The Supreme Court has today agreed with former Justice Minister Sir Douglas Graham and three other Lombard Finance & Investments board members that their home detention sentences were too harsh.
Graham, former Justice Minister Bill Jeffries, former PR man for the Queen Lawrie Bryant and Lombard director Michael Reeves were convicted of making untrue statements in company offer documents prior to the firm's failure.
The four men sought to overturn their convictions in the Court of Appeal, while at the same time the Financial Markets Authority (FMA) argued the sentences of community work the men received were inadequate.
The Court of Appeal upheld the convictions and imposed tougher sentences of home detention on the men after determining the original penalty didn't reflect the gravity of offending and didn't give sufficient weight to accountability, denunciation and general deterrence.
But now, the Supreme Court has released a judgement that says Court of Appeal sentences were too harsh and the original sentences are to be restored.
The High Court's original sentences were:
- Doug Graham: 300 hours community work and reparations of $100,000
- Lawrie Bryant: 300 hours community work and reparations of $100,000
- Bill Jeffries: 400 hours community work
- Michael Reeves: 400 hours community work
The key issue in the Supreme Court appeal was whether the offending warranted sentences of imprisonment, and whether it was appropriate that sentences of home detention could be imposed.
In today's judgement, the Supreme Court judges concluded that the conduct of the 'Lombard Four' did not warrant sentences of imprisonment and has unanimously allowed the appeal.
The judges noted Justice Dobson's findings that the four directors of Lombard were "honest men who took their responsibilities seriously but nonetheless, by reason of misjudgments made in circumstances of pressure, were responsible for the issuing of a prospectus which was untrue as to liquidity".
"These findings of fact were not disturbed by the Court of Appeal," the judgement says.
"On this basis, the sentencing purposes of accountability, denunciation and deterrence had limited application.
"The considerable losses suffered by investors were less than those in other comparable cases and the principle of consistency supports the approach taken by Justice Dobson.
"Accordingly, the sentences imposed by the Court of Appeal are set aside and the sentences imposed by Justice Dobson are restored."
Almost 4000 investors were owed $111 million when Lombard collapsed in 2008.
These investors have got about 22c in the dollar back. The payout was boosted by about 9c after the failed finance company's receivers reached a $10 million out-of-court settlement earlier this year with the four directors, their insurers and an unnamed "third party".
Prior to the settlement, the receivers had made a civil claim against the directors for alleged breaches of duties.