SCF trial delayed to next week by evidence matter
New Zealand's biggest fraud trial has ground to a halt again.
Former South Canterbury Finance (SCF) chief executive Lachie McLeod and former directors Edward Sullivan and Robert White are on trial at the High Court in Timaru before Justice Paul Heath, after pleading not guilty to 18 individual and combined 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.
Former director Stuart Nattrass was the first Crown witness and has been giving evidence since Tuesday. He was a director of SCF from 2002 to 2009.
Issues about the admissibility of documents were raised yesterday before the cross-examination of Mr Nattrass could begin, with Justice Heath adjourning the trial until midday tomorrow, when court will resume in chambers.
Cross-examination of Mr Nattrass is now expected to start on Monday afternoon.
The public gallery had a dozen people watching proceedings yesterday, including former Timaru SCF branch manager Tim Underdown.
This is the second delay in the case, which has already taken two years and three months to get to trial. The trial is set down for four months.
The trial began last Wednesday but was adjourned on Thursday when the Queen's Counsel acting for the defendants called for Justice Heath to recuse himself from the trial.
He rejected the application on Monday, with the trial resuming with the first Crown witness, Mr Nattrass, on the stand.
Yesterday morning Mr Nattrass discussed a company managed by Sullivan's nephew, Geoffrey Sullivan. He was the general manager of Specialised Sales and Marketing (SSM) and Mr Nattrass was discussing transactions between SSM and Shark Wholesalers.
"Both South Canterbury Finance and Southbury [SCF's parent company] lent to SSM."
On December 9, 2003, Shark Wholesalers, purchased SSM for $4.639m.
SSM sold Goldair heating appliances.
Any unsold stock at the end of the selling season was bought by Shark, with a loan from SCF, to aid SSM's balance sheet, and the next selling season the stock was sold back to SSM with a 12 per cent fee charged on top.
SSM was not listed as a related party to SCF.
The Crown is arguing it was and should have been listed as such when SCF entered the Government's retail deposit guarantee scheme, and also in SCF prospectuses.
The trial resumes with chamber discussions about admissible evidence tomorrow.
- The Timaru Herald