Saturday, 28 January 2012
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FRANTIC MOVES TO KEEP BRIDGECORP AFLOAT REVEALED
28 January 2012
Waikato Times
English
© 2012 Fairfax New Zealand Limited. All Rights Reserved.
NICK KRAUSE
As management desperation mounted in the leadup to Bridgecorp's 2007 collapse, its former boss even flew to Hong Kong in a last-ditch bid to sell off part of a troubled Fiji development it had lent heavily on.
Mike Jeffcoat, the finance company's former general manager, told the High Court in Auckland yesterday that former director Rod Petricevic was trying to flog off the Marriott resort part of the Momi Bay resort development into which the company had sunk more than $100 million as a co-partner.
But as cashflow worsened and a $40m repayment from an entity that owned the Momi development failed to materialise despite featuring daily in the company's cashflow statements, Bridgecorp began exploring all funding avenues.
Jeffcoat told Crown prosecutor Brian Dickey that an email was sent out from group treasurer John Welch to senior staff "seeking ideas for quick cashflow", a move Dickey said reflected poorly from a financial perspective.
Petricevic flew to Hong Kong to try to sell the Marriott component or get someone to take an equity stake in it, Jeffcoat said, but was unsuccessful. Meanwhile, money was still being spent on Momi's stage one development for earthworks, architects fees and other project costs.
The Momi resort was planned to ultimately comprise 900 residential sections, a Marriott resort, a Ritz Carlton Hotel, two further hotel sites, an 18-hole championship golf course, a marina, shopping centre and commercial complex.
In December 2006 the Fijian military staged a coup. The unfinished project has since been the subject of legal battles.
The court also heard that when Bridgecorp began missing customer repayments, senior managers decided to blame a computer glitch.
Jeffcoat said he, Petricevic and another former director Rob Roest, as well as investor services manager Chris Todd, decided to offer that explanation to the growing number of fretting investors calling the company.
Asked by Crown prosecutor Brian Dickey where the idea originated from, Jeffcoat said he could not recall. But he said the team decided they couldn't tell the truth to investors as it would have created panic.
"We didn't want to tell investors there was no money in the bank to pay them," Jeffcoat said. Expected additional funding had been delayed.
Jeffcoat was recalled from Australia in February 2007 once the funding difficulties started emerging in New Zealand. He had been general manager in Australia and had nearly completed winding down that business - the loan book fell from $187 million to $20m.
Petricevic, Roest and fellow former director Peter Steigrad have denied 10 charges under the Securities Act. They are accused of making untrue statements in the investment statements and registered prospectuses of Bridgecorp in December 2006.
The court case is expected to run until March. Two other directors have already admitted the charges.
The Bridgecorp group collapsed in July 2007 owing $490 million to 14,500 small investors who are expected to get back less than 10 cents in the dollar. Fairfax NZ
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