Defence closes in Feltex trial

The defence in the Feltex trial submitted their closing submissions today, bringing the end to a long and complex trial a little bit closer for the company's five directors.

The directors - Tim Saunders, John Feeney, Peter Thomas, John Hagen, Peter David Hunter - pleaded not guilty to charges laid by the Companies Office for alleged breaches of the Financial Reporting Act.

The Crown alleges the directors failed to disclose that Feltex was in breach of a loan agreement with its bank ANZ, and incorrectly classified its debt with the bank as non-current in its half-yearly interim financial statements to December 31, 2005.

Prosecutor Brian Dickey, closing for the Crown yesterday, said the directors could have done more to ensure those breaches were properly disclosed in the accounts, and that the responsibility was ultimately theirs.

But defence lawyer Paul Davison said today the directors did everything they were obligated to and had voluntarily sought the expert and professional advice of accounting firm Ernst & Young.

The firm conducted a review of the accounts at a cost of A$113,000 to Feltex and did not pick up the breaches contained in the accounts that had been prepared by Feltex's finance department.

Ernst & Young approved the accounts and gave verbal assurance to the board that they complied with the relevant accounting standards and laws, and therefore the directors signed and registered them on the belief that compliance had been met, Davison said.

He added that any suggestion the directors deliberately did not disclose the breach and that the debt was current to improve the appearance of their balance sheet was misleading and unfounded.

Davison said the directors took all necessary steps to ensure they were compliant under the appropriate accounting standards and were right to seek Ernst & Young's advice. The firm unfortunately underperformed and did not properly identify the problems in the company's accounts.

If the directors are convicted they face fines of up to $100,000 each.

A decision is likely to be reserved.