Only one of the three South Canterbury Finance directors facing fraud charges was found guilty yesterday in New Zealand's biggest fraud trial.Edward Oral Sullivan was found guilty of making false statements in prospectuses, but Justice Paul Heath in the Timaru High Court found fellow directors Lachie McLeod and Robert White not guilty of similar charges and a larger allegation of fraud against the Government.South Canterbury Finance collapsed in August 2010 owing NZ$1.6 billion, forcing the Government to pay out depositors and bond holders because the property and consumer loan financier was part of New Zealand's deposit insurance scheme.The Serious Fraud Office alleged that the directors had fraudulently obtained entry to the Government deposit guarantee scheme using transactions worth NZ$1.6 billion that were linked to undisclosed related parties.Eventually the Government was only able to recover NZ$800 million from the sale of South Canterbury's assets, leaving the Government close to NZ$1 billion out of pocket, including interest costs.However, Justice Heath only found Sullivan guilty of five counts of making false statements to investors other than the Government in prospectuses. Justice Heath did not accept the Government's allegation that there was "culture of concealment" operating inside South Canterbury Finance from 2006 to 2010."Rather than a culture of concealment, I have concluded that there were two market phenomena which had a significant impact on the way in which South  Canterbury was governed and managed over the period covered by the alleged offending," Justice Heath said.Firstly, South Canterbury's corporate governance was inadequate to deal with its rapid growth in deposits to almost NZ$2 billion, largely due to the influence of the now deceased company chairman and controlling shareholder Allan Hubbard, who ran it more like a closely held company than a public institution.Secondly, South Canterbury had a "less than orthodox" approach to debt impairment, Justice Heath said, referring to Hubbard's practice of using related companies to buy back loans at valuations set by Hubbard. The 83-year old Hubbard died in a car crash in September 2011, well before charges were laid.Serious Fraud Office director Julie Read said she was disappointed with the decision, but satisfied there was sufficient evidence to launch the prosecution. Sullivan is due to be sentenced on December 12 and faces a possible jail sentence, although Justice Heath asked for a report on home detention options.National Australia Bank's BNZ and Commonwealth Bank of Australia were mentioned in the five-month trial as the last banks to provide loan facilities to South Canterbury Finance. Eventually the facilities were withdrawn in August 2009, but not before claims were made in a prospectus about them being in place when there was some doubt about the facilities. ANZ's National Bank quietly withdrew its loan facility with South Canterbury well before 2008.The collapse of South Canterbury Finance dominated New Zealand's financial markets through 2010 and 2011 leading up to the laying of charges and Hubbard's death. The size of the collapse was comparable to that of Lehman Brothers in the United States, relative to the sizes of the