Bridgecorp witness says defence 'word-smithing' over related party claim

Rod Petricevic. Photo / Paul Estcourt

A Crown witness in the trial of three former Bridgecorp directors said the defence was "word-smithing" during his cross-examination in the High Court at Auckland this morning.

Former Bridgecorp bosses Rod Petricevic, Rob Roest and Peter Steigrad each face 10 Securities Act charges for allegedly misleading investors in the failed finance company's offer documents issued on 21 December 2006.

Expert witness and accountant Grant Graham was quizzed by the defence today over his contention Barcroft Holdings - a group the Crown alleges Bridgecorp used as its "piggy bank" - was a related party.

Bridgecorp and Barcroft entered into a transaction in June 2006 which involved the sale of loans from the former to the latter.

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.

Urwin originally pleaded not guilty and appeared in court with Petricevic, Roest and Steigrad, but changed his plea in November last year and is awaiting sentencing in April.

Despite the alleged link, Barcroft was listed as an 'unrelated company' in the section of Bridgecorp's prospectus about 'related-party transactions'.

The Crown argues this statement is untrue.

This morning Steigrad's lawyer Brian Keene questioned Graham over definitions of 'related company' and suggested Barcroft could not be classified as such under Bridgecorp's trust deed.

But during the discussion Graham said regardless of whether the word 'company' or 'party' was specifically used, the term 'unrelated' would have been the most important one for readers of the prospectus.

"The word unrelated has a very distinct meaning to 99 per cent of readers," Graham said.

"Whether you substitute related 'party' or 'company' the nuances of that will be lost (on) 99 per cent of readers. What won't be lost to them is the word 'related' or 'unrelated'," he said.

"I'm suggesting that this is word-smithing and the issue is that Barcroft is a related party...when you strip everything else aside the word 'related' is an important word for readers of financial statements."

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

The directors deny all charges against them in a trial expect to run until March.

Bridgecorp collapsed in July 2007 owing around 14,500 investors $459 million.