Bridgecorp CFO guilty plea concludes SFO investigation

Published

Bridgecorp CFO guilty plea concludes SFO investigation

The former Chief Financial Controller of Bridgecorp Limited (Bridgecorp), Cornelis Robert Roest (56) has today pleaded guilty in the Auckland District Court to one Crimes Act charge and two Companies Act charges brought against him by the Serious Fraud Office (SFO). He also entered guilty pleas to charges brought by the Inland Revenue Department (IRD) relating to misapplication of PAYE deductions.

For this offending Mr Roest received an uplift of three months on his existing sentence of imprisonment of six and a half years, imposed in May, in respect of Financial Markets Authority (FMA) convictions of various offences under the Securities Act 1978, Crimes Act 1961, and Companies Act 1993.

Mr Roest is currently appealing both his FMA conviction and sentence.

SFO's charges related to Mr Roest's role in the fraudulent acquisition and financing of a luxury launch, the ‘Medici', which was purchased using Bridgecorp funds totalling $3.5 million.

SFO Chief Executive, Adam Feeley, said it was satisfying to bring another major finance company investigation to a successful conclusion.

"The public have every reason to be cautious about giving trust and confidence to a sector that caused such considerable losses. However, these and other recent convictions will hopefully help rebuild their confidence that offenders will ultimately be held to account" he said.

Bridgecorp went into receivership in July 2007 and an investigation under the Serious Fraud Office Act was commenced on 1 May 2008.

Charges under the Crimes Act were laid in May 2010 against Mr Roest and former Managing Director for Bridgecorp, Rodney Michael Petricevic (63).

ENDS

For further information

Andrea Linton
Serious Fraud Office
027 075 4550

Note to editors

Background to investigation

The principle activity of Bridgecorp Limited was the sourcing of funds, and lending, in relation to property financing transactions which were primarily funded through issuing secured debentures to members of the public.

When Bridgecorp went into receivership in July 2007, approximately $459 million of secured debenture stock was outstanding to approximately 14,500 debenture holders.

During the timeframe relevant to the charges, Cornelis Robert Roest was the Chief Financial Controller and Secretary to the Board of Directors for Bridgecorp. He is a former Chartered Accountant.

His associate, Rodney Michael Petricevic was the former Managing Director and majority shareholder in Bridgecorp who was also convicted on SFO charges in July.

Purchase of the ‘Medici'
Between March and September 2002, Bridgecorp funds totalling $1.8 million were used to acquire a luxury launch, the ‘Medici'.

Ownership of the Medici vested in Poseidon Limited (Poseidon), a company wholly owned and directed by Mr Petricevic.

In December 2002, the fraudulent use of a document provided financing totalling $1.6 million to Poseidon.

The SFO alleges that Mr Roest and Mr Petricevic together ensured that Bridgecorp paid for the acquisition and operating costs of the Medici along with providing security for a loan to Poseidon.

The acquisition and financing of the Medici were misreported in the quarter ending 31 December 2002 financial statement and director's certificate to the Trustee.

Crimes Act charges

Section 220 Theft by person in special relationship
(1) This section applies to any person who has received or is in possession of, or has control over, any property on terms or in circumstances that the person knows require the person-
(a) to account to any other person for the property, or for any proceeds arising from the property; or
(b) to deal with the property, or any proceeds arising from the property, in accordance with the requirements of any other person.

(2) Every one to whom subsection (1) applies commits theft who intentionally fails to account to the other person as so required or intentionally deals with the property, or any proceeds of the property, otherwise than in accordance with those requirements.

(3) This section applies whether or not the person was required to deliver over the identical property received or in the person's possession or control.

(4) For the purposes of subsection (1), it is a question of law whether the circumstances required any person to account or to act in accordance with any requirements.

Section 227 Punishment of theft (Pre-2003 Amendments)
Every one who commits theft is liable to the following punishment:
(a) To imprisonment for a term not exceeding 7 years if the theft is one to which section 222 (which relates to theft by a person required to account) or section 223 (which relates to theft by an attorney) or section 224 (which relates to theft by misappropriation) of this Act applies:
(b) To imprisonment for a term not exceeding 7 years if the object stolen is-
 (i) A testamentary instrument, whether it is stolen during the testator's life or after his death:
 (ii) Anything stolen by a clerk or servant which belongs to or is in the possession of his employer:
 (iii) Anything in the possession of the offender as a clerk or servant, or as an officer of the Government or of any local authority or public body, or as a constable:
 (iv) Anything stolen from the person of another:
 (v) Anything stolen from a dwellinghouse:
 (vi) - (viii) Repealed.
 [(ba) To imprisonment for a term not exceeding 7 years if the object stolen exceeds in value the sum of $300:]
(c) To imprisonment for a term not exceeding one year if the theft is one for which no other punishment is prescribed by this Act, and if the object stolen exceeds in value the sum of [$100]:
(d) To imprisonment for a term not exceeding 3 months if the theft is one for which no other punishment is prescribed by this Act, and if the object stolen does not exceed in value the sum of [$100].

Companies Act charges

Section 377 False statements
(1) Every person who, with respect to a document required by or for the purposes of this Act,-
(a) makes, or authorises the making of, a statement in it that is false or misleading in a material particular knowing it to be false or misleading; or
(b) omits, or authorises the omission from it of, any matter knowing that the omission makes the document false or misleading in a material particular-
commits an offence, and is liable on conviction to the penalties set out in section 373(4).

(2) Every director or employee of a company who makes or furnishes, or authorises or permits the making or furnishing of, a statement or report that relates to the affairs of the company and that is false or misleading in a material particular, to-
(a) a director, employee, auditor, shareholder, debenture holder, or trustee for debenture holders of the company; or
(b) a liquidator, liquidation committee, or receiver or manager of property of the company; or
(c) if the company is a subsidiary, a director, employee, or auditor of its holding company; or
(d) a stock exchange or an officer of a stock exchange,-
knowing it to be false or misleading, commits an offence, and is liable on conviction to the penalties set out in section 373(4).

(3) For the purposes of this section, a person who voted in favour of the making of a statement at a meeting is deemed to have authorised the making of the statement.

Role of the SFO

The Serious Fraud Office (SFO) was established in 1990 under the Serious Fraud Office Act in response to the collapse of financial markets in New Zealand at that time.

The SFO operates three investigative teams:

  • Fraud Detection & Intelligence;
  • Financial Markets & Corporate Fraud; and
  • Fraud & Corruption.
  • The SFO operates under two sets of investigative powers.

Part I of the SFO Act provides that it may act where the Director "has reason to suspect that an investigation into the affairs of any person may disclose serious or complex fraud."

Part II of the SFO Act provides the SFO with more extensive powers where: "...the Director has reasonable grounds to believe that an offence involving serious or complex fraud may have been committed..."

The SFO's Annual Report 2011 sets out its achievements for the past year, while the Statement of Intent 2012-2015 sets out the SFO's three year strategic goals and performance standards. Both are available online at: www.sfo.govt.nz