Andrew Young cross examined his former business partner Gary Armstrong in court during his fraud trial.
Andrew Young cross examined his former business partner Gary Armstrong in court during his fraud trial.

Kleenmaid trial: Young cross-examines former partner

A BUSINESSMAN on trial for fraud and insolvent trading has cross-examined a former director of his collapsed whitegoods company Kleenmaid.

Andrew Young, who is defending himself against 19 fraud and insolvency charges, questioned his former business partner Gary Armstrong during the seventh week of the lengthy trial in Brisbane District Court on Wednesday.

“Can I call you Gary?” Mr Young asked at the start of questioning.

Mr Young is accused of dishonestly gaining a $13 million loan from Westpac and operating the company while the precarious financial state of Kleenmaid was known.

He has pleaded not guilty to all the charges.

Mr Young, who dropped his legal team halfway through the trial, put to Mr Armstrong that they never had a conversation about the dire position of Orchard – one of two business groups within Kleenmaid.

“So it’s fair to say I never discussed with you specifically anything described as the precarious financial position of the Orchard group?” Mr Young asked.

“That’s true, yes,” Mr Armstrong replied.

The court heard that Mr Young also never “agreed nor approved” Mr Armstrong making a loan application to Westpac.

During evidence three weeks ago, Mr Armstrong told the court that Mr Young and another former director Bradley Young refused to give Westpac financial records when Edis (Kleenmaid’s spare parts offshoot) was applying for the $13 million loan in 2007.

“I relayed the (bank’s) request to both Bradley and Andrew and both of them said ‘No’,” Mr Armstrong said.

During cross-examination, the court heard Mr Young never discussed that Mr Armstrong would “not disclose the full relationship of the agreement between Edis and Orchard”.

Mr Armstrong told the court that the motivations for the 2007 restructure of Kleenmaid were primarily a business opportunity, but also to give Mr Young a chance to step away from the business after some health issues.

Mr Young made it clear that Edis was not acquired by Kleenmaid but operated under a licensing agreement, meaning “one company renting a brand from another company”.

While Mr Armstrong was hesitant to use the term “arm’s length” to describe the relationship between Edis and Kleenmaid, he agreed that they were independent corporate entities, despite sharing the same premises.

The Crown has alleged that Mr Young withheld from the bank the financial struggles of the Orchard Group and how intertwined it was with Edis.

Kleenmaid had about 100 staff members at the company’s head office in Maroochydore and 300 contractors and franchisees when administrators took over in 2009 with it owing nearly $100 million.

The trial continues under Judge Brian Devereaux. – NewsRegional