Bridgecorp directors relied on staff, court told

(L- R) Former Bridgecorp directors Rod Petricevic and Robert Roest. Photo / Brett Phibbs

Accused Bridgecorp directors had relied on the advice and expertise of the failed finance company's staff when preparing allegedly misleading offer documents, the High Court heard this morning.

Rod Petricevic, Rob Roest, and Peter Steigrad each face 10 Securities Act charges brought by the Financial Markets Authority (FMA) for allegedly making untrue statements in the investment statements, registered prospectuses and extension certificates of Bridgecorp and Bridgecorp Investments.

The Bridgecorp companies collapsed in 2007 owing $459 million to 14,500 investors.

The trial of the three directors resumed this morning for the defence's opening statements following an adjournment on October 27.

Petricevic's lawyer Charles Cato said the former director had an "honest belief" as well as reasonable grounds to believe the statements contained in the prospectuses were not misleading in themselves, or by omission.

Cato said Petricevic had relied on the experience of Bridgecorp's chairman Bruce Davidson and held discussions with lawyers both within the company and externally.

The prospectuses had made a number of disclosures to investors and the risks were "clearly stated", Cato said.

Petricevic held "great regret that investors suffered losses," the court heard.

The lawyers of Roest and Steigrad also rejected the charges.

Steigrad's counsel, Brian Keene, said the defendant was a non-executive director, independent and had no shareholding in the companies.

Keene also said Steigrad was in a different position to the other directors and did not know the same level of detail about Bridgecorp's operations.

"He was not in the bowels of the beasts," Keene said.

Steigrad had taken advice from Bridgecorp staff and none of this advice had suggested the wording of the offer documents was misleading, Keene said.

The Crown has now begun calling witnesses, including the company's risk and audit manager.

As well as the Securities Act allegations, Petricevic and Roest face eight charges under the Crimes Act and Companies Act of knowingly making false statements that Bridgecorp had never missed interest payments to investors, or repayments of principal in offer documents.

Investors were misled because they were not informed payments were missed from February 7, 2007, the FMA alleges.

"Disclosures of such defaults should have been advised to the investing public. It would have accurately forecast to the public that the companies were facing imminent failure," FMA prosecutor Brian Dickey said last month.

Cato this morning said Petricevic was not aware of the defaults until a board meeting shortly before Bridgecorp went into receivership.

Former Bridgecorp director Gary Urwin originally pleaded not guilty, but he changed his plea last week and is awaiting sentencing in December.

His lawyer, David Reece asked last week for a home detention report to be prepared, but Dickey said the Crown is seeking a term of imprisonment.

The charges carry a maximum penalty of five years in jail or a fine of up to $300,000.

Former Bridgecorp chairman Bruce Davidson was sentenced to nine months' home detention after he changed his plea to guilty.

He was also ordered to pay reparations of $500,000 and perform 200 hours' community work.