Bank complicity key to GPG case: Farmer

By PAUL PANCKHURST

To win its case against Perry Corporation, Guinness Peat Group must show that two merchant banks also broke securities laws, lawyer Jim Farmer, QC, told the High Court at Auckland yesterday.

Farmer is acting for Rubicon, the forestry and biotech company.

He told Justice Judith Potter that GPG's whole case relied on whether it could establish that Perry had "some form of arrangement or understanding" with the two banks, UBS Warburg and Deutsche.

GPG's claim required that each of the banks had themselves breached the Securities Amendment Act with their own substantial security holder notices.

The banks entered into equity swaps with Perry in June last year.

GPG alleges the arrangements were a concealment of Perry's 16 per cent stake in Rubicon.

Farmer said Rubicon, the third defendant in the case, took a "neutral stance" in the proceedings.

GPG had not sought relief against the company and Rubicon had therefore not filed a statement of defence.

It had filed an "appearance for ancillary purposes" to provide evidence - specifically, of Rubicon's knowledge of Perry's interest in Rubicon shares and of the circumstances of two Rubicon board appointments - and to respond to any arguments that affected it.

Farmer said the board appointments were an issue "on which the plaintiffs have placed some reliance".

Farmer said the company's positions on the key issues in the proceedings were that:

* It did not believe Perry had a "disclosable" interest under its swap agreement.

* It was reasonable for Rubicon to have that view based on the inquiries that it made.

* And the company had a "proper and constructive" relationship with Perry.

Farmer said neither of the two new board appointees was a Perry representative.

One of the best-known names in New Zealand business, Hugh Fletcher, also gave evidence yesterday - some of it on the topic of Perry's relationship with the Rubicon board.

Fletcher is an independent director on the board.

Cross-examined on Perry's input into the proposed Fletcher Challenge Forests transaction involving the Central North Island Forest, Fletcher said it had not been a lot.

On the likelihood of Rubicon getting a better exit price for its stake in Fletcher Forests than the deal torpedoed by opponents including GPG, Fletcher said, "Well, we're going to give it a jolly good shot."

The shareholding was Rubicon's dominant asset.

Smiling, Fletcher said the old deal was history.

"There's no point in sour grapes - we've got to give it a crack."

He would have a bottle of champagne for GPG if it came up with something better.