Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Bridgecorp trial: Roest grilled over 'piggybank' transaction

Rob Roest and Rod Petricevic. Photo / Brett Phibbs
Rob Roest and Rod Petricevic. Photo / Brett Phibbs

Former Bridgecorp director Rob Roest remained firm this morning after being questioned on a transaction between the failed finance company and its alleged "piggybank".

Roest - along with fellow directors Rod Petricevic and Peter Steigrad - face 10 Securities Act charges and are accused of misleading investors in Bridgecorp prospectuses and offer documents.

The Crown's cross-examination of Roest continued this morning and focused on the "Barcroft transaction".

The transaction involved the sale of loans from Bridgecorp to Barcroft Holdings on June 30, 2006 and represented Bridgecorp's single biggest exposure.

The amount Barcroft owed Bridgecorp was originally around $80 million but grew to more than $100 million before the latter company collapsed, owing 14,500 investors $459 million.

The Crown argues Bridgecorp used Barcroft as its "treasury or piggybank" and said the companies were closely linked through former director Gary Urwin.

Despite the alleged ties, Barcroft was listed as an unrelated company in one of Bridgecorp's prospectus.

Financial Markets Authority lawyer Brian Dickey alleged this morning that a purpose of the transaction was to hide that the loans were impaired and could not be paid back when due or soon after they were due.

"The position we end up with, Bridgecorp has related-party loans which can't be paid...to recognise that true position would have to impair these loans in Bridgecorp's financial statements for 2006," Dickey said.

"I disagree," Roest replied.

"Bridgecorp could't afford to impair these loans...[it] would have wiped out out Bridgecorp's profits," Dickey said.

Roest repeatedly denied the loans were impaired.

Dickey then put to the witness that he and Gary Urwin, in substance, "ran Barcroft".

"You controlled its money at Bridgecorp, you controlled its accounts at Bridgecorp," Dickey said.

Roest denied the allegation and said the two companies had an "administration agreement".

The trial continues this afternoon.

- NZ Herald

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