By Patrick Gower
Two former Justice Ministers are being taken to court by the Securities Commission for their role in a failed finance company.
Former National minister Sir Douglas Graham and former Labour minister Bill Jeffries face penalties of up to $500,000 each for misleading investors in Lombard Finance.
The Securities Commission is also continuing to investigate the laying of criminal charges.
Graham was trusted with setting New Zealand's laws as Justice Minister, as was Jeffries. They later traded on that trust to get people to put their money into Lombard.
Lombard collapsed, and now the two former ministers face the courts.
The Securities Commission began legal action today to get $500,000 from them for misleading investors like Claire Jonas, who banked her life savings on their names.
"It doesn't matter how many Sirs or titles are behind their names," she says. "It doesn't mean a thing to me now."
It is also pursuing directors Laurie Bryant and Michael Reeves, who indulged his love of European motor cars - like the Maserati - while on the Lombard payroll.
"I would like to see them give up their swanky house and their swanky boats, and their swanky racehorse and be made to sell the lot, and all that money raised be given to the investors," says Ms Jonas.
And that's what the Securities Commission wants to do - use the penalties to pay back investors, some who were due to get nothing back after Lombard went under owing $127 million to 4400 of them.
It says Lombard's statements about its financial position during 2007 were false,
Graham would not appear on camera, but said: "I must record my dismay that it has taken two-and-a-half years to make allegations, and very disappointing the commission has never raised with me any concerns it had over the prospectus prior to filing proceedings."
The hefty penalties, liable through a civil case, may not be the only court action against Graham and the directors. His own statement mentioned criminal charges, although the Securities Commission would only say investigations are ongoing.
Such charges can carry a jail term of up to five years.