The lawyer of Bridgecorp director Rod Petricevic grilled a Crown witness this morning and alleged he was making up evidence.
The trial of Petricevic and fellow Bridgecorp directors Rob Roest and Peter Steigrad is continuing at the High Court at Auckland today.
The trio face 10 Securities Act charges brought by the Financial Markets Authority (FMA) for allegedly making untrue statements in the investment statements, registered prospectuses and extension certificates of Bridgecorp and Bridgecorp Investments.
The three directors deny the charges, while two fellow directors Gary Urwin and Bruce Davidson have pleaded guilty to them.
Bridgecorp's former internal audit and risk manager, Indra Kumar, was cross-examined this morning by Petricevic's lawyer, Charles Cato, about the "Barcroft transaction".
This transaction constituted Bridgecorp's largest exposure to a single borrower and involved the sale of loans from Bridgecorp to Barcroft Holdings Ltd in June 2006.
The original amount Barcroft owed Bridgecorp was $76.8 million. This had grown to $90 million by November 30, 2006 and was more than $100 million before the company collapsed.
Barcroft is alleged to have had covert ties with Bridgecorp director Gary Urwin through trusts, and through parent company BHL, a company which Bridgecorp exercised considerable control over.
Despite the alleged link, Barcroft was listed as an unrelated company in a Bridgecorp prospectus distributed to investors after December 21, 2006.
Kumar gave evidence yesterday that he had discussed concerns over Barcroft's related-party status directly with Roest before the directors signed the prospectus.
This morning Cato questioned if this conversation had taken place.
He asked why Kumar had not formally flagged his reservations over Barcroft in a report prepared on the prospectus prior to its issue.
Kumar replied he had alerted the directors to Barcroft's "deficiencies" both in monthly audit reports and in the conversation with Roest.
The witness then told the court of an alleged altercation with Urwin when he raised the issue after a Sydney committee meeting on the day the December prospectus was signed.
"I got a hostile and unrefined response from Mr Gary Urwin. A few four-letter words were exchanged," Kumar said.
Cato retorted that Urwin was not even present at the meeting.
The lawyer also asked why Kumar had not given some of this "very serious" evidence at pre-trial hearings.
"I suggest to you that you are simply making this up," Cato said.
"I take great exception to that," Kumar replied.