Court hears of Bridgecorp 'turnaround'

(L- R) Former Bridgecorp directors Rod Petricevic and Robert Roest. Photo / Brett Phibbs

A major department of the failed finance firm Bridgecorp showed a "substantial turnaround in business practice" just months before the company collapsed, a court heard this morning.

The trial of three former Bridgecorp directors accused of misleading investors - Rod Petricevic, Rob Roest, and Peter Steigrad - continues in the High Court at Auckland today.

The directors' defence lawyers resumed their detailed cross-examination this morning, taking a Crown witness through screeds of documents, emails and accounts.

Roest's counsel, Paul Dacre, spent most of the morning querying Bridgecorp's former internal audit and risk manager Indra Kumar over the company's performance indicators in the year before its collapse.

During Dacre's questioning, Kumar said Bridgecorp's lending department had showed a "substantial turnaround in (its) business practice" by April 2007 - just three months before its collapse.

The department, which handled all the loans Bridgecorp made, had taken on advice and made changes to improve its operations, Kumar said.

Despite this, the company was placed into receivership on July 2, owing $459 million to 14,500 investors.

After the lunchtime adjournment, Bridgecorp's former internal counsel, Jo Wong, will appear to give testimony for the Crown.

Kumar is expected to return to the stand tomorrow morning.

The Financial Markets Authority [FMA], who is bringing the case, accuses the directors of making untrue statements in the offer documents of Bridgecorp and Bridgecorp Investments.

The trio, who each face 10 Securities Act charges, deny the allegations against them.

Former Bridgecorp director Gary Urwin originally pleaded not guilty and appeared in court with the trio, but he changed his plea in November and is awaiting sentencing in April.

His lawyer, David Reece, asked last year for a home detention report to be prepared, but FMA lawyer Brian Dickey said the Crown is seeking a term of imprisonment.

The charges carry a maximum penalty of five years in jail or a fine of up to $300,000.

Former Bridgecorp chairman Bruce Davidson was sentenced to nine months' home detention in October after he changed his plea to guilty.

He was also ordered to pay reparations of $500,000 and perform 200 hours' community work.

As well as the Securities Act allegations, Petricevic and Roest face eight charges under the Crimes Act and Companies Act of knowingly making false statements that Bridgecorp had never missed interest payments to investors, or repayments of principal in offer documents.

Investors were misled because they were not informed payments were missed from February 7, 2007, the FMA alleges.