Dick Smith Class Action, Watch Live Coverage Here
Former directors, of the failed Dick Smith retail chain, who stand accused of lying over the performance of the retailer who was placed into liquidation with debts of $400 Million are this week facing a grilling in the Equity Division of the NSW Supreme Court.
Also facing cross examination by barristers representing class action shareholders is executives from Delloitte the former auditors for the failed retailer.
On Friday former Dick Smith executive Carl Bonham who was responsible for merchandising was cross examined over questionable invoices and stock levels as well as the value of goods that made up the questionable financial reports of the Company which shareholder claim were misleading and fraudulent.
On Wednesday former CEO Nick Aboud will be questioned as to whether he and other members of the executive team overstated the value of inventory and stock on the DSH’s balance sheet, while also overstating the reported rate and amount of gross profit and net profit and
overstating reported shareholders’ equity.
Claims have been made in statements obtained by ChannelNews that Dick Smith Holdings (DHS) asked suppliers to change invoices to reflect “higher prices” than what the goods were actually worth.
Swept up in the collapse is Deloitte the auditors to the failed retailer who now stand accused of making “false statements” and failing to reveal accurate information regarding the operations of Dick Smith in the Companies accounts.
Dick Smith executives are blaming Deloitte while Deloitte is blaming Dick Smith executives.
ChannelNews has obtained a copy of the Statement of Claim, which accuses Nicholas Abboud the former CEO and Mr Michael Thomas Potts the Companies CFO of misleading shareholders.
Justice Ball who is sitting alone will hear claims that DSH had a responsibility to keep written financial records that correctly recorded and explained its transactions (which included the Volume Rebates and the O&A Rebates) and financial position and performance, and that would enable true and fair financial statements to be prepared and audited.
It’s alleged that Abboud and Potts had not adequately considered the appropriate accounting treatment of the rebate practices and inventory held by Dick Smith, it’s also claimed that the directors failed to address whether the accounting treatment would give a true and fair view of DSH’s financial position and performance.
It’s also claimed that when Abboud authorised the issue and publication of the accounts to the market he should have reasonably known that the
statements, or dissemination of information, were false.