Dishonesty plus Breach of Fiduciary Duties can Add up to Fraud

Published date01 March 1996
Date01 March 1996
AuthorJoanna Gray
Subject MatterAccounting & finance
Dishonesty plus Breach of Fiduciary Duties can
Add up to Fraud
Joanna Gray
Journal of Financial Crime Vol. 4 No. 1 Company Fraud
The Privy Council has added an interesting twist
to the developing jurisprudence of commercial
fraud in
Grant Adams
v The Queen,1 a recent appeal
from the Court of Appeal of New Zealand. The
judgment seems to suggest that the dividing line
between 'civil' wrongdoing (ie breaches of fidu-
ciary duty, company law obligations) and 'criminal'
wrongdoing (ie theft and fraud) is not an impene-
trable barrier.
The background to the appeal exhibits all the
characteristic complexity of a 'white collar crime'
webs of interconnected companies, trusts and
individuals spanning several jurisdictions, transac-
tions in moneys and securities employing several
currencies and much secrecy, to no obvious com-
mercial purpose. All the things that the criminal
process finds so difficult to distil down into a form
comprehensible to a jury, so it is worth pointing
out that the six-month trial at first instance in
New Zealand took place without a jury. Grant
Adams, the appellant, had been deputy chairman
of Equiticorp Holdings Ltd (EHL) and either
chairman or director of other companies in the
Equiticorp group. By 1989 the whole group was in
receivership and EHL shares were worthless.
Adams had been found guilty on two counts of
conspiracy to defraud the EHL group. The Court
of Appeal had upheld his conviction on the first
count and quashed his conviction under the
second ('Count 4' in the report of the case). The
conviction under the first count was, strictly speak-
ing, the only subject of the appeal to the Privy
Council but since they disagreed with the Court of
Appeal's reasoning in quashing the appellant's con-
Page 59

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