(L- R) Former Bridgecorp directors Rod Petricevic and Robert Roest. Photo / Brett Phibbs
(L- R) Former Bridgecorp directors Rod Petricevic and Robert Roest. Photo / Brett Phibbs
A former Bridgecorp manager said there were issues with how the failed finance firm recorded items in its accounts, including a $40 million loan advanced to an alleged related party developing properties in Fiji.
Three Bridgecorp bosses -Rod Petricevic, Rob Roest, and Peter Steigrad - each face 10 Securities Actcharges brought by the Financial Markets Authority (FMA) for allegedly making untrue statements in the investment statements, registered prospectuses and extension certificates of Bridgecorp and Bridgecorp Investments.
Their trial is continuing in the High Court at Auckland this morning.
The trio's fellow directors - Gary Urwin and Bruce Davidson - have pleaded guilty to the charges.
Crown witness Indra Kumar, who was Bridgecorp's risk and audit manager, took the stand this morning and was questioned about documents he prepared shortly after Bridgecorp collapsed in July 2007, owing 14,500 investors $459 million.
One of the documents referred to a loan Bridgecorp made to the Urwin Fernandez Group - an entity the Crown alleges Gary Urwin had a controlling stake in.
The Urwin Fernandez Group was involved with Bridgecorp in the development of a hotel, golf course and residential properties at Momi Bay, Fiji
On 30 June 2005, a $40 million loan made to Urwin Fernandez was recorded as a receivable in Bridgecorp's accounts and a credit made to the UF loan account.
The loan repayment was due to be made with funds gained from the sale of Momi Bay properties.
However, Kumar said the sale amount from these properties was concerning and an "unusual coincidence" because it was the exact amount of Urwin Fernandez's loan balance at the end of May 2005.
He also said there were not the relevant documents detailing the sale or who the buyers were. Despite requesting these from Bridgecorp management, they were not provided.
The $40 million was never received by Bridgecorp, Kumar said.
By treating the Urwin Fernandez Group loan as a receivable, it potentially reduced Bridgecorp's levels of related-party lending, Kumar said.
The Crown argued last month that investor knowledge of related-party transactions and lending is vital as it impacts on how risk is assessed.
Kumar will continue giving evidence this afternoon.
