Three
further directors of Dominion Finance Group and North South Finance have been
sentenced to home detention after pleading guilty to charges of breaching securities
legislation: Richard Gilbert Bettle (ten months home detention), Vance Eric
Arkinstall (ten months) and Paul Winstone Forsyth (eleven months). In total, five of the companies’ directors
have now been sentenced to home detention.
To date, the nearly
6000 investors who placed money with Dominion Finance have recovered only
twelve cents in the dollar since the finance company’s 2008 receivership. The nearly 7000 investors in North South
Finance have been repaid 65 cents in the dollar since North South went into
liquidation insolvent in 2010.
Bettle, Arkinstall and
Forsyth pleaded guilty prior to a scheduled six week trial on charges of
issuing false offer documents. The court
was told the two finance companies issued in 2007 and 2008 prospectuses and investment
statements which misrepresented the investment risk by not properly disclosing the
companies’ financial positions. In
particular, the offer documents concealed the extent of related party lending,
the quality of loans and the companies’ deteriorating liquidity.
The three directors
said they had signed the offer documents believing them to be true. They had been let down by others who prepared
the information. Justice Katz said
securities law in this area imposes strict liability. It is not enough that directors have an
honest belief that the information is accurate, they must have reasonable
grounds for that belief. Directors have
ultimate responsibility for the proper governance and management of their
company.
Both Mr Bettle and Mr
Arkinstall were described as non-executive directors who were added to the
boards for their good standing and existing reputations in other areas.
Mr Bettle lives in
Stoke, Nelson. He told the court that
with the benefit of hindsight he lacked experience of the finance sector which
caused him to rely too heavily on management, the trustees for debenture holders,
the auditors and other directors. He was
deeply remorseful for the losses suffered by investors. He offered to surrender the fees received as
chairman of Dominion Finance. He was
sentenced to ten months home detention together with 200 hours community work
and required to pay $90,000 in reparations.
Mr Arkinstall said he
regretted investor losses. He himself
had over $150,000 invested with Dominion Finance. He had now retired from business life and was
solely reliant upon superannuation for his income. He was sentenced to ten months home detention
at his Lower Hutt home and 200 hours community work.
Mr Forsyth was
sentenced to eleven months home detention, 200 hours community work and ordered
to pay $50,000 reparations. He too had
funds invested with Dominion Finance: suffering losses of some $300,000. As a qualified chartered accountant, Mr
Forsyth worked part-time for the companies processing loan applications
submitted to both Dominion Finance and North South. This closer involvement in the companies’ day
to day affairs meant he was slightly more culpable than were the other two
directors, Justice Katz said.
R.
v. Bettle, Arkinstall & Forsyth – High Court, Auckland (16.08.13)
13.020