April 8, 2008.
The charges carry a maximum penalty of five years' jail or fines of up to $300,000. All four directors pleaded not guilty in the High Court at Wellington in October.
Lombard Finance was put into receivership in April 2008, owing $125 million to 4400 investors.
Secured creditors are expected to be repaid less than 24 cents in the dollar, while unsecured creditors would get nothing.
Graham said he resigned as a director the day after the company was put in receivership "as there was nothing more I could do.
"I had done everything I could to protect the investors' interest but had failed."
He rejected the suggestion that the offer documents were untrue because they failed to disclose liquidity details and reduced cash.
He also defended the decision not to disclose that five loans were impaired. He had since learned the definition of impaired was not the normal accounting or layman's understanding of the term.
He believed the offer documents were true until it became clear in April 2008 that some of the loans were impaired and cash had fallen to critical levels.
On reflection he wondered whether he could have become more involved in monitoring loans, but without expertise in property development "my input would have been more a hindrance than a help. I do not know what else I could have done."
He spent hours on board papers and the directors were well informed by management.
The running of the loan book was left to the senior management.
"We were on the bridge charting a course through troubled waters - not in the engine room looking at the dials.
"I accept that some investors invested in Lombard because they trusted me to look after their savings."