Date set for Feltex decision

Photo / Hawkes Bay Today

The fate of Feltex's five directors will be determined on August 2 when they are due back in court to hear whether they will be found guilty or not of alleged Financial Reporting Act breaches.

The directors' trial ended last week after the defence submitted its closing arguments on Thursday.

The Crown alleges the directors, Tim Saunders, John Feeney, Peter Thomas, Peter David Hunter and John Hagen, failed to disclose that Feltex was in breach of its A$100 million loan agreement with ANZ and that it incorrectly classified its debt with the bank as non-current.

The debt should have been classified as current, meaning it was on call.

The directors now concede that those details were not included in the company's interim financial report to December 31, 2005, but claim at the time they signed the documents, they believed the statements complied with International Financial Reporting Standards and disclosure laws for a listed company.

During the trial the defence argued that it was Feltex's auditors Ernst & Young who failed in their professional duties and not the company's directors.

The directors voluntarily paid Ernst & Young A$113,000 to conduct a review of the statements.

The firm did not pick up the disclosure breaches and also gave the directors verbal assurance that the statements were compliant with all the necessary standards.

But the Crown argued that this alone was not enough, that the directors should have done more to ensure the statements were compliant, that they should have read the standards themselves.

Judge Jan Doogue is expected to deliver a verbal judgment on August 2 at the Auckland District Court, the Ministry of Economic Development - that brought the case against the directors - confirmed this afternoon.