30 Mar 2012

Lombard penalties put focus on directors' responsibilities

7:47 pm on 30 March 2012

The Shareholders Association says the criminal case against four directors of failed company Lombard Finance is likely to be a watershed and should improve company disclosures in future.

Sir Douglas Graham, Bill Jeffries, Lawrence Bryant and Michael Reeves were sentenced in the High Court in Wellington on Thursday for making false statements in company prospectuses before Lombard went into receivership.

The company collapsed in 2008 owing $127 million to 4400 investors.

Graham and Bryant were sentenced on Thursday to 300 hours' community work and ordered to pay $100,000 each in reparation.

Jeffries and Reeves were sentenced to 400 hours' community work.

Shareholders Association president John Hawkins says the sentences effectively end any commercial life the men had and reduce their ability to make a living in future.

He says the Financial Markets Authority may also proceed with a civil claim seeking compensation.

Institute of Directors president Denham Shale says the sentencing is a reminder of company directors' responsibilities.

He says those who aspire to be company directors must be diligent and aware of their responsibilities and understand the financial affairs of the company.

Knighthood debate reignited

Former Act MP Rodney Hide says Graham should turn his knighthood in, or the prime minister should tell the Queen to take it.

Mr Hide says the title signifies someone with integrity and courage and the expectation is that someone who has a knighthood can be looked up to.

He says John Key should wait until after the 28-day period allowed for an appeal and then remove the honour.