Director had blind faith, says Crown

Carol Braithwaite. Photo / Greg Bowker

All Black captain Richie McCaw, the reality-television show American Idol and Greek philosopher Plato were all conjured up during the summing up in the trial of National Finance's Carol Braithwaite yesterday.

Braithwaite is on trial in the High Court at Auckland charged with making untrue statements in a prospectus of National Finance 2000.

The Crown says there were 10 material untruths in the document, an allegation Braithwaite now accepts. She is defending the charge on the basis that she believed the prospectus was correct when she signed it in 2005.

All evidence in the case has been presented and last night the jury had not reached a verdict.

In closing arguments yesterday, Crown lawyer John Dixon queried if Braithwaite had even read the prospectus properly and had understood it.

"She wasn't qualified in the first place, [she had] never been a director of a company, never seen a prospectus before," he said.

During the trial Braithwaite said she took comfort from the fact the prospectus was prepared by a chartered accountant and that a barrister was on the board of directors with her.

If there were issues with the company or prospectus, she assumed others would bring them up.

But Dixon said yesterday directors needed to be independent and put in place systems to monitor management.

Dixon said even if Richie McCaw puts his name to a finance company prospectus, it "doesn't change the reality" of what he would be required to do as a director.

"You can't just take their [other directors'] word," he told the jury. "She said, 'she didn't know any better'. That may be, but it's not a defence ... she didn't do anything, she just had blind faith in others."

In his closing submissions, Braithwaite's lawyer Quentin Duff referred to a contestant in reality show American Idol who genuinely thought they could sing but was actually terrible.

"The question isn't, 'can Carol sing?' The question is, 'at the time did she genuinely believe she could sing?' The answer to that is 10 times yes," Duff said.

He said the defence only needed to prove that it was "more likely than not" that the accused believed the statements were true and that she had reasonable grounds for that belief.

The jury was allowed to have "serious doubts" about the defence and still find her not guilty, Duff said. He went on to say that Braithwaite was in the dark and had information kept from her before she signed the prospectus.

The defence lawyer said the accused was in an "informational black hole" and finished up by retelling Greek philosopher Plato's allegory of the cave - a parable on knowledge and ignorance.

"When everything is a mess and you're in the dark, how much information is really available to you?" Duff asked.

Justice Pamela Andrews in her summing up yesterday afternoon said a director of a company seeking investment from the public has a duty to ensure a prospectus does not contain untrue statements.

RECEIVERSHIP

* National Finance went into receivership in 2006, owing investors $21 million.
* Some investors have recovered 49c in the dollar.
* National Finance boss Trevor Ludlow - Braithwaite's former de facto husband - is serving a sentence of six years and four months' after being convicted of Serious Fraud Office and the Financial Markets Authority charges.
* He was found guilty last July of defrauding investors of an estimated $3.5 million.