Former Gunns chief executive Greg L'Estrange has described the fallen timber giant's internal company processes as a compliance nightmare.
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In his first comment since administrators and receivers were called in last week and he was sacked, Mr L'Estrange told a court today his hardest task as chief executive was getting proper processes in place. "It's not a company with a culture of complying with policies,'' Mr L'Estrange said.
"Transparency was the most difficult part of my job.'' One weakness, he told the Launceston magistrates' court, was in the monthly management report to the board, reporting on the state of the company's finances.
"They had no standard forward forecasting methodology,'' Mr L'Estrange said.
And although continuous disclosure policies adopted by Gunns obliged them to hold regular meetings of senior management, Mr L'Estrange said: "There wasn't a senior management meeting in the organisation.''
He said that after he became chief executive in June 2009, he bought one tranche of Gunns shares but did not obtain board approval, as was stated on the company's share trading policy.
"Is it the case that you weren't aware of the existence of a share trading policy?'' said Philip Priest, QC, counsel for former Gunns chairman John Gay. "Correct'' said Mr L'Estrange.
He was being cross-examined by Mr Priest at a pre-trial hearing in the case against Mr Gay, who has pleaded not guilty to two insider trading charges over the sales of $3 million of shares in December 2009.
Mr L'Estrange corrected a series of numerical errors in internal Gunns financial documents tendered in the case.
These included the key October 2009 management report that Mr Priest said provided the foundation of charges against Mr Gay.
Mr L'Estrange also agreed that failure to obtain finance for Gunns planned $2.2 billion pulp mill was central to the company's fall.
In compliance with continuous disclosure regulations, he said the Gunns board tested at the six month audited accounts where the mill was likely to proceed.
"The only time we formed the view it was unlikely to happen was at the June 2012 accounts.''
Mr Priest: "Until June 2012 you were still optimistic you would get finance?''
Mr L'Estrange: "Correct.''
Mr Priest: "Gunns would still be a going concern making money for its shareholders?''
Mr L"Estrange: "I wouldn't have put in the last three years of my life if I didn't believe that.''
The hearing is continuing.
