The directors of Lombard Finance & Investments acted with honesty and integrity, using the best information they had available to them, according to the defence counsel.
Counsel for Doug Graham and Lawrence Bryant, Paul Davison QC who previously successfully defended Feltex directors against criminal charges brought by the Registrar of Companies, told the High Court in Wellington his clients acted honestly and with integrity while directors of the failed lender, and acted on the best advice available to them when signing off on offer documents.
In his summing up, Davison said the Crown’s case was working backwards, using the benefit of hindsight, and that there was nothing in front of the lender’s board at the time that dictated they should have impaired any of Lombard Finance’s major loans or disclose what the prosecution calls the deteriorating state of the property market.
“Sir Douglas and Mr Bryant are men of the utmost integrity and honesty, and there is evidence of taking action to make sure there was nothing wrong or overstated, exaggerated or could be termed in a manner misleading in any way,” Davison told the court.
The Crown contends Lombard Finance directors Graham, Bill Jeffries, Lawrence Bryant and Michael Reeves made untrue statements in a 2007 prospectus, investment statement and advertising material.
The Securities Commission, and its replacement the Financial Markets Authority, didn’t act until after Lombard Finance was put into receivership, and worked its way back towards its current case, Davison said. The court has to consider what was available to the board at the time, and it is up to the Crown to prove the guilt of the accused beyond reasonable doubt.
Even if acquitted, Davison said his clients’ reputations have been irretrievably damaged by the accusation.
Davison said the board trusted its management, which had a history of success, but when it emerged the lender faced a short-fall on the sale of the Bayswater property development, Graham immediately took steps to familiarise himself with the loan and subsequently requested a review of the firm’s entire loan book.
Bayswater differed from the other major loans, in that it should have been recognised as impaired, Davison said.
Management and external parties thought Lombard Finance would be able to make full recoveries from the rest of the major loans, and that the advances didn’t need to be impaired, he said.
Davison will continue his closing argument today, with counsel for co-accused Jeffries and Reeves set down for the next two days.
The case is continuing, heard by Judge Robert Dobson, sitting alone.