Guilty director's ignorance 'no excuse'

National Finance's Carol Anne Braithwaite. Photo / Greg Bowker.

The misleading offer document Carol Anne Braithwaite signed her name to claimed the mother-of-five had a wide array of skills equipping her "very well" to be a director of the now defunct National Finance 2000.

But this week a jury of 12 - the first to try a director of a failed finance company - heard the opposite was the case. After a day and a half of deliberation, the jury of six men and six women yesterday found Braithwaite guilty of making untrue statements in a National Finance prospectus, released in September 2005.

The outcome was a majority verdict where 11 found the 53-year-old guilty and one juror believed she was innocent of the charge.

Convicted and bailed to an address on Devonport's waterfront, Braithwaite will be sentenced in September and faces a maximum term of five years in jail or a fine of up to $300,000.

Crown lawyer John Dixon said jail was a possibility for the disgraced director but her defence counsel, Quentin Duff, asked for a home detention report to be prepared.

While pleased with the result, Bernard Howe - an investor who lost $350,000 in National Finance's 2006 collapse - said the verdict did nothing to improve his financial situation.

Howe and his wife, who are retired, had to move in with relatives when he lost most of his life savings six years ago. "Our health went downhill as a result," Howe said.

"In the enormity of what we were facing without money, we became dependent on our family for help ... we had nothing, we went on the pension and that was it."

Howe said he would like to see Braithwaite serve jail time, but he does not think he could face going to her sentencing. "I'd probably break down."

Braithwaite told the jury during her trial she had become a director at the request of the now jailed National Finance boss Trevor Allan Ludlow - her de facto husband at the time.

"I thought that's what wives did, they become a director of their husband's company," she said.

Braithwaite said Ludlow told her that "everything was going great" with the business.

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

If there were issues with the finance firm, she assumed others would bring them up and was just "following what the other directors were doing".

Dixon questioned during his closing arguments if Braithwaite was up to the job.

"She wasn't qualified in the first place, [she had] never been a director of a company, never seen a prospectus before," he said. Braithwaite accepted, in hindsight, she should have done more in her role as a director and admitted her understanding of the company's finances was not up to scratch.

Financial Markets Authority's head of enforcement, Belinda Moffat, said yesterday's verdict acted as a reminder for what is reasonably expected of directors.

"Directors need to be aware of their obligations and it is no excuse to say they did not understand them or relied upon others."

This sentiment was echoed by Institute of Directors chief executive Ralph Chivers. "If they [directors] do not consider they have sufficient financial skills to adequately monitor the business of a company, they must take steps to address that immediately," he said. "Similarly, if a director doesn't understand the business they are on the board of they need to remedy that."

The case
* Braithwaite faced a single Securities Act charge for making 10 material untruth statements in the National Finance prospectus.
* While she later admitted the statements were untrue, she attempted to defend the charge on the basis she believed the prospectus was correct when signing it in 2005.
* Under the law this required her to convince the jury both that it was "more likely than not" she thought the prospectus was true and that she had reasonable grounds for her belief.