Jock Anderson

It came as no surprise to CaseLoad to see the Lombard prosecution “deal” slip back into court this week.

After nearly 18 months of protesting their innocence, Lombard Financial Services director and chief executive of the Lombard Group Michael Reeves and fellow director Alan Beddie, who is also Lombard Group’s chief financial officer, pleaded guilty in Wellington district court to five charges laid under the Securities Act.

But they do not want to be convicted.

Lombard Financial Services, a subsidiary of Lombard Group, also pleaded guilty to five charges under the Securities Act.

In a deal with the Companies Office, which brought the long-running prosecution, a total of 40 charges laid in 2005 involving offer documents and advertising for two contributory mortgage schemes was reduced to 10.

In general terms Mr Reeves and Mr Beddie pleaded guilty to failing to provide information and misleading investors in contributory mortgage offers relating to Village Care New Plymouth and the Ballantyne Development Company and its Ballantyne Golf and Retirement Resort near Tauranga.

Former ministers of the Crown and Lombard directors Bill Jeffries (Labour) and Hugh Templeton (National) had similar charges against them withdrawn.

Mr Reeves, Mr Beddie and Lombard Financial Services each face fines up to $15,000 on each charge but the prosecution suggested a total fine of $30,000 for the company and $15,000 for each of the two executives would suffice.

Having heard defence lawyer Bruce Squire QC’s submission that convictions would be catastrophic for Mr Reeves and Mr Beddie and out of all proportion to the gravity of the offences, Judge David Ongley reserved his decision on sentencing.

The case has an interesting history, reaching court in July 2005.

Despite a strong attack on the prosecution case by Mr Squire and a call for the case to be thrown out, Judge Ongley found there was a case for all four accused to answer but in an unusual move agreed to let that finding be tested in the High Court before going any further.

Justice Ron Young heard argument in March before agreeing totally with Judge’s Ongley’s view that there was a case to answer.

Unhappy with Justice Young’s decision Lombard lawyers went back to the High Court in June to ask Justice Young for leave to appeal his rulings to the Court of Appeal.

Not unsurprisingly Justice Young refused leave to appeal, figuring the proper course was for the district court proceedings to be completed and then issues raised could be subject to appeal to the High Court.

Then came indications that guilty pleas would be entered before Christmas.

Comment: If CaseLoad were defending sound fellows of the jib-cut of Mr Reeves and Mr Beddie he would make something of a meal of the shame and unwarranted ignominy heaped upon them by a scurrilous Press. Don’t convict these chaps, CaseLoad would implore, because look, they are well-off enough to offer $15,000 to the City Mission to make the lot of those less fortunate a tad more palatable. A technical mistake was made. No-one lost any money. They’ve all learned from this and won’t do it again. That was then, this is now. Time to move on. Justice, spare them to win over investors another day. Something along those lines.

On the other hand, if CaseLoad was prosecuting and was satisfied convictions were appropriate, he might see things differently. Whatever else anyone says the buck stopped with Mr Reeves and Mr Beddie, who have now pleaded guilty to failing to provide information and misleading investors. That is surely serious enough. Investors give their money to and trust people like Mr Reeves and Mr Beddie to be straight and upfront. That’s why companies like Lombard Financial Services and the Lombard Group include among their directors ex-ministers of the Crown and gentlemen of honour.

They say to the investing public: “Not only can you trust us to do the decent thing at all times but we have the expertise and wisdom to safeguard your money.”

After all there are too many rogues in the finance game already.

That no-one lost any money in this affair might be seen as good luck. Not losing money might mitigate penalty, but should not avoid conviction.

Investors require protection from people who are either fools or worse.

Watch this space

Feedback on this story to jockanderson@xtra.co.nz