SCF trial may not continue

16:00, Mar 14 2014

The long-awaited billion-dollar South Canterbury Finance fraud trial has kicked off with a whimper, rather than a bang.

On Wednesday, two years and three months after the charges were laid and nearly four years after the finance company collapsed, the High Court trial finally began, with the public gallery noticeably empty.

SCF collapsed in 2010 and investors were paid out $1.58 billion under the Crown retail deposit guarantee scheme.

Former SCF chief executive Lachie McLeod, and two former directors, lawyer Edward Sullivan and accountant Robert White, have pleaded not guilty to 18 individual and combined fraud charges laid by the Serious Fraud Office in December 2011.

Their trial is set down for four months before Justice Paul Heath.

It is a rarity to see so many Queen's Counsel in one courtroom, particularly in Timaru. Sullivan has the biggest team, with three lawyers led by Phillip Hall, QC; White is represented by Bruce Squire, QC, and Jonathan Eaton,QC, is putting McLeod's case to the court. Prosecutor Colin Carruthers, QC, is being assisted by two lawyers.


Journalists filled 10 of the 12 seats in the jury box set aside for the media, a stark contrast to the 47 seats in the public gallery behind the three accused that have been almost empty, save for a pair of SFO representatives, and McLeod's wife and sister. A Hubbard investor turned up for an hour but hasn't been seen since.

McLeod has looked pensive throughout, often rubbing his temples; Sullivan has been seen leaning back often, hands clasped and resting on his stomach, taking in proceedings; while White at times seems to be straining to hear.

As proceedings unfold, it is White who is bringing personality to them, with his colourful correspondence in internal company documents read to the court during the Crown's opening.

He compared one transaction to moving deckchairs around on the Titanic, and described other transactions as "round the mulberry bush", and "trying to hide a pea under a thimble".

The Crown's opening finished at lunchtime on Thursday. Sullivan's brother-in-law and nephew were due to start giving evidence, with the Crown suggesting they had acted as puppets to hide related party loans. However, Thursday afternoon's proceedings ground to a halt when the defendants made a formal application to have Justice Heath removed from the case.

The lawyers had earlier claimed that comments made last week by SFO director Julie Read at a conference, where she said, "We are very fortunate to have Justice Heath as our trial judge", showed a perception of partiality and required the trial to be aborted.

Defence counsel told the court the challenge to Justice Heath, initially knocked back by the judge on the trial's first morning, would be formally renewed, and court was adjourned until Monday afternoon. If this is unsuccessful, the trial will continue, with former SCF director Stuart Nattrass giving evidence, which is expected to take all week.

If the application is successful, the trial will be aborted, with a new judge to be found and four months to be timetabled in the court, potentially delaying the trial for years.

The Timaru Herald