Crown to call its last witness in trial

20:15, Jun 03 2014

After nearly three months of evidence, the Crown's last witness will take the stand in the country's largest fraud trial today, with the defence to begin later this week.

It is the 11th week in the trial of former South Canterbury Finance (SCF) directors Ed Sullivan and Robert White, and former chief executive Lachie McLeod, before Justice Paul Heath at the High Court in Timaru.

The final witness the Crown will call is Christopher Mantell. He is an investigator for the Serious Fraud Office (SFO), which brought the charges.

Yesterday the cross-examination of expert witness Grant Graham was completed. Graham is a partner in the investment company Korda Mentha and was engaged by the SFO.

He discussed a loan to Dairy Holdings chairman Colin Armer, which the Crown said breached SCF's trust deed.

As a result, McLeod faces a charge of theft by a person in a special relationship, as he is alleged to have structured the loan to circumvent the trust deed.


In 2008, a loan was advanced to Armer for $14.5 million. The Crown argues that, as the loan was essentially for Dairy Holdings, it would have put SCF's exposure at $90.2m, well over the trust deed's limit of $79m.

Graham said the credit facility was used by Dairy Holdings, which he determined made it a related party transaction.

In cross-examination by McLeod's counsel, Jonathan Eaton QC, Graham was asked about the loan. After the collapse of SCF in 2010, receivers called on Armer to pay $3m as the loan was in his name.

"Because Armer became the meat in the sandwich, when it came time to call up the loan, he had to pay," Graham said.

He was asked if a layperson without an understanding of the New Zealand equivalent of the International Accounting Standards would have viewed the transaction as a related party transaction.

He said no.

Eaton accused him of being one-sided when giving his view of the transactions in relation to the international standards.

"Perhaps you could give both sides of the story," Eaton challenged.

The Timaru Herald