'When in doubt, don't sign'

Directors should not sign financial documents if they are not confident the information they contain is accurate, a court heard yesterday.

Independent forensic accountant David Crichton was giving evidence on the second day of National Finance 2000's depositions hearing at the Auckland District Court.

This will be one of the last depositions hearings because of changes to committal procedure introduced to free up court time and speed the process to trial.

Directors Anthony Banbrook and Trevor (Allan) Ludlow, who represent themselves, were excused from the depositions hearing yesterday because they both concede there is a case to answer. The third director, Carol Braithwaite, was in court.

Crown prosecutor Nicholas Williams asked Crichton what a director with little financial knowledge should do if uncertain whether documents were correct.

"They should not sign them," Crichton replied.

The Companies Office laid criminal charges indictably against the directors in 2008, meaning additional charges could follow if more evidence emerges during depositions.

The charges relate to alleged untrue statements in the company's registered prospectus and failure to comply with financial reporting standards.

The directors are charged under the Financial Reporting Act for their alleged failure to disclose material transactions between the company and related parties such as Payless Cars and Great North Management.

Both companies have been liquidated and were owned by Ludlow.

The directors are further charged under the Securities Act for allegedly saying they had made adequate provision for bad debts, and that loans were secured by general security agreements, which they were not.

Ludlow faces additional charges for allegedly making false or misleading statements in relation to bad debt provisioning, related party lending and general security agreement.

The directors have not yet entered a plea.