nz action 'will compromise': lawyers

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NZ action 'will compromise': lawyers

Anthony Marx | 07:12am November 6, 2013




LAWYERS for two failed Gold Coast businessmen urged a judge yesterday to halt their civil trial in Australia because New Zealand regulators have laid criminal charges against them.

Counsel for former Octaviar executives David Anderson and Craig White argued in the Supreme Court in Brisbane that the NZ proceedings could undermine their right to avoid self-incrimination.

Barrister Brian O'Donnell, acting for Mr Anderson, warned Justice George Fryberg that NZ prosecutors would unfairly be able to use testimony from the Australian trial if a stay was not granted.

Mr Anderson and Mr White are among five former Octaviar officials - including chief executive Michael King - facing allegations of corporate wrongdoing brought by the Australian Securities and Investments Commission.

ASIC alleges the group misappropriated $147.5 million from its Premium Income Fund and re-allocated the money through multiple entities in an effort to pay debts in late 2007 and early 2008.

False and back-dated documents were allegedly used to justify the transactions.

The tourism and finance company, formerly known as MFS, later collapsed in 2008 owing $2.5 billion.

ASIC's counterpart in NZ, the Financial Markets Authority, announced yesterday that it had filed criminal charges against four former directors of failed MFS Pacific Finance, later known as OPI Pacific Finance.

The FMA alleges that Mr Anderson, Mr White, and two other executives made untrue statements in a 2007 offer document related to the performance and management of the business. More than 10,000 investors are owed about $247 million, with only a small number of secured debenture holders clawing back 25 in the dollar.

The men face a maximum of five years in prison or a $300,000 fine in the case, which has been set down for a first hearing on December 3 in Auckland. ASIC is seeking to recover the $147.5 million from the defendants, fine them $200,000 per breach and ban them from managing corporations.

Mr O'Donnell argued that both cases "cover the same factual matters" and the cross examination of witnesses could be compromised. The precise knowledge both men had of the money movements was also at issue, he told the court.

But Justice Fryberg challenged a number of Mr O'Donnell's assertions and cautioned him that a stay could not be approved on just "a hope or a theoretical possibility".

The hearing continues today.