Directors
of Gisborne based finance company Rockforte Finance have been sentenced for
their role in misusing company money to prop up trucking company, Gisborne
Haulage. The 90 investors who had put in
$3.8 million were paid out in full by taxpayers because Rockforte was part of
the government-funded deposit guarantee scheme set up after the 2008 banking
crisis.
Nigel Grant O’Leary
was sentenced to four years’ jail; John Patrick Gardner to eleven months home
detention and 200 hours community work. The
court was told Rockforte breached loan limits set out its trust deed governing
use of funds borrowed from the public.
When Gisborne Haulage got into financial difficulty, further funds were
advanced by Rockforte in breach of trust deed limits as to how much could be
lent to any one borrower. This was
compounded by the fact that Rockforte directors had a commercial interest in
Gisborne Haulage and these further loans were in breach of trust deed controls
on related party lending. A relative of
Mr O’Leary was put up as the supposed owner of Gisborne Haulage in a deliberate
attempt to disguise the loans as not being related party loans.
Evidence was given
that a total of nine loans were falsely recorded, hiding their true
nature. In addition there were two
instances of investors’ money being recorded as repaid when in fact the funds
were misappropriated by being illegitimately reinvested without the investors’
knowledge.
Of the two directors
sentenced, Mr O’Leary was described as the primary offender. He signed off on a false prospectus which hid
the level of related party lending and he pleaded guilty to deceit in relation
to false information provided to government when Rockforte entered the
government-funded deposit guarantee scheme.
Mr Gardner was
described as having less culpability.
Whilst a director of Rockforte, he was on the periphery of much of the
offending and did not have the finance and accounting background of other
directors.
R.
v. O’Leary & Gardner – High Court (24.10.13)
13.032