Rodney
Michael Petricevic has been sentenced to six and half years jail for making false
statements to Bridgecorp investors. The
High Court did not accept protestations that he was unaware of severe liquidity
problems until just before Bridgecorp went into receivership.
Bridgecorp used money
from public investors to finance property developments. About 14,500 investors were left out of
pocket when in July 2007 Bridgecorp went first into receivership and then
quickly into liquidation. Investors are
owed some $459 million. Those holding
secured debentures can expect to recover less than ten cents in the dollar. Holders of capital notes (about $29 million)
or redeemable preference shares ($30 million) will not recover anything.
Some investors lost
very heavily. The court was told one 69
year old retired professional man had placed nearly two million dollars with
the finance company. He has been forced
back into working long hours and his wife suffered a nervous breakdown
following their loss. Another investor,
a retired couple in their seventies, lost their retirement capital, totalling
$250,000.
Central to the
prosecution was an allegation of untrue statements in the prospectus that
Bridgecorp had never missed any interest payments to investors or returns of
principal on maturity. Statements
highlighting excellent liquidity could be expected to give comfort to intending
investors in a finance company.
Mr Petricevic told the
court he was completely unaware of any late payments until just weeks prior to
receivership. His evidence was not
believed. Witnesses told of Mr
Petricevic being present at meetings months before receivership when the
problem of missed payments was discussed and another occasion when strategies
to hoodwink investors were canvassed, including manufactured excuses about
“computer glitches” to justify delays.
By April 2007, Bridgecorp staff were refusing to answer the phones and
be party to lies told to investors.
The court was told
that Mr Petricevic himself was providing short-term bridging finance to
Bridgecorp through April and May 2007 to meet company payments. Amounts ranging from $500,000 to $100,000
were advanced, being repaid within a few days on each occasion.
In general terms,
Bridgecorp directors had failed to properly disclose its deteriorating trading
position in offer documents available to the public: impaired loans and
non-performing assets had increased; liquidity had worsened since June
2006. And despite its stated policy,
Bridgecorp did not hold a specific reserve in bank deposits to meet investor
maturities.
Mr Petricevic was
managing director of Bridgecorp and described himself as having thirty years
experience in the finance industry.
R.
v. Petricevic – High Court (5.04.12 & 26.04.12)
(12.008)