National Finance trio's trial begins

Allan Ludlow, Managing Director of National Finance. Photo / Supplied

The former directors of National Finance which collapsed four years ago owing investors $24 million will stand trial today for criminal charges relating to alleged financial reporting breaches.

Directors Anthony Banbrook, Carol Braithwaite and Trevor (Allan) Ludlow are due in the Auckland District Court this morning for their alleged falure to disclose material transactions between the company and related parties such as Payless Cars companies and Great North Management.

The charges also relate to allegedly untrue statements in the company's registered prospectus.

The criminal charges were laid by the Ministry of Economic Development's National Enforcement Unit in 2008. The directors have not yet entered a plea.

A deposition hearing was only held for Braithwaite in July as the other directors conceded there was a case to answer.

This was one of the final criminal cases to go through this procedure as changes have now been made to the pre-committal process.

During Braithwaite's deposition hearing Crown lawyer Tom Molloy said two separate loans, one for $200,000 and another for $313,000, were not disclosed as related party lending in the company's financial statements and no interest accrued on the loans.

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

Ludlow also faces charges under the Financial Responsibility Act (FRA) for allegedly making false or misleading statements in relation to bad debt provisioning, related party lending and general security agreement.

If convicted on the Securities Act charges, the directors face imprisonment not exceeding five years or a fine not exceeding $300,000, and if convicted on the FRA charges, they face fines of up to $100,000.

Ludlow also faces a further five-year prison term or a fine not exceeding $200,000 if he is convicted of the additional charges.

National Finance 2000 was placed into receivership in 2006. Its core business was providing finance for cars.

The Serious Fraud Office is also conducting an investigation into the company.