North South Finance enters receivership after charges laid

The trustees for North South Finance have called in the receivers, a day after the Securities Commission laid civil and criminal charges against the directors.

A statement yesterday by independent directors Rick Bettle and Vance Arkinstall said that after discussions with the Covenant Trustee Company the finance company would be placed in receivership.

North South Finance went into moratorium in December 2008. It has paid back about $54 million of the $102 million owed to investors.

On Wednesday the Securities Commission revealed it had laid criminal charges and issued civil proceedings against Dominion Finance Group and North South Finance directors Arkinstall and Bettle, with Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale.

Bettle, who is chairman of North South Finance, said continuing the moratorium under the direction of the directors in the light of the Securities Commission charges was inappropriate.

Dominion was placed into receivership in September 2008 owing $176.9 million to around 5900 investors. Receivers expect less than 25c in the dollar to be paid back.

Arkinstall will find out today or early next week whether he will retain his job as chief executive of the Investment Savings and Insurance Association (ISI).

Association chairman Sean Carroll confirmed that he had spoken to Arkinstall about his options.

"The board is currently working through options off the back of those discussions," he said through a spokesperson. A decision was expected late today or Monday at the latest.

Arkinstall said he would reserve any comment about his future at the ISI until then.

"As you'd understand it's quite a sensitive issue at this point and it's just too early to know what the outcome might be.

"We'll work our way through it," he said.

Carroll earlier described the situation as "tricky".

"As an association, trust and confidence is a big thing. It's pretty hard to maintain with this sort of thing hitting the papers."

The criminal charges carry a maximum five-year jail term or a fine of up to $300,000. The civil proceedings carry fines of up to $500,000 for each of the directors.

The case is due in court at the end of the month. The directors are expected to defend the charges.