A decision to charge three South Canterbury Finance
executives over allegations of masterminding the "biggest
fraud in New Zealand's history" without first giving them a
chance to explain their actions "is nothing short of
mind-boggling", a court was told today.
Former South Canterbury Finance (SCF) chief executive Lachie
McLeod, 50, and two of the company's former directors, lawyer
Edward Sullivan, 72, and accountant Robert White, 70, deny a
$1.6 billion fraud.
The Crown says their actions "contributed directly" to SCF's
collapse on August 31, 2010.
Because of the company's participation in the Crown retail
deposit guarantee scheme, 35,000 investors were bailed out by
the taxpayer to the tune of $1.6 billion.
The trial in the High Court at Timaru is finally coming to a
conclusion after 61 days of evidence spanning five months.
Pip Hall QC, representing Mr Sullivan, opened the joint
defence submissions this morning with the Latin phrase:
"Fraus est odiosa et non praesumenda – fraud is odious and is
not to be presumed."
The defence says that is precisely what the Serious Fraud
Office and the Crown has done in this case.
"They have presumed fraud when it does not exist," Mr Hall
said in opening.
Marc Corlett, counsel for Mr Sullivan, said that on December
7, 2011, the charge was "triumphantly announced" by the
Serious Fraud Office as the "biggest fraud in New Zealand's
He went on to say that the investigation was the "most
resource-intensive and time-consuming in recent history".
"What we know now is very different," Mr Corlett said.
Allegations of the men being involved in the biggest fraud in
New Zealand were "baseless and devoid of any merit", the
He said the accused were never questioned over SCF's entry in
to the Crown retail deposit guarantee scheme, without ever
been given the chance to explain what had in fact happened
back in 2008 and the role that they had played.
"That people can be charged with the biggest fraud in our
history without being given the chance to explain is nothing
short of mind-boggling," Mr Corlett said.
Another major failing by the SFO and the Crown was that they
did not obtain any Treasury or Reserve Bank documents, nor
did they interview anyone there before laying charges.
And the failure to interview "the decision-maker" John
Whitehead, Secretary to the Treasury, was unfathomable", the
defence told the court today.
"Mr Whitehead was not called because wouldn't have provided
the evidence the Crown needed," Mr Corlett said.
"Only he knows what factors he took into account in allowing
South Canterbury Finance to enter into the scheme.
"Only he knows if the alleged mis-statements would have made
The long-time SCF chairman, Timaru financier Allan Hubbard,
died after a September 2011 car crash, aged 83 - just months
after the SFO laid 50 fraud charges against him.
Defence have compiled three volumes of joint submissions,
amounting to a "daunting" 572 pages.
Closing arguments for the defence are expected to take the
rest of the week.
Justice Paul Heath will then reserve his decision, which is
expected to be released in October.
- By Kurt Bayer of APNZ