The Crown alleges the directors lied to prospective investors in Bridgecorp's term investment prospectuses, registered on December 21, 2006. The prospectuses reported Bridgecorp's financial position for the year ended June 30, 2006.
But Crown prosecutor Brian Dickey submitted yesterday that by the time they were registered in December, Bridgecorp's financial health had "considerably deteriorated" and its outlook was "bleak".
Reinvestment and new investments had declined, the company's costs had increased, and market conditions had worsened, Mr Dickey said.
By failing to state this in offer documents, the directors misled investors, he submitted.
The documents also said the company advanced loans only in accordance with "good commercial practice", which the Crown alleged was not the case.
More than $100 million was invested or reinvested in the companies between the time these documents were issued and Bridgecorp's collapse.
In discussing possible defences the directors could offer, Mr Dickey said the four were unable to argue they had placed responsibility for the statements onto the likes of auditors.
"A director could not abdicate or delegate their responsibility to ensure truth in material company documents to internal senior managers or external advisers. They must form their own view," he said.
As well as Securities Act charges, Petricevic and Roest face eight counts under the Crimes Act and Companies Act of knowingly making false statements in March 2007 that Bridgecorp had never missed interest payments to investors, or repayments of principal.
The Crown alleged Petricevic and Roest were aware the company had missed a number of payments from February 7, 2007.
Much of yesterday was taken up with Crown allegations that the directors also failed to disclose that Barcroft - a company Bridgecorp had loaned $76.8 million - was a related party.
The Crown depicted the two companies as being closely linked to each other and said Bridgecorp used Barcroft as its "treasury or piggybank".
By failing to inform investors of its relationship with Barcroft, Bridgecorp's financial position was painted as being "far more favourable than [was] the truth", Mr Dickey said.
The loan, which allegedly breached Bridgecorp's trust deed, also permitted the company to create false profit figures, he said.
The Crown's opening statements are scheduled to resume today.
After this, the trial will be 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.
This month, former Bridgecorp chairman Bruce Davidson pleaded guilty to misleading investors. He was sentenced to nine months' home detention and ordered to pay reparations of $500,000, which will be distributed to investors.
Timetable
* Bridgecorp collapsed in July 2007 owing $459 million to 14,500 investors.
* The trial of four former directors, including Rod Petricevic, for allegedly misleading investors began yesterday and is scheduled to go until March.
* The prosecution is understood to be bringing nearly 40 witnesses to support its case.
