Feltex (FTX) - All over for shareholders

[Kees]

the rope is slowly being pulled around the neck of these directors.

http://www.stuff.co.nz/business/indu...of-proceedings

[thorel]

In the 1960's Feltex was in South Africa. My family had huge investments in the company. Feltex did something and I am not sure what it was but everyone lost everything. They closed the doors and ran away with all the money. I was surprised to see them trading on the exchange here. If it is the same company maybe the NZX should be liable. If they are the same people then they should all be put in a very low class prison. ( no windows, very little food, no light, basically lock-up and throw away the key). I would hate to think that the tax payer is funding their comforts in the cosy NZ prison, that everyone seems to try so hard to get into. They always seem to be fully booked.

[Steve]

I had forgotten that this was still happening...

[kura]

Saga update ...

"It was the accountants fault" : http://www.nzherald.co.nz/business/n...ectid=10637893 (yesterday)
[/url] (today)

Belg, this is the same John Hagen that was once the president of the NZ Accountants Society ? (Institute of Chartered Accountants of NZ) (ICANZ)

To me it seems a bit rich for the president of such an esteemed society, to say "don't blame me, I just followed what our dumb advisors told us, without applying any independant thought process of my own" ,particularly given his experience is in the area of "Corporate Finance"

Extract from something I found on John Hagen (Though most recent info has his directorship of Feltex deleted, Hmm funny how that can happen )

20 October 2005:

Hagen joins Feltex board

Recently retired Deloitte NZ chairman John Hagen was appointed to the Feltex Carpets Ltd board today.

Mr Hagen spent 24 years at Deloitte, 10 as chairman. He was a partner in the corporate finance area. He’s been president of the Institute of Chartered Accountants and was the inaugural chairman of the Accounting Standards Review Board. Other directorships include Datacom Group Ltd, Trustee Executors Ltd & the Auckland Regional Chambr of Commere & Industry Ltd, and formerly Gough Gough & Hamer Ltd. He’s a fellow of the Institute of Chartered Accountants, the Institute of Directors & the Arbitrators & Mediators Institute.

Mr Hagen fills a vacancy left by Joan Withers, who resigned when she was appointed chief executive of Fairfax NZ Ltd. The Feltex board will seek confirmation of Mr Hagen's appointment at the annual meeting on 1 December.

Please also note that this criminal prosecution has a "mere" maximum fine of $100,000 However a successful criminal prosecution will make it a lot simpler for liquidators/creditors to make a claim against these guys for a far larger civil type claim (ie reckless trading)

[beacon]

Please also note that this criminal prosecution has a "mere" maximum fine of $100,000 However a successful criminal prosecution will make it a lot simpler for liquidators/creditors to make a claim against these guys for a far larger civil type claim (ie reckless trading)

This has taken a long time coming. If they are held liable, as they should, it would be a good outcome. Baby steps, but will be a step closer to NZ capital markets finding a firmer footing...

[whatsup]

http://www.nzherald.co.nz/business/n...ectid=10639951

Friggin' un-believable! You borrow millions from a bank and no-one, not the accounts nor the directors, checks compliance? Case over as far as I'm concerned. Directors are guilty and accountants should be sued for gross incompetance!

Whats the betting that they get OFF with a slap of a wet bus ticket. Here in N Z the law (imho) is P!ss weak just no real culperibility over in the U S these guys would get 20 years (and frig the expense) and all other directors would sit up and notice---what did Brian Clegg get, from memory 1 years home detention , utter B S, and he was seen attending MASS for god sake, the N Z justice system IMHO is utterly devoid of justice!!!.

[Balance]

This is becoming farcical!

http://www.nzherald.co.nz/business/n...ectid=10641389

Is the directors sole defense that the accountants should have told them that they were not doing the jobs they were paid to do?

A valid defense nevertheless?

[moimoi]

and almost beyond farcical...

Former Feltex executive director Peter Thomas says he played no role in the decision to float the carpet company in 2004, despite his position as head of Credit Suisse First Boston’s private equity activities in Asia/Pacific at the time.

I was indeed surprised your honor when the firm that i was head of decided to float it....GET REAL.

[peat]

Even the judge appears incredulous at the defense
Judge Jan Doogue questioned Saunders on this: "Didn't your management slip up? You didn't join the dots in your own organisation. You'd have to concede that."
And the CFO couldn't see the 400 pound gorilla in the room either?
"Tolan [Feltex's chief financial officer] had a huge amount on his plate, I'm not making excuses, but there is a limit to what a CFO can do. He conceded there were mistakes made. The finance team was always a diligent and competent department. Why did they slip up this time? I go back to Ernst & Young," he [Saunders] said.

http://www.nzherald.co.nz/business/n...ectid=10641702

I may be out of turn and have limited information but fwiw I'm not really buying that as a defence either
Although that is an interesting article giving us some detailed information.
What they need to be able to do to substantiate their defence claim is to produce a report or possibly an email produced at the time where it states categorically that Ernst and & Young are being engaged to assist compliance with the NEW accounting regime of IFRS. To me those are material factors as to whether blame can be shifted. The onus is surely on the directors here.

From earlier
Ernst & Young partner Stuart Painter, said the company had conducted an interim review of Feltex's financial statements for the six-month period to December 31, 2005. The directors had adopted the international financial reporting standards for that period for the first time.
He said the change in reporting standards was part of a worldwide process.Painter said a review was different to an audit, and that the directors were responsible for the corporate governance of the company.

So its just a court-room blamefest really. Maybe they're all at fault to some degree.
Its still a failure of competency to not know you're in breach however a failure of competency isnt necessarily fraud.
The fines dont seem that large at 100k (and no jail) so can I take it that the charges arent of a fraudulent nature?

[Kees]

The fines dont seem that large at 100k (and no jail) so can I take it that the charges arent of a fraudulent nature?

That will come later its jail time for this lot in the next round.