The Allan Hubbard supporters
August 27th, 2010 at 9:23 am by David FarrarI have previously blogged my hope that Allan Hubbard will be found to have done nothing wrong. From all accounts he is a wonderful New Zealander, who has done much good and has the best of intentions.
However that does not mean that he, or his companies, are exempt from the law. And indeed there are some problems to be accounted for, as reported by the Herald:
About 300 investors in Hubbard Management Funds (HMF) have been told by statutory managers that the reported value of their investments at March 31 was overstated by at least 25 percent.
In their second report, statutory managers Richard Simpson and Trevor Thornton of Grant Thornton New Zealand also warned today that investors in another company operated by Timaru businessman Allan Hubbard, Aorangi Securities Ltd, may suffer a loss in their investments.
This indicates to me the legal process should continue until there is a clear resolution. But one group of his supporters has been getting very excited. There is a bit of a split in his supporters. Some want to engage a professional public law firm to engage on their behalf (which seems sensible), while another group wants to run full-page newspaper adverts. And what do they want the ads to say:
The idea that has been put forth is to run half or full page newspaper advertisement’s in the NZ Herald, the Dominon Post, The Christchurch Press, and the Otago Daily Times, in the form of an open letter to the Prime Minister, demanding the cessation of statutory management and the removal of the SFO from this situation.
This is probably the most appalling idea I have ever seen. A group of citizens saying we want the Prime Minister to interfere in a criminal investigation and to try and call the SFO off. This is in fact a call for corruption – what else can you call it – to have political pressure decide who does or does not get investigated by the SFO,.
The group seems to have had some negative feedback to their plans, and are now talking slightly different ads. But it is clear to me their blind loyalty to Allan Hubbard has suspended their facility for clear thought and reason.
As I said, I hope Allan Hubbard is found to have done nothing wrong, but they are decisions for independent authorities, and not something that should be decided by newspaper advertisements.
August 27th, 2010 at 9:39 am
Have no idea who this bloke is. Have never had any dealing with his companies.
As a dispassionate observer of this situation:
1) A lot of folk like this man.
2) He has helped Finance a lot of business’s in NZ.
3) His track record has been very good.
4) Investments made by folk have been realistic in terms of interest cover.
5) All of the above have mostly depended on his largesse with large sums of Capital
Like a true socialist, it is all great until you run out of other peoples money. I do believe he has been caught out by exceptional
World Financial circumstances. I also believe he is NOTHING like the other SCUMBAG Finance Company operators caught with huge holes in their Balance Sheets, but with ‘convenient’, yet non trust compliant related party loans.
Vote:August 27th, 2010 at 9:44 am
Hubbard received a lot of support after the initial investigation was announced.
I wonder, if people will be so supportive when they start losing their life savings.
Given the interconnectivity and reported lack of documentation of these Hubbard entities, you’d have to have fears for the granddaddy South Canterbury Finance.
Doesn’t have a good look. If I were a SCF investor, I’d be withdrawing all funds ASAP.
Quite sad.
Vote:August 27th, 2010 at 9:49 am
I am un-affected by the Hubbard/South Canterbury situation, but it seems to me that the disquiet among investors was caused by the manner in which the alacrity with which the powers that be jumped upon Hubbard a man of high repute, compared with their seeming reluctance to investigate the likes of Hanover and the manner in which their principals rewarded themselves before impoverishing their company. Those principals then flamboyantly disporting themselves to the chagrin of their ruined investors. Conversely it seemed that the action against Hubbard may have been motivated by a situation where the brother of a member of the Commerce Commission had a loan foreclosed by one of the Hubbard Companies. Hubbard still seems on the face of it to a victim of timing and while his liabilities may presently exceed assets in some funds the fact remains he has never reneged on an obligation. Perhaps without this intervention he never would have.
Vote:August 27th, 2010 at 9:50 am
Agree, everyone should let the SFO complete its investigation.
Vote:August 27th, 2010 at 10:12 am
“Hubbard still seems on the face of it to a victim of timing and while his liabilities may presently exceed assets in some funds the fact remains he has never reneged on an obligation.”
Neither did Maddof. Untill he did, that is.
Vote:August 27th, 2010 at 10:14 am
Only question is why they didn’t jump on houchy and Wouchy as quick. They could well have jumped on the Rugby Legends as well.
Nah Helen was in charge for while and when things changed , well you don’t dump on your mates do you?
Vote:August 27th, 2010 at 10:16 am
I see my HMF investment is worth 25% less (“at least”). That isn’t as bad as Bluechip, Hanover etc. Real estate is falling but thanks to Harcourts selling “products” in Shanghai (etc Etc) it is getting harder to find a nice spot where you don’t have to worry about unruly students with loud stereos or a town house blocking the sun on the back porch.
Vote:August 27th, 2010 at 10:19 am
backster – yes, perhaps. The same applied to Bridgecorp, Hanover, etc, etc. These companies at least on the surface had complied with legal requirements concerning prospectuses, investor statements, etc. Thus there was no ‘case’ for statutory management once the trustees put in receivers/ liquidators.
In Alan Hubbard’s case, an investor squealed to the authorities about lack of a prospectus, etc, and an initial investigation showed something was fishy, sufficiently so for the authorities to recommend to the Minister to put him and his organisations under statutory management.
OK his companies (unlike Bridgecorp) may have been meeting interest and repayments out of new and rolled over investments, but if investors knew that the companies were technically insolvent at the time of investment – they would invest elsewhere.
Another thing – if records had been properly kept, the loan book regularly reviewed, Alan able to pledge any apparent shortfall, etc, the Statutory Managers would have been out in a week.
As for asking the Prime Minister to tell the SFO to lay off would be like asking the police to lay off the pharmacist who had the misfortune of an intruder dying in his shop. In that case I am sure that the police and Crown Law would want to resolve the pharmacist’s situation as soon as possible (from what I have read, I doubt he will be charged with anything).
Vote:August 27th, 2010 at 10:26 am
I was told a while ago the SFO would find a minor fault to justify their investigation.
A pity they had to do so through the slime.
Still, beats having to admit it is the work of one vindictive member of the hierarchy.
Vote:August 27th, 2010 at 10:49 am
I’m not fully up with the situation, but I did see part of an item on the news a while back.
It seems that Hubbard organised his entire operation using paper records. Because of this, he wasn’t able to bring out all the paperwork in time.
At the time, I thought that proved he had bought this on himself. If you can’t organise your affairs so that statutory bodies can get reasonable paperwork on demand, then you have no right to complain. Now it looks strongly like that was simply an excuse.
Either way, he hasn’t been running a tight ship.
Vote:August 27th, 2010 at 10:55 am
Surely within the margin-of-error for investments in the current climate? Quick, what’s your house worth? Accuracy +/- 2% please.
Vote:August 27th, 2010 at 11:08 am
“Surely within the margin-of-error for investments in the current climate?”
From the report;
“The reason for this is that some of those statements included investments and cash balances, which did not exist.”
WHICH DID NOT EXIST!
Also in the report;
“There are also likely to have been further losses in value in the fund since 31 March 2010 due to the weakness in the markets over that period.”
The 25% doesnt actually include the most recent downturn.
Vote:August 27th, 2010 at 11:21 am
OK thanks, I didn’t read the report as you can tell. I was just responding to the notion that investments can be valued with any accuracy. Particularly in the current climate. The NZX tells me my F&P shares are only worth 50 cents, but I’m hoping they’re wrong by a few 100%.
Vote:August 27th, 2010 at 11:26 am
This story on Hubbard by Macfie in the Listener may be relevant (link below).
I think the comment by High Court judge Smellie (is he retired now?) is interesting. I think the judge is the father of commentator/journalist Patrick Smellie.
http://www.listener.co.nz/issue/3654/features/15459/a_south_canterbury_tale.html
Vote:August 27th, 2010 at 11:38 am
There is a story on-line at the NBR which suggests that the Hubbard SCF picture is not good.
Vote:August 27th, 2010 at 11:40 am
Hopefully the government wont put the Kiwisaverfund managers under the microscope as even guruth morgans fund has some serious lacklustre facets due to fees and the downturn.
Vote:Just putting the statuary managers into Mr Hubbards personal funds will have created strains and as the comment above promoted for investors to pull their funds out, makes for a much bigger hole when the horses are frightened..
I am amazed at the alacrity the powers were in taking action against this elderly christian man suffering kidney failure and his wife when so many other charlatans have continued on their merry way with other peoples money funding their obscene displays of wealth seamingly inhindered.
I understood that SCF was in the govt guarantee scheme and Mr Hubbard has made personal guarantees for Aorangi finance and other personal finance entities. Meanwhile Petrovic, Hotchin, Watson et el are really being held to account Yeah right. But of course they were legal wern’t they, hang on.
New Zealand finance laws are still firmly in the wild west mode and I thought we had sorted that after 1987 but that is a mirage and as for the NZX they would be a joke if it wasn’t so serious.
August 27th, 2010 at 12:01 pm
A development on Hubbard’s SCF. Trading in its bonds halted pending an announcement.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10669239
Vote:August 27th, 2010 at 12:03 pm
Seems rather obvious from today’s report that the Stautory Management was well deserved….. this second report cites overstating of accounts and false reporting of the companies cash position, plus investment in areas not allowed by the prospectus, as well as missing (non-existent) assets ….. it might well have been a well-intentioned fraud but breaking the rules to the tune of several million dollars is, I think, reason enough for the government to have stepped in.
Vote:It is sad it has come to this, but feeling sorry for an old man who actually appears to have been in charge of companies that broke the law doesn’t actually make things right for the 100s who trusted him and now face substantial losses.
August 27th, 2010 at 12:03 pm
A development on the NZ tax-payer’s SCF. Trading in its bonds halted pending an announcement.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10669239
Vote:August 27th, 2010 at 12:10 pm
Loads of people spoke very highly of Bernie Madoff too, until the bubble burst.
Vote:August 27th, 2010 at 12:36 pm
I’m picking significant claims against the Government guarantee scheme come Monday.
Vote:August 27th, 2010 at 1:05 pm
MT_Tinman suggests:
I haven’t been following this story at all, so I thought I’d be lazy and ask for more detail of there here, if there is any? Winston was always claiming the SFO was used to further the personal vendettas of certain senior officers but unlike the Police, of whom I’ve had personal experience, I’ve never been able to ascertain if that perception had any basis in fact. Are Hubbard’s supporters suggesting the same here? Is there any evidence?
Vote:August 27th, 2010 at 2:02 pm
I am sorry but I seem to have missed the whole point and the crux of the story
The SFO have found that 1 fund was 25% overvalued at the time of reporting. If this is a criminal offence then why are the SFO not banging down the doors of Allied Farmers who’s funds have dropped by something like 75%, and are at nothing like the value there were assessed at.
Value of something assessed today means nothing tomorrow.
The assessment could be weeks old
Point being – we are in a Depression. Fund values are dropping. People are losing money. It’s what happens
David
Vote:August 27th, 2010 at 2:20 pm
@Lipo….. you have missed several facts…. like the fact they said there was nearly $6 milion cash in a fund that actually wasn’t there, like the fact they said the fund had other assets of $13 million that actually didn’t exist, like the fact that the prospectus said money would be invested in a certain type of assets when it wasn’t, like the fact that Aorangi was propped up by external cash and assets in order to make loan interest payments and this was not mentioned in a prospectus …. it is not a case of asset values deteriorating, it is case of them being fraudulently stated and therefore misleading investors.
Vote:August 27th, 2010 at 2:32 pm
Anyone handling other people’s money has to be scrupulous and it doesn’t matter whether they are Mr Nasty or Mr Nice. While Mr Hubbard is alive and able to keep everything in his head and on bits of paper it may all work but people were placing a lot of trust in one mortal person.
Vote:There’s no point raving on about conspiracies etc. If it is all squeaky clean and above board then that’s great. But if your funds were in danger wouldn’t you want someone taking a look?
August 27th, 2010 at 3:21 pm
As for asking the Prime Minister to tell the SFO to lay off would be like asking the police to lay off the pharmacist who had the misfortune of an intruder dying in his shop. In that case I am sure that the police and Crown Law would want to resolve the pharmacist’s situation as soon as possible (from what I have read, I doubt he will be charged with anything).
Vote:YER RIGHT, crims are the reason we have plods, the chemist will be charged
August 27th, 2010 at 4:50 pm
roger – the gun shop guy was not charged with causing injury, etc, only with a firearm offence. In this instance it seems the pharmacist did not have a firearm, so there would be no firearms charges.
Some years ago a pharmacist was scuffling with a hold-up crim in Queen Street. The crime had purchased pantihose from a nearby department store to cover his head. The cops did not do him for fighting in a public place.
Vote:August 27th, 2010 at 5:04 pm
As I understand it ,South Canterbury Finance was weathering the storm better than other like companies until they leant money to Hendo..Dave Henderson. A year or two back , I talked to a cafe owner in ChCh just after some of the Hendo bad news had hit..she told me small and medium size business owners all over ChCh were furious with Hendo..he owed most of them money..so anyone lending to him subsequently , exercised bad judgement.
Vote:Mayor Parker’s Hendo dealings are likely to mean he will be a one term mayor.
There is a general backlash against the Nats in the south island…Hubbard , Ecan , Hendo buildings in ChCh , cuts to elderly care etc…For those who don’t know much about the Hubbards , prior to this they were considered to be the wealthiest people in the South Island.
August 27th, 2010 at 8:27 pm
Based on what facts and whose opinion?
Vote:August 27th, 2010 at 8:34 pm
Joana: I agree with you that Henderson is under a cloud in this piece. The banker that an ailing, ageing Hubbard put in to run the company seems to have lent tens of millions to Henderson, long-time best mate of Rodney Hide, and fellow campaigner against the IRD. Henderson was also a big sponsor of ACT in Christchurch.
One thing I’ve heard more than once in conversation is why didn’t the Securities folk go after Henderson, or Hotchins and Co? One person likened them to jackals picking off a weak old member of the finance industry pack?
At least Hubbard has put everything he owns into the obviously ailing firm, unlike some of the Auckland financial kings who have retreated to luxury on foreign beaches.
Vote:August 27th, 2010 at 9:07 pm
Brilliantly put, backster.
This is Power’s problem, ultimately.
He’s been heavy-handed against an 80 y.o. that’s helped many and harmed none.
Whatever happens, many if not the majority of people will have the suspicion that this man who’d never failed couldn’t have kept it going. That’s already formed and it’s hardening, right now, as this unfolds.
Oh dear.
Vote:August 27th, 2010 at 9:12 pm
My 9:07 sounds trite. What I mean is: when the SFO told Power they were looking at Hubbard, what did they talk about when discussing the way the issue might be taken within the public arena were they to take the action they actually did?
And what did Simon say then, in the way of strategic advice?
Vote:August 27th, 2010 at 9:25 pm
See this is how mental the whole thing is.
If Power had called Hubbard and told him there were concerns I imagine Hubbard would not have resisted in anyway and been quite open and it may never have come to anything.
If they tried that and he resisted then that changes the picture, but if they didn’t even try that given his reputation, they’re complete fools.
Vote:August 27th, 2010 at 10:51 pm
There is more news out about the Hubbard situe tonight..Fri. And Jack 5 , it looks like Henderson is about to be made bankrupt but he probably should have been made bankrupt ages ago. There is/ was a big problem with him and the water supply for the Gibbston valley. You say he was a big sponsor of Act but he was also in some other political org which I think originated in CHCh. I cannot recall its name.
Vote:August 28th, 2010 at 7:08 am
@joana, ZAP.
Vote:August 28th, 2010 at 8:42 am
ZAP very interesting Joe thanks.
Vote:August 28th, 2010 at 11:45 pm
Told ya so, and its only Saturday, it will get worse by Monday. Now, how do we feel about being “finaciers” of last resort? My pockets are pretty shallow after having to pay for leaking apartments in Auckland.
Vote:August 29th, 2010 at 2:02 am
” this man who’d never failed couldn’t have kept it going” Yep, all he needed to do was earn at least 33% on the money he had invested, just to make back the money he told people was in the fund, but in reality DID NOT EXIST!
“I imagine Hubbard would not have resisted in anyway and been quite open and it may never have come to anything”
You can imagine all you like. But if he was up against it and KNEW they were coming after him I think it is much more likely he would have acted, at best, the way he did. At worst, given he is guilty of fraud, and given how guilty people have historically acted when confronted with being discovered, he would have panicked and tried to hide all evidence.
Those that he has “helped” are the ones who he hurt, it is just that many of them are yet to come to that realisation.
Vote: