The South Canterbury Finance trial has heard from the former managing director of one of New Zealand's largest companies, Hellaby Holdings.
Three former directors Edward Sullivan, Lachie McLeod and Robert White are on trial in Timaru over 18 fraud charges relating to the $1.6 billion collapse of South Canterbury Finance in 2010.
The charges brought by the Serious Fraud Office include theft by a person in a special relationship, false statements by a promoter, obtaining by deception, false accounting and failing to declare loans to companies related to South Canterbury.
In 2006, investment company Hellaby Holding wanted to sell its remaining 20 percent share in Wool Services. South Canterbury Finance's chairman, the late Allan Hubbard, already held a majority shareholding in the wool scouring company.
The court was told that Hellaby's then-managing director David Houldsworth asked Mr Hubbard if he wanted to buy the shares outright, or if he knew of a friendly unrelated party that might be interested in purchasing them to avoid having to obtain the consent of Wool Services' shareholders.
An offer was later made by Edward Sullivan on behalf of a director of a newly-formed company, Woolpak Holdings, which the Crown alleges was in fact under the control of the defendants.
Also giving evidence was Geoffrey Sullivan, who said he had no reason to believe anything was wrong with transactions he was making at the direction of his uncle.
He outlined a 2004 deal where a related company agreed to purchase goods, including heaters from the appliance import business he worked for.
Geoffrey Sullivan said these goods were later sold back to his business, providing it with a line of credit over the intervening period. He said while it was not an everyday transaction, it was not necessarily an abnormal one.
Mr Sullivan said he took his orders from his uncle, who was a director of the import business as well as South Canterbury Finance.
The charges also include hiding risky loans, some of which were to companies unable to secure finance through major banks.
The court was told of a deal in 2003 in which an electrical appliances importer was given a cash injection by a company related to South Canterbury Finance after failing to obtain a loan from the National Bank.
Specialised Sales and Marketing former sales and marketing manager Murray Reid said the cash injection came via a company related to South Canterbury, Shark Wholesalers Ltd.
It involved his company selling stock including heaters to Shark Wholesalers, which were sold back to his firm further down the track.
The goods were moved to a separate part of a warehouse once the sale took place and then put back where they came from after they were sold back to Specialised.
