Nathans finance board 'did not question figures'

Nathans director Roger Moses. Photo / Paul Estcourt

The directors of Nathans Finance relied on the expertise of its finance team and did not make independent inquiries before signing the company's quarterly liquidity report to the end of 2006, a court has heard.

Former director Mervyn Doolan was questioned by defence lawyer Nathan Gedye on the report yesterday, leading High Court Justice Paul Heath to ask Doolan why he did not make an "independent inquiry" into the liquidity report to the company's trustee, Perpetual Trust.

Doolan said he took "comfort" in the finance team's abilities to produce accurate reports for the board.

But Justice Heath said if the chief financial officer reports to the board and the board reports to the trustee, and the board does not question the figures, then the trustee is relying on management.

Justice Heath asked whether this had happened, and to what extent the board had assessed the report or whether they had taken it at "face value".

Doolan said that Nathans' chief financial officer was competent and took control of the company's cashflow. He said the finance team signed a checklist and that a formal process was followed before the reports were brought to the board.

In the report, dated January 31, 2007, for the period to December 31, 2006, it stated that the directors were of the opinion that during each period the company would be able to meet all its obligations as they fell due.

Doolan and fellow former directors Donald Young and Roger Moses have pleaded not guilty to breaching the Securities Act.

The Financial Markets Authority says they issued statements concerning related party lending and the quality of Nathans' loan book that were untrue.