Hamish Fletcher

Business reporter for the NZ Herald

Bridgecorp said it was safe - but was likely to fail, court told

(L- R) Rod Petricevic, Robert Roest, Gary Urwin and Peter Steigrad. Photo / Brett Phibbs
(L- R) Rod Petricevic, Robert Roest, Gary Urwin and Peter Steigrad. Photo / Brett Phibbs

Bridgecorp presented itself as a company that was safe to invest into rather than one in a "position of likely financial failure", the High Court heard this morning.

The trial of three former Bridgecorp directors - Rod Petricevic, Rob Roest and Peter Steigrad - continues in Auckland today with the Crown's closing arguments.

The trio face 10 Securities Act charges and are accused of misleading investors in Bridgecorp prospectuses and offer documents.

As well as the Securities Act allegations, Petricevic and Roest face eight counts of knowingly making false statements in offer documents that Bridgecorp had never missed interest payments or repayments of principal to investors.

According to evidence tabled earlier by the Crown, Bridgecorp began missing payments from February 7, 2007. The finance company, which primarily offered property loans, collapsed in July 2007 owing 14,500 investors $459 million.

The three directors on trial deny the charges against them.

This morning, Crown lawyer Brian Dickey said Bridgecorp offer documents "set out a favourable view of the financial position of the Bridgecorp companies" and did not disclose to investors that "Bridgecorp was having to borrow from a competitor at extraordinary rates to fund its own cash flow".

Nor did the wording of the documents tell investors that Bridgecorp had stopped lending, or that its cash position had become precarious, he said.

"Overall the picture conveyed to investors is one of a company which had a liquidity risk profile which is safe for them to invest into, as opposed to a position of likely financial failure," Dickey told the court.

Crown submissions continue today, which will be followed by rebuttal statements from defence lawyers.

Justice Geoffrey Venning, who is hearing the trial alone, has indicated he will give his verdict on April 5.

That same week, former Bridgecorp director Gary Urwin is expected to be sentenced after a disputed fact hearing.

Urwin originally pleaded not guilty and appeared in court with Petricevic, Roest and Steigrad. But he changed his plea in November last year.

The charges carry a maximum penalty of five years' jail or a fine of up to $300,000.

Urwin's lawyer, David Reece, asked in November for a home detention report to be prepared, but prosecutor Brian Dickey said the Crown would seek a term of imprisonment.

Former Bridgecorp chairman Bruce Davidson was sentenced to nine months' home detention in October after changing his plea to guilty, and was ordered to pay $500,000 reparations and perform 200 hours of community work.

- NZ Herald

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