Fraud accused believed business would survive
A SUNSHINE COAST businessman at the centre of the Kleenmaid fraud trial pumped millions of dollars of his own money into the company because he thought it would survive, a defence team has argued.
Kleenmaid's former director Andrew Eric Young is facing an eight-week trial in the Brisbane District Court after pleading not guilty to 19 charges of fraud and insolvent trading.
Mr Young is accused of dishonestly gaining a $13 million loan from Westpac when the bleak future of the whitegoods company was already known.
During the second day of the trial, Mr Young's defence barrister Andrew Hoare said by April 2009, Mr Young had poured $17.4 million from his own pockets into the Orchard Group - Kleenmaid's main trading company.
"That is actual cash that Andrew Young has directly contributed into the Orchard Group at or around the time the Crown case says that the business is losing money and is potentially insolvent," Mr Hoare said.
Mr Hoare said this highlighted his client's "positive belief that Kleenmaid would survive" or that the company's financial woes were "only a temporary issue".
Kleenmaid and related companies closed in 2009, owing about $96million.
Prosecutor Lincoln Crowley, acting on behalf of the Commonwealth DPP, argued that Mr Young was aware of the "poor financial state" of the company.
"The defendant is getting monthly reports," Mr Crowley said.
" He's getting the cash flow updates showing there's no cash - he's getting those emails about the problems with supply, he's getting emails about creditors threatening legal action."
At least 55 witnesses will give evidence during the trial, including former Kleenmaid director Gary Armstrong, along with company employees, customers and ASIC officers.
The Crown's first key witness - Deloitte liquidator Richard Hughes - took to the stand on Tuesday.
Mr Hughes told the court of the company's dire financial situation when it went into administration on April 9, 2009.
"We reached the conclusion that all of the companies in the entire Kleenmaid group were insolvent on the 31st of March 2008," Mr Hughes said.
"It was pretty clear there was a very large balance sheet deficit across the group and specifically in Orchard KM."
Mr Young is also accused of asking staff members to withdraw $330,000 on his behalf from company accounts just two days before administrators took over the company.
The court heard that the money should have been used to pay staff members, but was instead transferred to an account that "directly or indirectly" benefited Mr Young.
"That money was due for payroll, it never got to payroll," Mr Crowley said.
"It never got to the workers, instead it went to that account associated with the defendant."
But Mr Hoare said that figure paled in comparison to the "significant funding" Mr Young regularly provided to the business.
"That sum was only a fraction of the moneys he paid from his own pocket into the business," he said.
The trial continues under Judge Brian Devereaux. - NewsRegional