Five Star director says sorry to investors

Anthony Bowden from the Five Star Group leaving the Auckland District Court earlier this year. Photo / Steven McNicholl

Former Five Star director Anthony Bowden is genuinely sorry about the distress caused to investors following the collapse of the company in 2007, his lawyer has said.

Bowden was sentenced to nine months' home detention and 300 hours' community work on Securities Act charges in the Auckland District Court this morning.

Bowden's lawyer Todd Simmonds said while the sentence was a "significant penalty" he was pleased his client had avoided jail.

Fellow directors Marcus MacDonald and Nicholas Kirk will spend Christmas in jail for their part in the multi-million dolalr failure of the Five Star Finance group.

The company's former manager, Neill Alan Williams, is due back in court for a disputed facts hearing relating to charges of misuse of funds in March.

Meanwhile Simmonds said Bowden's focus now was to ensure that he undertook the penalty imposed by the court.

He added that Bowden was "genuinely and deeply sorry about the collapse of the Five Star group of companies and the resulting loss to investors".

Five Star was placed in receivership on 29 August 2007 owing investors about $46 million.

The court earlier indicated that if Bowden plead guilty he would escape a jail term.

The outcome of today's sentence was in contrast to MacDonald and Kirk who were handed down jail terms of two years and three months and two years and eight months respectively.

Bowden's position could be contrasted to an extent to his co-accused because there was "no element of intentional offending or dishonesty, nor was his unintentional offending motivated in any way by notions of greed or personal gain".

Simmonds said the prosecution had had a significant impact on Bowden and his family, although he accepted he had breached certain provisions of the Securities Act.

The Companies Office laid the criminal charges against the directors in July, 2008.

The charges related to securities being offered and allotted to members of the public without a registered prospectus, investment statement or trustee appointed.

According to the Companies Office, MacDonald and Kirk were on the board of Five Star Debenture Nominee, in liquidation, and MacDonald, Kirk and Bowden were also on the board of Five Star Consumer Finance, in receivership.

The directors were banned in April 2009 by the Registrar of Companies from holding board or management positions in New Zealand companies for five years.

In August the Serious Fraud Office announced it had laid more than 100 charges against the directors, and former manager Williams, concerning related party lending that took place between 2003 and 2007.

It is alleged the directors acted dishonestly and breached obligations under the trust deed.

Bowden has pleaded not guilty to the charges. The case is due back in court in February.

"For investors to have confidence in the financial markets they need to know there will be quick and effective intervention by a law enforcement agency with the powers and resources to deal with serious and complex fraud," Serious Fraud Office chief executive Adam Feeley said in a statement at the time.

"Investigations of the scale and complexity of Five Star Finance require detailed forensic accounting analysis which inevitably takes time," he said.