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Feltex directors not guilty

Contributor:
Fuseworks Media
Fuseworks Media

Auckland, Aug 2 NZPA - Directors of failed manufacturer Feltex Carpets have been found not guilty of breaching financial reporting standards.

Five directors -- Peter Hunter, Peter Thomas, Michael Feeney, John Hagen and former chairman Tim Saunders -- were charged with failing to publish a breach of Feltex's banking covenants and not properly classifying its $A119.5 million ($NZ157m) ANZ Bank debt facility. They all denied the charges.

The directors were accused of either deliberately omitting or neglecting their duty to include the breach and bring their report into line with the newly introduced International Financial Reporting Standards (IFRS).

In Auckland District Court today Judge Jan Doogue found the five not guilty of all charges.

Counsel for the directors had argued that when the accounts were filed they believed the company met all the relevant standards and regulations.

Paul Davison QC, for Feeney and Thomas, said the prosecution had been reduced to "clutching at straws".

The men had done everything that reasonable and conscientious directors could have possibly been expected to do in compiling their accounts, most notably employing accounting firm Ernst & Young to review the company's report, he said.

The Crown argued the directors should have done more to ensure the statements were compliant and they should have read the standards themselves.

Feltex was floated on the New Zealand stock exchange in May 2004 and raised $254 million.

The company collapsed two years later.

The ANZ, which was owed $135 million, placed Feltex into receivership, and days later its assets were sold to rival firm Godfrey Hirst.

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