South Canterbury Finance (SCF) directors used a "puppet director" to conceal a related party, the Crown alleges.
On the first day of the Crown's closing yesterday, Colin Carruthers, QC, outlined the first count against Robert White and Edward Sullivan, which relates to Shark Wholesalers.
Sullivan's nephew, Geoffrey Sullivan, was the general manager of Specialised Sales and Marketing (SSM), which sold heating appliances. He identified that SSM had a funding problem. His uncle proposed that a new company, Shark Wholesalers, purchase SSM stock and resell it to SSM as needed. Sullivan appointed his brother-in-law, Peter Symes, as the sole director and shareholder of Shark. SCF loaned $5.2 million to Shark so it could purchase the stock from SSM.
Count one alleges both directors made a false statement in prospectus 55 by not properly declaring the lending and involvement with Shark and not identifying it as a related party. The Crown needs to prove that both men knew they had been reckless and made false statements in the prospectus and that it would induce people to invest in SCF.
Carruthers said Symes, who has since died, had no active role and was a "puppet" of Sullivan.
Of Symes' interview with the Serious Fraud Office, he said "his evidence is modest, even if the consequences of it are not. Simply that his brother-in-law asked a series of favours, that consisted of being a director and shareholder of various companies he had no involvement in and took no part in other than to sign documents.
"Mr Sullivan cannot realistically say he thought the insertion of Mr Symes into the transaction meant that it was no longer related-party." White had also failed to act, he said, as he knew Symes was related.
- The Timaru Herald
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