Sth Canty Finance trial looms

Former South Canterbury Finance CEO Lachie McLeod and deceased financier Allan Hubbard.

The Serious Fraud Office trial of South Canterbury Finance's chief executive and two of the failed firm's directors is due to begin in Timaru on Wednesday and will stretch on for up to four months.

When the SFO announced it had laid charges in connection with the collapsed South Island firm, it said the value of the allegedly fraudulent transactions was about $1.7 billion.

"The value of the fraud alleged to have been committed exceeds anything in the history of white-collar crime in New Zealand," the SFO's then boss said in 2011.

While five defendants initially faced charges, only three are going to trial and two have had the allegations against them withdrawn.

The three men due in court this week are former SCF chief executive Lachie McLeod and two of the company's former directors, Edward Sullivan and Robert White.

The men face a mix of charges, including theft by a person in a special relationship, false statements by promoter, obtaining by deception and false accounting.

Their High Court trial, before Justice Paul Heath, is set to take between 12 and 16 weeks and involve thousands of documents. The proceedings are expected to attract a good deal of attention, with close to 20 seats in the court being reserved for members of the media.

South Canterbury Finance, built up and run for decades by now-deceased Timaru financier Allan Hubbard, was placed into receivership on August 31, 2010, owing about $1.8 billion. But because of the company's participation in the Crown retail deposits scheme, 35,000 SCF investors were bailed out by the taxpayer to the tune of $1.7 billion.

While debenture and stock holders were covered by the scheme, investors who held preference shares in SCF were not covered. These shares were worth $100 million when issued in 2006, but their value had fallen to $15 million by 2010.