Feltex chief exec says Ernst & Young never questioned him

Feltex directors (from left to right) Tim Saunders, Peter Thomas, John Feeny, John Hagen and Peter David Hunter in the Auckland District Court. Photo / Paul Estcourt

The chief executive and director of the failed finance company Feltex told the Auckland District Court today Ernst & Young never questioned him about the state of the company's affairs as part of their review into the carpet-maker.

Peter Thomas told the Auckland District Court today Ernst & Young were engaged to provide the company with an additional level of assurance into its financial statements and that the review was voluntary.

Feltex's five directors are in court defending allegations the company's half-year accounts to December 31, 2005 did not disclose it was in breach of its loan agreements with ANZ.

The directors have pleaded not guilty and maintained that at the time those statements were prepared they understood the accounts met all appropriate standards.

Thomas said he made a judgement call that the accounts were right based on the advice of Ernst & Young.

Those statements failed to note the company had breached its loan agreement with ANZ and that its debt with ANZ was current, meaning all debt was on call.

"If they (Ernst & Young) had found anything in their review which required clarification as to the status of the ANZ relationship, they should have asked us - the never did," Thomas said.

"We wanted these accounts to be right - think about the media pressure we were under. These accounts could not be wrong," he said.

Thomas said Feltex believed it had put in place the appropriate processes that would bring an accurate set of accounts to the board.

The case continues.