Miscarriage of justice, Lombard company directors say on appeal

The directors of failed Lombard Finance and Investments say they suffered a miscarriage of justice and that the verdicts against them were wrong in law or fact.

Lombard chairman Sir Douglas Graham, along with fellow former justice minister Bill Jeffries, Lawrence Bryant and Michael Reeves, were found guilty of making misleading statements in documents seeking money from the public between December 2007 and April 2008, when Lombard was put into receivership, owing $111 million to about 3600 unsecured investors.

Reeves, Lombard’s founder and chief executive, said in his notice to appeal that Justice Dobson set the threshold of liability for directors too low. That had led to the act being applied in ‘‘such a way as to criminalise directors who dis- charge their fundamental duty to act honestly, responsibly, prudently and in good faith’’. Reeves said that while Justice Dobson agreed the directors had acted honestly and without intent to mislead investors, they were guilty of a ‘‘material misjudgment’’.

During sentencing Justice Dobson said the men’s decision not to disclose pressure on Lombard’s cashflow was not one they could reasonably have come to.

The Financial Markets Authority has appealed the sentences, which range from 300 hours of community work and $100,000 of reparations for Graham and Bryant, to 400 hours’ community work for Jeffries and Reeves. Justice Dobson said the offending fell well short of that in other failed finance firms and jail terms were unwarranted.