A South Canterbury Finance (SCF) director was warned he was "harassing pensioners" after approaching chairman Allan Hubbard at his home following a failed leadership coup, the High Court has been told.
The evidence was heard on the fourth day of the trial of former SCF chief executive Lachie McLeod and former directors Edward Sullivan and Robert White yesterday. It is taking place at the High Court in Timaru before Justice Paul Heath.
Former director Stuart Nattrass is the first Crown witness. He was a director of SCF from 2002 to 2009.
The three defendants have pleaded not guilty to 18 charges laid by the Serious Fraud Office in December 2011. SCF collapsed in August 2010, with $1.58 billion paid to investors under the Crown deposit guarantee scheme.
By 2009, Mr Nattrass said recapitalisation discussions took place with businessman George Kerr and the Government in an attempt to save SCF from collapse.
"The ultimate objective was to recapitalise the business as it relied on a single source of capital (parent company Southbury) which was no longer able to make good."
On August 20, 2009, a vote of no confidence was passed in Mr Hubbard as chairman, seconded by Sullivan and agreed to by White.
"The wider group accepted me as fulfilling the role (of chairman) but Mr Sullivan was not complimentary."
Meanwhile Sullivan had made Mr Hubbard aware the vote of no confidence was afoot.
The same day a recapitalisation deal came through Mr Kerr, so he took that to Mr Hubbard's house, where he was on dialysis.
"Then I got a call from an Auckland law firm asking me to leave the Hubbards' house as I was harassing pensioners in their home. The following day I resigned."
The sale of the Hyatt Hotel was also discussed at length with a series of documents showing it changing hands. It was sold to Quadrant Holdings, owned by Sullivan's brother-in-law Peter Symes.
The Crown say he was never in control, but instead part of a puppet company designed to disguise the hotel as an undeclared related party loan of SCF.
Mr Nattrass had signed a number of transactions. He said he only became aware of the role of Mr Symes, a freezing worker at the time, when he read a newspaper article after he resigned.
Asked if he thought it should have been disclosed as a related party loan to the Government, he said, "'yes, if it was a related party loan, it also exceeded $20 million".
"Mr Sullivan's view was the structure negated that (being a related party loan)," Mr Nattrass said, to which White, seated at the rear of the court, muttered "absolute crap" to Sullivan.
Nattrass said that when he joined SCF it held $400m in assets and by 2007 that had risen to $1.4b.
The trial continues today with Mr Nattrass giving evidence.
- The Timaru Herald