Defence to present case in SCF trial
After five months, this is the final week of one of New Zealand's longest running trials and biggest alleged fraud.
The South Canterbury Finance trial began on March 12 in the High Court at Timaru. It has sat on and off during this time for over 60 days. Last week Colin Carruthers, QC, wound up the case against former SCF directors Ed Sullivan and Robert White, and former chief executive Lachie McLeod who face a total of 18 charges brought by the Serious Fraud Office.
The trial is being heard by Justice Paul Heath alone. This week will see the defence put its case for the three accused, with the late chairman Allan Hubbard likely to be the focus, as he has been in the Crown's case.
In closing Carruthers said it was, "no secret that this has been one of the longest running and most expensive criminal cases in New Zealand history".
"A large finance company is much like a black box. Large amounts of money goes into it, but little is known, by those whose funds they are, what has become of the money.
"Because of that, New Zealand has a sophisticated system of regulation around raising money from the public and lending or investing it."
These regulations were largely ignore by Hubbard, Carruthers said.
"Evidence from both sides has been that the driving force in the business, Mr Hubbard, had little regard for the restrictions.
"He was the majority owner of the business, the public face of it, and without any doubt the reason so many investors brought their money in such large quantities to South Canterbury."
Hubbard's lack of regard for the law led to the collapse of SCF, he said, with defendants enabling his wayward ways.
"The business was largely run as Mr Hubbard saw fit. He was not sufficiently restrained from doing so, whether by directors refusing to go along with him, or resigning, which would have brought attention to his business practices. Instead these directors and senior managers went along with his conduct and enabled it."
The defendants had done well out of their positions at SCF, he said. "Mr Sullivan and Mr White had been long-term beneficiaries of Mr Hubbard's success, not just as directors at SCF, but as a partner at RSM Law and Hubbard Churcher, respectively. Mr McLeod was a chief executive who, on his own evidence, was somewhat plucked from obscurity.
"It is one thing to know that the majority shareholder and chairman is not inclined to comply. What these three men did was something different - they affirmatively said nothing was wrong.
"There was a culture of obfuscation and dissembling at SCF. It is plain that the evidence has borne that out. A large hotel worth tens of millions of dollars was hidden in the hands of Mr Sullivan's' brother-in-law, accounting records were backdated and related party loans were not disclosed."
The defence is expected to take four or five days, beginning tomorrow and possibly sitting on Saturday.
The Timaru Herald