Centro ex-CFO 'feels guilt'
CENTRO'S former chief financial officer, who suffered a breakdown during the latter part of 2007, has told a court he has "feelings of guilt" about what happened that year when a multibillion-dollar error in the group's financial statements shocked the market and sent the share price plunging.
CENTRO'S former chief financial officer, who suffered a breakdown during the latter part of 2007, has told a court he has "feelings of guilt" about what happened that year when a multibillion-dollar error in the group's financial statements shocked the market and sent the share price plunging.But under cross-examination in the Federal Court, Romano Nenna rejected suggestions that he had reconstructed a version of events to assuage his guilt about the accounting debacle.Under lengthy and at times testy cross-examination by lawyers representing Centro shareholders in a class action, Mr Nenna denied he was not functioning properly around August and September 2007 when the Centro group's 2006-07 accounts were being finalised.He admitted he was under stress and that he suffered some panic attacks and high anxiety in 2007.But Mr Nenna told the court this might have been due to "an accumulation" of issues he faced at the time, and not solely because he was trying to refinance the group's multibillion-dollar debt book before the end of the year."I had multiple other responsibilities," Mr Nenna said, explaining later that he was trying to renegotiate many different debt facilities with numerous lenders in Australia and the United States. "It was an accumulation of those [responsibilities] but yes, it [his refinancing concern] was a part of those."Mr Nenna is one of the key witnesses in a complex, multi-party class action being heard by Justice Michelle Gordon in the Federal Court.Two sets of Centro shareholders, represented by law firms Maurice Blackburn and Slater & Gordon, are suing Centro Properties and Centro Retail Trust over losses they claim they incurred when Centro in late 2007 and early 2008 revealed it had wrongly classified billions of dollars of short-term debt as long-term debt.Centro, however, has blamed its auditors, PricewaterhouseCoopers, for the flawed accounts. Centro claims PwC "botched" the 2006-07 audit and its work was hallmarked by incompetence, carelessness and a lack of supervision of inexperienced, recently graduated staff.PwC, in turn, is suing Centro. PwC claims Centro should have told the audit partners that the property group was under pressure from its bankers to repay its debt.Much of Mr Nenna's cross-examination yesterday focused on his negotiations with Centro's main lenders, including JPMorgan, Commonwealth Bank and Royal Bank of Scotland, and the group's relationships with its banks.Emails indicated that Mr Nenna was negotiating with various banks to have several of Centro's maturing loan facilities rolled over, and at the same time he was trying to extract extra finance from some lenders to repay others.The court heard Commonwealth Bank, then Centro's biggest lender, had insisted Centro reduce the total amount it owed CBA, and Royal Bank of Scotland had said it was unlikely to lend Centro any new funds.