Former CFO 'stressed' when debt error was made
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 when a multibilliondollar 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 when a multibilliondollar 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 he had reconstructed a version of events to assuage his guilt about the accounting debacle.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 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 debt book before the end of the year."I had multiple other responsibilities," Mr Nenna said, explaining later that he was trying renegotiate many different debt facilities with numerous lenders in Australia and the US. "It was an accumulation of those [responsibilities] but, yes, it [his refinancing concerns] was a part of those."Mr Nenna is one of the key witnesses in a complex 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 has blamed its auditors, PricewaterhouseCoopers, for the flawed accounts. Centro claims PwC "botched" the 2006-07 audit.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.Mr Nenna's cross-examination 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.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free