Receiver tells court of Bridgecorp alert

Rod Petricevic. Photo / Sarah Ivey

Bridgecorp's receiver alerted the Securities Commission and the Ministry of Economic Development to concerns it had over the company's prospectus, it was revealed during a court hearing yesterday.

The depositions hearing held at the Auckland District Court will determine whether Bridgecorp's five directors will stand trial for charges laid against them by the Securities Commission.

Directors Bruce Davidson, Rod Petricevic and Rob Roest and non-executive directors Gary Urwin and Peter Steigrad are facing 10 Securities Act charges each relating to their roles in issuing the company's prospectus.

Steigrad was excused from the hearing after admitting through his lawyer that there is a case to answer.

The prosecution alleges the directors lied to prospective investors in Bridgecorp's term investment prospectus, registered in December 2006, in an investment statement and advertisements.

It is alleged Bridgecorp said it would only lend in accordance with good commercial practice and that it had never missed an interest payment.

PricewaterhouseCoopers (PWC) partner Colin McCloy told the court at a continued depositions hearing that a team of legal advisers and receivers, two based in Australia, had worked on the Bridgecorp receivership.

The company was placed into receivership in July 2007.

McCloy said serious concerns were raised over the company's loan book.

He told the court several Bridgecorp staff members had provided PWC with information regarding the company.

A month after Bridgecorp was placed into receivership, PWC passed its concerns on to the Securities Commission and the Ministry of Economic Developing (MED).

It raised concerns Bridgecorp may have allegedly breached its prospectus or issued false statements in its prospectus.

McCloy said receivers had an obligation to report any concerns regarding a company to the authorities.

When Bridgecorp collapsed it owed 14,500 debenture holders $459 million.

Securities Commission spokesman Roger Marwick said the MED charges, laid by the Registrar of Companies, had been incorporated into the commission's case against the directors.

The commission has also issued civil proceedings against all five directors. These charges are on hold pending the criminal proceedings.

The criminal charges are laid under section 58 of the Securities Act and carry a maximum penalty of five years' imprisonment or fines of up to $300,000.

The depositions hearing is scheduled to end this week. A decision will then be made on whether the directors will face a trial.

The MED banned Petricevic and Roest from directing or managing a company for five years from May 29, 2009.