Warning signs evident 'years before Access fell'

Former employees of Access Brokerage say there were signs of a shortfall in investor funds for years before the discount stockbroker was wound up in late 2004 leaving clients $5 million out of pocket, according to court documents.

Access managing director Peter Marshall is facing a number of false accounting charges brought by the Serious Fraud Office following an investigation into events leading up to the company's September 2004 liquidation.

Among statements handed up to Wellington District Court during a depositions hearing last month, and this week made available to the media, former employees said signs of a shortfall in funds appeared as early as 2000.

Glenn Phillips, who dealt with client relationships and development at the firm, said there were insufficient funds to meet client payments "on a number of occasions". The problem first emerged in "approximately 2000-2001".

Former Access employee Valerie Wenk said her duties included reconciling money held by Access in various accounts against the firm's obligations to clients and scrip holdings.

She said a reconciliation she performed in 2003 found Access' financial obligations to clients exceeded its ability to pay by about $3.5 million.

Dominda Samarakoon, who was employed to maintain Access' broker and other IT systems, said he was also made aware of client fund shortfalls as were accountants Deloitte Touche Tohmatsu.

Access' majority owner Bill Garlick, who took over as managing director in September 2004 when Marshall underwent surgery, said in his statement that Marshall had his "absolute trust and confidence".

Garlick said that even after gaining "a reasonable understanding" of Access' true position with the help of accountants Price Waterhouse Coopers, "I was inclined to the view that he had somehow become lost in a tangle of spreadsheets and confused thinking, although this was a difficult position to reconcile with his broking and banking experience".

However, Garlick said he lost his trust in Marshall after discovering he had transferred Access money into his own bank account on more than one occasion.

Garlick hired Marshall, a former Barclays and Westpac bank employee, as managing director of Access in 1995. His salary during 2004 was $150,000 on top of which he received a $30,000 bonus.

Garlick said he thought Access could have traded its way out of difficulty even after the shortfall in client funds was discovered but NZX rules required a rapid recapitalisation and there was "just too little time".

Marshall, 60, of Silverstream in the Hutt Valley, will appear in Wellington District Court on April 11 for a callover hearing.