Bridgecorp staff told to lie when investors called, court told

Rod Petricevic, Rob Roest, Gary Urwin and Peter Steigrad deny the charges against them. The trial is expected to last until March. Photo / Brett Phib

Bridgecorp renewed investment offers to the public despite directors being aware the finance company had been missing interest payments to securities holders, the Crown argued this morning.

The High Court this morning also heard Bridgecorp staff were told to lie to investors calling up asking where their payments were.

Four former Bridgecorp directors - Rod Petricevic, Rob Roest, Gary Urwin and Peter Steigrad - face 10 Securities Act charges for allegedly making untrue statements in the investment statements, registered prospectuses and extension certificates of Bridgecorp and Bridgecorp Investments.

Petricevic and Roest face a further eight charges under the Crimes Act and Companies Act for knowingly making false statements that Bridgecorp had never missed interest payments to investors, or repayments of principal in the company's offer documents.

The four have pleaded not guilty to the all the charges they face as the second day of their trial continues in the High Court at Auckland today.

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

Financial Markets Authority prosecutor Brian Dickey argued this morning the directors mislead the public by renewing the company's offer to investors through extension certificates, dated 30 March 2007.

Investors were misled because they were not informed of the company's deteriorating financial position or the fact payments of interest of principal were missed from 7 February 2007.

"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," Dickey said.

"Staff were directed to lie (by senior management including one or other of Petricevic, Roest) to investors who contacted the Companies asking why they had not received their full payments on the relevant due date. The late or non payments were attributed to computer errors, bank errors, or accounting department errors."

The Crown alleged the directors would have been aware some payments had been defaulted and if they were not, then they should have been as they had access to the company's financial statements.

These showed the company's position had worsened considerably from December 21, 2007 when the original prospectuses were signed, he said.

The Crown argued this morning that Bridgecorp had consistently failed to meet nearly all of its cashflow and cash balance forecasts.

By the week ending February 16, 2007, it had negative cash of $441,000.

From before the directors signed the December prospectus, the company was failing to meet forecasts and was dealing with liquidity issues, the Crown said.

For instance, it had forecast it would have a cash balance of $811,000 for the week ending November 3. The actual cash balance was $621,000.

The company's performance continued to decline in the early months of 2007. By April that year an email sent to Roest advised that Bridgecorp had available funds of $45,000 to pay investors a due amount of around $1,924,000 and staff salaries of $267,000.

The Crown finished giving its opening statements today.

The trial has now been adjourned until November 14, when it will continue until the court closes for the year. It will begin again on January 23 and likely run until March. The directors have been remanded at large.