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Former Bridgecorp executive director Robert Roest allegedly asked an internal auditor of the finance company to keep quiet a report showing it had missed payments.
Roest and his fellow former director Rod Petricevic appeared in the Auckland District Court yesterday on charges that they made false statements in
two company prospectuses and in a directors' certificate to the finance company's trustees.
The charges relate to the five months last year before Bridgecorp collapsed. The Registrar of Companies says from February 7 to July 2, when the receivers were called in, the financier was late on or missed $21.1 million worth of interest and principal payments to debenture holders.
Despite this, it says, on March 26 the executive directors signed two prospectuses - one offering debenture stock and another offering capital notes - saying: "Bridgecorp has never missed an interest payment or when due, a repayment of principal".
The summary of the case against the directors says that a few weeks before the prospectuses were signed, a Bridgecorp employee sent out this email copying in Petricevic and Roest: "The directors will need to satisfy themselves that all other information in the prospectuses remains accurate and is not misleading due to any events which have occurred."
The summary says: "It was reasonably common knowledge within [Bridgecorp] that there was a cashflow problem."
It also says in May 2007 Bridgecorp's internal auditor conducted a review of payments to investors, and reported to Roest. Roest suggested the report should not be issued on a formal basis because it would be detrimental to the company.
The auditor told him he could not keep the report under wraps, and gave it to board chairman Bruce Davidson on June 14.
Davidson called a special board meeting on June 21, at which Petricevic and Roest assured the board the Bridgecorp companies were meeting their obligations.
Two days later the pair told the board there had been defaults. Receivership followed shortly after.
The pair are also charged with signing a directors' certificate to Bridgecorp's trustees on April 30, falsely stating that all interest and principal on securities had been paid on the due date.
The Companies Office says the trustee would not have permitted Bridgecorp to accept new funds for investment if it had knowledge of the defaults.
As it was, it says the finance company accepted $92.5 million in investments by members of the public in debenture stock between February and July.
Also yesterday in the Auckland District Court Bridgecorp Limited pleaded guilty under the Securities Act to issuing debenture stock when the registered prospectus was known to be misleading.
The company, now in receivership, was convicted and discharged on the grounds that a fine would only further penalise creditors of the company.
