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High Court throws out Bridgecorp chairman's appeal

Thursday 2nd September 2010

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The High Court in Wellington threw out an appeal by Bruce Davidson, the former chairman of failed finance company Bridgecorp, to have his directorship ban lifted.

The Bridgecorp group of companies collapsed in mid-2007 owning investors in its debt securities an estimated $486 million.

At the time of the collapse Bruce Davidson served as a director on six of the companies in the group, including the parent Bridgecorp Holdings which he chaired, and two subsidiaries Bridgecorp and Bridgecorp Investments.

Davidson was banned from being a director, promoter or manager of a company for 2 1/2 years from December 1, last year.

The Serious Fraud Office later laid criminal charges involving $5.24 million against Bridgecorp’s managing director Rod Petricevic and finance director Rob Roest, alleging for buying luxury vessel Medici using Bridgecorp's funds; and illegally receiving payment worth $1.2 million using investors' funds.

Davidson appealed his ban on the grounds that he had no means of discovering the dishonest transactions by Petricevic and Roest, and as a commercial lawyer relied on managers and fellow directors for financial matters.

He appealed on the grounds that the Registrar of Companies should only have imposed the ban on him after the criminal case against Petricevic and Roest had been settled.

The appeal was overturned by Justice Forrest Miller who found that Davidson was required to have a level of financial understanding in his role as a director.

Miller also ruled that the ban criminal cases were separate processes and that no error of process had occurred.

Miller said that while he accepted that Davidson no longer posed a threat to the public, the ban served as a means of “general deterrence”.

“Davison’s lapses point to a failure to appreciate the nature and extent of his responsibilities and his excuses point to a need to set standard that require rather more of a director than mere honesty,” said Miller.

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