Capital + Merchant directors face criminal charges

The Securities Commission has laid criminal charges and issued civil proceedings against Capital + Merchant Finance directors Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland.  Criminal charges have also been laid against Wayne Douglas, who resigned as a director in February 2007.

These proceedings follow extensive investigations by the Commission since Capital + Merchant Finance went into receivership on 23 November 2007 owing approximately $167 million to some 7,000 investors.  According to the receivers it is likely that none of this will be recovered.

"The Commission alleges that Capital + Merchant Finance's offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to related party lending, insurance cover and liquidity," Commission Chairman Jane Diplock said.

On Thursday, the Serious Fraud Office announced it was investigating Capital & Merchant Finance's related-party transactions.

Last year, Capital + Merchant's receivers Grant Thornton said they had uncovered $90m in related- party loans, though only about $10m of that had been earlier disclosed. Only $10m of the related party loans were recovered.  

Sources said the SFO investigation was unlikely to lead to a recovery of any more money.

The Serious Fraud Office investigation began after a referral from Grant Thornton, the receivers of companies within the Capital & Merchant Group.

SFO Chief Executive Adam Feeley said that the investigation was into ''specific transactions which, on current information, appeared to have benefitted certain related parties through the use of Capital & Merchant funds in contrived structures and with questionable supporting documentation.''

• Are you an investor with Capital + Merchant? What do you think of the company and that criminal charges have been laid? Email us at businessday@dompost.co.nz.

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