Published 28 October 2011
The Serious Fraud Office has charged Dominion Finance Holdings Ltd majority shareholder & director Terry Butler & 3 others over $20 million of unauthorised related-party lending in the 4 years before its liquidation.
Mr Butler (64), director & lawyer Barry Whale (64), former chief executive Paul Cropp (48) and a fourth person subject to a non-publication order appeared in the Auckland District Court yesterday on a combined total of 14 charges under the Crimes Act of theft by a person in a special relationship. They were remanded without plea until Friday 9 December.
The charges related to operating subsidiaries of the listed holding company, Dominion Finance Group Ltd & North South Finance Ltd. The Serious Fraud Office has alleged the defendants participated in unauthorised related-party lending totalling over $20 million between 2004-08, in breach of the trust deeds entered into by the 2 subsidiary finance companies.
Terry & Ann Butler acquired Dominion Finance Holdings in 1987 and remained the majority shareholders up to its liquidation in 2009. Dominion acquired North South in 2005.
Both subsidiary companies suspended performance of their obligations to investors in July 2008 and proposed moratorium arrangements, but the trustee appointed for the Dominion Finance Group depositors, Perpetual Trust Ltd, declined to support the proposal and the company was put into receivership in September 2008.
At that time, Dominion Finance Group owed 5937 debentureholders $177 million and wholesale lenders were owed another $55 million.
The trustee acting for the North South depositors, Covenant Trustee Ltd, accepted the proposal and the moratorium continued until July 2010. At the time receivers were appointed, North South owed debentureholders $31 million and wholesale lenders $15 million.
Dominion Finance Holdings entered voluntary administration on 15 October 2008. Following an administrators’ recommendation, it was placed in liquidation on 3 February 2009 with an estimated deficit exceeding $115 million.
SFO chief executive Adam Feeley said the group in total was recorded as having unpaid creditors in the region of $400 million.
The Securities Commission (now the Financial Markets Authority) laid criminal charges and issued civil proceedings under the Securities Act against former Dominion Finance & North South directors. The Serious Fraud Office began its investigation last October after referral from the securities Commission.
Mr Feeley said these charges concluded the twelfth investigation into a finance company by the Serious Fraud Office, leaving 3 to be completed. Of those concluded, 8 had resulted in charges being laid by the SFO and another charged by another agency.
“The remaining investigations – South Canterbury Finance Ltd, Rockforte Finance Ltd & Hanover Finance Ltd – are well advanced and nearing conclusions.”
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Attribution: SFO release, story written by Bob Dey for the Bob Dey Property Report.
