SCF was in talks with banks: witness
Two credit lines totalling $150 million were still available to South Canterbury Finance (SCF) when mentioned in a prospectus, the defence in the country's biggest fraud trial has argued.
The Crown maintains both had expired.
Former SCF chief financial officer Graeme Brown, who was employed from 2006 until January 2010, continued to give evidence yesterday as part of the defence of former SCF directors Ed Sullivan and Robert White, and former chief executive Lachie McLeod.
The three face 18 charges brought by the Serious Fraud Office (SFO) following the $1.58 billion collapse of SCF. A single charge against Brown was dropped in August last year.
Brown was questioned on the $150m credit facility, which is crucial in the fourth count.
The Crown case is that the credit facility no longer existed, with one line expired and the other breached by an amalgamation SCF had carried out. Both were referred to in SCF prospectus 59, from October 24, 2008 to September 21, 2009, resulting in White and Sullivan each facing a charge of a false statement by a promoter.
One credit line was for $100m, which would expire in 2010, which Brown said he was seeking to extend by a further year, and the second was a $50m loan, due to expire on November 28, 2008, which was being renegotiated.
"One of the banks had sought further information.
"I had approached other banks because it became apparent there were divergent views between CBA (Commonwealth Bank Australia) and the BNZ.
"If we did nothing the pricing [of credit] remained the same."
A problem emerged as SCF had recently amalgamated all its separate finance companies around the country into one, which the banks wanted more information about. This had delayed the negotiation, he said.
Brown said late chairman Allan Hubbard enjoyed robust debate in the boardroom, whilst being the strongest voice.
"As a chairman he fostered robust debate to air the topic, then corralled it into a resolution."
Brown's evidence continues today.
The Timaru Herald