False accounting charge against former South Canterbury Finance chief financial officer dropped

The Serious Fraud Office (SFO) has withdrawn a charge of false accounting against the ex-chief financial officer of South Canterbury Finance (SCF) Graeme Brown.

SFO Acting CEO Simon McArley said the decision to withdraw the charge against Brown, the only one he was facing, followed submissions received on behalf of Brown, reassessment of the evidence held and additional witness interviews.

“I am acutely conscious that we must continually assess whether the charges we are prosecuting remain both fair and in the public interest. In this case a combination of factors, including clarification of existing evidence, meant that I was no longer satisfied that the available evidence supported this charge to the standard required," McArley said.

The trial of the remaining four defendants has been set down for March 12 next year. Brown may be called as a witness.

In a separate statement issued in the name of Brown's barrister Richard Raymond, Raymond said Brown had always denied any wrong doing at SCF, and in particular the allegation of false accounting.

"The Crown’s withdrawal of the charge, following frank discussions and disclosure to the SFO and its counsel, totally vindicates Mr Brown’s position," Raymond said.

"Mr Brown said that the last three years of investigation, and then the prosecution, has had a very profound impact on his personal and professional life."

The statement quoted Brown saying he wanted to thank the people who saw beyond the charge, and continued to believe in him and what he achieved during his time at SCF.

"As other charges remain before the Court, and Mr Brown may yet be called as a witness, it is inappropriate for him to comment further," Raymond added.

In December 2011 the SFO laid 21 charges against five men, including Brown, involved in failed lender SCF's affairs in what it has alleged is a $1.7 billion fraud.

The charges came after a 12 month investigation. The alleged offences under the Crimes Act 1961 include theft by a person in a special relationship; obtaining by deception; false statements by the promoter of a company; and false accounting. The offences carry maximum penalties of between seven and 10 years’ imprisonment.

The other four men still facing charges are former SCF CEO Lachie McLeod, accountant Terry Hutton, lawyer Ed Sullivan and retired accountant Bob White.

SCF was tipped into receivership on August 31, 2010 triggering a taxpayer funded bailout of almost $2 billion under the Crown retail deposit guarantee scheme.

SCF's receiver, McGrathNicol, said in its last receiver's report it had recovered $774.6 million, leaving taxpayers with a shortfall of about $805 million.