Radhika Oswal says the ANZ bank "had a gun at my head" after threatening she and her husband could be jailed for fraud and their children could become orphans.
Mrs Oswal said she did not want to be personally liable for almost $US1 billion in her husband Pankaj Oswal's debts but ended up with no choice after heated meetings with the bank in December 2009.
"There was no way out. I had a gun at my head," Mrs Oswal told the Victorian Supreme Court on Wednesday.
Mrs Oswal said then ANZ chief risk officer Chris Page told her she could also go to jail over her husband's fraud and the bank's group general counsel Bob Santamaria said her children could end up as orphans.
Mrs Oswal said during the Sunday meetings her lawyer Grant Pestell said she would not sign the guarantee.
"Mr Santamaria said to Grant do you realise that both of them could go to jail and their children could become orphans," Mrs Oswal told the court.
Mrs Oswal claims the bank pressured her into signing a guarantee over $US568 million in debts - after initially wanting her to be personally liable for almost $US1 billion - to prevent her husband going to jail for fraud over falsified security documents.
The court heard Mr Page and Mr Oswal were alone in a room at the beginning of the Sunday, December 20, meetings.
Mrs Oswal said her husband told her Mr Page was very angry and had said: "We must sign the documents. We bloody well sign the documents or there's going to be big trouble."
Mrs Oswal said lawyer Darren Greenham said he saw Mr Page with his arm around Mr Oswal's neck, towering over him, but straightened up when the lawyer walked in.
Mrs Oswal said her husband told her he had forged European security documents for loans for their Australian fertiliser business, which operated the Burrup ammonia plant in Western Australia.
Mrs Oswal said Mr Page told her there were people at the bank who believed she was involved all along, which she denied, and she too could go to jail.
She said she knew the personal guarantee with the ANZ, using her 35 per cent stake in parent company Burrup Holdings, was not in her commercial interests but she did in the end sign.
"I had to. There was no other way," she said.
"It was the only way to ensure safety for my husband and to not have receivers in the company and all its associated consequences.
"Pankaj would suffer humiliation. He would lose his business. He would be criminally prosecuted. He'd go to jail."
The Oswals fled Perth in December 2010, after the ANZ demanded the loans be repaid and appointed receivers to the fertiliser business.
Mrs Oswal said she was now completely exposed to the bank and the couple had the same fears as in 2009, including that Mr Oswal could go to jail.
"We left because we were that scared."
