Directors
of failed finance company Capital + Merchant were described as being driven by
self-interest and greed when sentenced to long terms of imprisonment following
convictions for theft. For the theft of
$19.7 million, Wayne Leslie Douglas and Neal Medhurst Nicholls were sentenced
to seven and a half years jail; Owen Francis Tallentire five years jail for the
theft of $12.1 million.
Each found guilty of
theft as a person in a special relationship, the three directors used Capital +
Merchant funds to finance personal business projects. When the finance company went into
receivership six of the company’s outstanding loans were to interests linked to
the three directors: in number this amounted to just over ten per cent of the
company’s loan investments. In total the
three directors had borrowed some $37 million dollars from their company. Evidence was given that only $200,000 has
been recovered.
Capital + Merchant was
funded by public investors. At the date
of receivership there were some 7000 investors, many of them elderly and solely
dependent upon Capital + Merchant for investment income. The company prospectus and debenture trust
deed said related party lending, such as loans to directors, was very severely
restricted.
Justice Wylie said the
directors intentionally breached these restrictions to advance their own
interests. The offending was
sophisticated, requiring significant planning and premeditation using
convoluted legal structures.
Particularly cynical was the use of Capital + Merchant funds when directors
could not raise personal loans from outside sources.
Each director said he
was not in a position to offer any reparations.
Douglas said he has no
personal assets. The family home is held
in a trust. Nicholls said he is the
part-owner of an investment property which has no equity since it is heavily
mortgaged. The family home is owned by a
family trust established by his father-in-law.
Tallentire said he has no savings.
R.v.
Douglas, Nicholls & Tallentire – High Court (31.08.12)
12.026