Lynch didn't speak with Stewart before payout, says ATL Group executive
A senior executive at the ATL Group has given evidence that the former chairman of its pension scheme, Patrick Lynch, admitted to ATL boss Gordon 'Butch' Stewart that they never discussed the 2007 distribution of the fund's surplus.
Chief financial officer at the ATL Group, David Davies, testified yesterday that Lynch's admission came during a 2010 meeting Stewart called after the findings of an interim report from a 2007 comprehensive review of the pension fund were communicated to him.
Lynch, former ATL Pension Fund general manager; Catherine Barber and Dr Jeffrey Pyne, the managing director of Stewart's holding company Gorstew Limited, are on trial for distributing more than $1.6 billion to members of the scheme without consent and using forged letters to justify the payouts.
Davies, who said he was present at the December 15, 2010, meeting, testified that Stewart asked Lynch if he discussed the distribution of the pension surplus with him.
"Mr Lynch responded to Mr Stewart saying no," the ATL executive recalled.
NOT AWARE CONSENT NEEDED
He said Stewart then asked Lynch if he was aware that the fund's trust deed required the founder's approval for the distribution of surplus.
"Mr Lynch replied that he was not aware that the trust deed required the founder's consent," Davies said.
He said Lynch continued, telling Stewart "if that was so, it meant that the trustees acted ultra vires".
"When Mr Lynch spoke of ultra vires, did Mr Stewart respond?" asked prosecuting attorney Gayle Nelson, who is leading Davies through his testimony.
"He indicated that the distribution of these funds to active members' accounts was unauthorised and that he wished these distributions reversed," Davies testified.
"Did he (Stewart) say why?" Nelson continued.
"He further stated that if he had been asked to consent to these distributions, he would not have consented because he would rather use those funds to increase the existing benefits to pensioners who had retired and who had helped him build a successful group of companies and are suffering from the ravages of inflation and the devalued dollar," Davies testified.
He said the following day Stewart called a follow-up meeting "to ascertain the status of what was happening".
Davies said he and other ATL executives attended the meeting.
The ATL executive said Stewart summoned Barber to join the meeting where she was asked whether she was aware that the pension fund's trust deed "clearly states that distribution of surplus requires the consent of the founder, Gorstew Limited".
"Did she respond?" Nelson asked.
"She said she was aware that consent was required," Davies responded.
He said Stewart asked Barber why she didn't ask for his consent and she replied saying, "she does have the consent of Gorstew Limited through a letter which was signed by the managing director".
Davies said Stewart then directed her to retrieve the letter and return to his office.
"She returned quickly with a file that was very thick and she opened the file and placed it on Mr Stewart's desk," Davies recalled.
He said the file contained four letters that were on Gorstew letterheads addressed to the pension fund's administrative manager "purporting to give consent by Gorstew in respect of pension increases and distribution of surplus".
Davies said Stewart asked why this was not brought to his attention at the first meeting.
"Mr Lynch replied that if he had told Mr Stewart about the letters, it would only aggravate him," he testified.
Davies will continue giving evidence today.