Last year’s jailing of two directors of a finance company had a chilling effect on boardrooms, Serious Fraud Office head Adam Feeley told MPs.
Two directors of failed finance company Five Star were jailed in December for more than two years for misleading investors, some of whom lost millions. [Both have also been banned for five years from directing a company].
Former managing director Nicholas George Kirk was sentenced to two years and eight months in prison and former director Marcus Arthur MacDonald to two years and three months.
Mr Feeley told Parliament’s law and order select committee that jail was a strong deterrent,
“It really works with white-collar criminals. They don’t like going to jail,” he said.
“We had … the first imprisonment sentence for a finance company director. The level of consternation among company directors as a result of that was palpable.”
He said many who raised concerns were not doing anything wrong but feared potential action.
“There is no doubt that even one imprisonment sentence of a finance company director had quite a chilling effect on the corporate boardroom.”
Police Minister Judith Collins encouraged the Serious Fraud Office’s aproach. “This could be someone who’s had the right club memberships, the right social networks, going to jail for fraud.”
The conviction not only deterred offending, but encouraged people to approach authorities with concerns.
“That’s a fantastic deterrence.”
The Five Star directors were jailed after they admitted charges of theft by a person in special relationship, laid by the office.
They also admitted charges laid by the Economic Development Ministry of making false statements in an ad or registered prospectus, making false or misleading statements, and 36 charges over Securities Act breaches,
The offending took place betwen 2005 and 2007, during which time $54 million was invested by members of the public, only $12m of which has been recovered.
The Dominion Post 16 June 2011, C3.