KEY POINTS:
Former Justice Ministers and Lombard Finance and Investment directors Sir Doug Graham and Bill Jeffries are in the firing line as the failed finance company's receivers investigate a series of issues raised by investors and other parties.
In a recent update to investors, John Fisk and John Waller of PricewaterhouseCoopers said they were aware of several concerns about Lombard's activities before its receivership in April.
"Accordingly, a thorough investigation is being undertaken."
Issues the receivers were examining included various transactions by the company and its treatment of investors before its receivership, its financial reporting practices and its compliance with its trust deed, the Securities Act and the Companies Act.
Without providing any details, Fisk and Waller said any breaches of legislation or the trust deed would be referred to "the appropriate Government authorities".
Sir Doug, a former National Government Justice Minister, was Lombard's chairman but resigned, with director and former Labour Government Justice Minister Jeffries, a week after the company went into receivership. He remains deputy chairman of the $14.7 billion taxpayer owned New Zealand Superannuation Fund.
Yesterday Sir Doug told the Business Herald he was "totally comfortable" with his role in Lombard's governance.
"I am satisfied that we were managing the book as well as could be expected in the circumstances."
He said all of the company's documents, including its amended prospectus, filed to the Companies Office on Christmas Eve last year, were prepared carefully with legal advice.
"I would be surprised if they [the receivers] can find anything untoward. I would obviously be very concerned if they did."
Sir Doug said if Lombard had been the only finance company to fail "people might have more justification in expressing concern".
"But if 30 fall over and firms like Tower, ING and others are defaulting I think it's probably more understandable. I'm not proud of it but the circumstances - the combination of credit crunch, high interest rates, the collapse in the market and panic of the investors, if you have all of those things nobody's going to survive."
Meanwhile, in their update to investors, Fisk and Waller trimmed their estimated return to secured debenture holders from a 21c to 44c range to between 19c and 40c.
They said the ongoing deterioration in market conditions and "uncertainty in the market place" were having an adverse effect on recoveries of loans and other assets.
They also said Brooklyn Developments No 1 - the company owned by Aucklander Tim Manning which took over the Brooklyn Rise subdivision in Wellington last year - had also gone into receivership.
With $42 million tied up in the project, Brookyn Rise is Lombard's largest loan exposure, accounting for almost a third of its $136.7 million property loan book.
Lombard was placed in receivership in April owing $127 million to 4600 investors after trustee Louise Edwards of Perpetual Trust rejected a moratorium proposal.
Chief executive Michael Reeves said the company was hit by "a downturn in real estate values, lack of sales and the lack of bank finance available to our borrowers due to the impact of the international credit squeeze".
He said the situation was "a systematic failure of an entire industry".
Last week it was reported that Fisk and Waller had sold Reeves' company car - a Maserati - for $97,000. The car was part of Reeves' $400,000 annual salary package.
RECEIVERSHIP
* Lombard Finance and Investments was placed in receivership in April.
* Lombard owes $127 million to 4600 investors.
* PricewaterhouseCoopers, the receiver, has trimmed its return estimate to secured debenture holders from a 21c to 44c range to between 19c and 40c.
