There is no evidence Feltex's directors misled the market, shareholders, potential investors or creditors when they approved interim financial statements that failed to disclose its debt with ANZ
correctly or that it was in breach of its loan with the bank, a court heard today.
Auckland District Court Judge Jan Doogue
delivered her not guilty verdict at noon today, the directors, Tim Saunders, John Feeney, Peter David Hunter, John Hagen and Peter Thomas, were each charged with two breaches of the Financial Reporting Act.
Doogue said the directors were "all honest men" who had conducted
themselves with integrity.
The Crown alleged the directors failed to disclose the company was in breach of its A$100 million loan with ANZ, and that the company's debt with the bank was current, meaning it was on call.
The directors all concede now that those details were not disclosed in the accounts to December 31, 2005, but they claim at the time
they believed the statements met all the necessary requirements under the accounting standards.
The company paid accounting firm Ernst & Young A$113,000 to conduct a voluntary review of the interim half- year statements to December 31, 2005.
Ernst & Young failed to pick up the mistakes.
Doogue said the directors should have been able to rely on expert
professional advice, advice that they had voluntary sought because they wanted to ensure the accounts were accurate and complied with the
newly adopted International FinancialReporting Standards
(IFRS).
This was the first time Feltex had used IFRS and had taken "comprehensive steps" to ensure they were compliant.
Doogue said there was no evidence that the directors misled markets, shareholders, creditors or investors, and therefore they were all found not guilty.
It has been a lengthy trial for the directors of the formerly NXZ listed company.
Feltex collapsed in 2006 after ANZ placed it into receivership.
Some 8000, mainly mum and dad, investors lost millions. The directors would not comment on the verdict to the media.
A press conference is expected to be held at the Auckland offices of law firm Bell Gully this afternoon.
