Accountants to blame, say Feltex Five

The five former directors of Feltex Carpets are blaming their accountants for irregularities in financial statements.

The Registrar of Companies has laid criminal charges against former chief executive, Peter Hunter, Peter Thomas, Michael Feeney, John Hagen and former chairman Tim Saunders.

The charges relating to information provided in the company's interim financial statements for the six month period ended December 31, 2005.

In the Auckland District Court today their lawyer, in opening submissions, said the company employed accounting firm Ernst and Young to advise Feltex. The directors had taken all reasonable steps and if Ernst and Young had not failed in its obligations, the group would not be in court today, he said.

The charges allege the directors failed to disclose a breach of Feltex's banking covenants, and did not properly classify its A$119.5 million (NZ$157m) ANZ Bank debt facility.

When Feltex was floated on the share market in 2004, more than $250 million was raised from mostly New Zealand investors.

Its shares were worth $254 million but all of that was lost when the company went into receivership in and subsequently into liquidation in 2006.

Each of the five directors faces fines of up to $100,000.

- NZPA