Sir Douglas Graham failed in his role as chairman of Lombard Finance & Investments by not taking a more active role in getting to know the property development business as the lender ultimately failed, the Crown prosecutor says.
Graham let Lombard Finance's management deal with an increasingly problematic loan book, and didn't lead greater board scrutiny of the lender's practices, prosecutor Colin Carruthers told the High Court in Wellington in his closing argument.
When the lender was in trouble, Graham should have ensured he became "knowledgeable about the state of the loans, what obstacles existed, what the likely impact was", he said.
One of the "rare examples" of Graham showing an adequate amount of scepticism was over the recoverability of loans to Mark Bryers and Blue Chip, he said.
"The Crown's position is that the evidence establishes the accused failed to fulfil their obligations and that failure deprives them of the reasonable grounds defence," he said. Carruthers said the tension between supporting the company's commercial goals was trumped by disclosure requirements under the law.
