Dominion Finance: Ann Butler Barry Whale Home Detention…

Two former Dominion Finance directors have been sentenced to home detention for their part in causing investor losses totalling $ 176.9 million.

At the High Court in Auckland this morning Justice Robert Dobson sentenced commercial lawyer and former Dominion director Robert Barry Whale to 12 months’ home detention, 250 hours of community service, and ordered him to pay $ 75,000 in reparations to the company’s receivers.

Whale originally pleaded not guilty to seven charges brought by the Financial Market Authority (FMA) under the Securities Act, but changed his plea at the end of last month.

Former Dominion director Ann Butler was sentenced to nine months’ home detention, 80 hours of community service, and ordered to pay reparations of $ 300,000 to the company’s receivers on seven FMA charges of misleading investors under the Securities Act.

The charges included making untrue statements in a Dominion Finance Group prospectus and investment statement, and making untrue statements in a North South Finance prospectus and investment statement.

Butler also pleaded guilty to the charges last month.

Justice Dobson said letters and prospectuses issued to shareholders included untrue statements that were in the market for nine months, which made the level of offending “relatively serious”.

The charges were laid by the FMA against all directors of Dominion Finance after it collapsed into receivership in 2008, owing more than 5900 public debenture investors $ 176.9 million.

North South Finance, a subsidiary company that operated under the same directors, was placed in receivership in 2010 owing $ 31m to 3900 investors.

The maximum possible sentence was five years’ jail or a fine of up to $ 300,000 on each charge, but finance company directors in similar circumstances have been sentenced to home detention.

Justice Dobson said both former directors had been grossly negligent but Whale’s offending was more serious due to the close involvement he had in the issuing of documents to shareholders.

However he had taken into account Whale’s good character and remorse, Justice Dobson said.

Whale’s lawyer Paul Davidson QC said his client was “severely and significantly remorseful”.

He had an unblemished record, but had “fallen from grace”, Davidson said.

Justice Dobson said he had also taken into account Butler’s previous good character, and the effect a jail sentence would have on the 64-year-old.

Butler had been a director of Dominion and North South Finance, and was formerly an executive director until 2005 when she stepped down as chief financial officer.

Property records show the Butlers still own a 487-square-metre home in Remuera with a rateable value of $ 6.8m.

The mortgaged property was advertised for sale last year for more than $ 7m.

Butler’s husband, Terry, was due to face the same charges but died of cancer this year.

Terry Butler also faced charges laid by the SFO, which Dominion Finance chief executive Paul Cropp was found guilty of in April.

In that hearing, Justice Graham Lang found Cropp guilty of knowingly breaching the trust deed of Dominion Finance and its subsidiary North South Finance, which said the company was not able to make loans to related parties.

Last month Cropp was sentenced to two years and seven months’ jail on the four Crimes Act charges of theft.

Another director, Paul Winstone Forsyth, also faces the FMA charges.

Speaking outside the Auckland High Court Davidson said Whale was relieved by the outcome, and added that the sentence was appropriate.

The FMA case illustrated how far the effects of directors’ decisions reached, even when there was no intention of wrong-doing, he said.

- © Fairfax NZ News

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