Bridgecorp director's ban stays

Bruce Davidson. Photo / Sarah Ivey

Former Bridgecorp director Bruce Davidson lost his appeal against a decision to ban him from future directorships when he appeared in the High Court at Wellington.

Davidson told the court during a July hearing that he had acted with honourable intentions when he was on the board of Bridgecorp, and that as a commercial lawyer he had less knowledge on financial matters as he was not a trained accountant.

Justice Forrest Miller said in his judgment on Friday that Davidson was not fully qualified for the office he held.

He said a director must understand the fundamentals of the business, monitor performance and review financial statements regularly.

"It follows that a degree of financial literacy is required of any director of a finance company.

"Without it, Mr Davidson could scarcely understand the business, let alone contribute to policy decisions affecting risk management and monitor the company's performance, yet his presence and reputation might encourage investors to believe that the group was well managed."

The judge accepted Davidson had acted with honourable motives, and that he had believed Bridgecorp and associated companies could work through its financial difficulties.

But investors relied on the personal reputations of directors, especially directors of finance companies, and therefore they needed to be well informed on the company's financial position.

Registrar of Companies' lawyer Hugh Rennie, QC, said Davidson had been too trusting and such a person could endanger investors in the same manner as an active wrongdoer.

Judge Miller said: "He [Davidson] has learned a painful lesson and I expect that his trusting nature will not again betray him in a commercial setting, nor will he accept an office for which he is not fully qualified."

Davidson was banned on December 1 until June 1, 2012.

He and other Bridgecorp directors Rod Petricevic, Rob Roest and Gary Urwin have been committed to trial for alleged Securities Act charges.

They have all pleaded not guilty.

Bridgecorp collapsed in July 2007 owing 14,500 debenture holders about $459 million.