So remember everyone saying how hard done by Hubbard was

August 6th, 2014 at 7:00 am by David Farrar

When the Government assumed control of ’s companies, they were attacked by many in South Canterbury, and beyond. Hubbard was a saint who could do no wrong, and Simon Power was savaged for agreeing to statutory management.

Now Hubbard was a well intentioned individual, but as the Herald reports, his financial management was deficient in recent years:

Allan Hubbard, the late boss of , which collapsed and required a $1.6 billion government bailout, “had little interest” in meeting accounting or legal requirements, and three of his most trusted colleagues went along with the massive fraud, a court has been told today. …

Long-time SCF chairman, Timaru financier Mr Hubbard, who died in a September 2011 car crash, aged 83, ignored various accounting and legal regulations that he was bound to adhere to, the court was told.

One witness described Mr Hubbard’s attitude as being, “Trust me, I know what I am doing”.

“The evidence has been that he had a disdain for disclosing related party transactions, a peculiar view of what constituted one, a penchant for swapping cheques to cleanse the accounts … and took assets off the balance sheet if they were impaired,” Crown lawyer Colin Carruthers QC said. …

The Crown says that on July 25, 2007, the defendants prepared a letter to Mr Hubbard expressing their concerns with the business practices.

“That is an extraordinary document, setting out a long list of issues directly relevant to these charges, from related party advances, the single entity exposure limit, advances being made without security, loan and drawdown authorisation, and so on,” Mr Carruthers said.

But despite the concerns, nothing changed, Mr Carruthers said.

A decision in the trial is due in October.

 

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30 Responses to “So remember everyone saying how hard done by Hubbard was”

  1. duggledog (1,559 comments) says:

    Thanks for the government guarantee Helen, meaning we had to bail the silly old fool’s company out. The Clark administration put not just one, but a series of millstones around the country’s neck, especially when you take into account the Local Govt Act’s long tail of irresponsible spending finishing up with the massive debt councils now carry, not to mention student loans and a railway. And she was only moderate compared to what’s coming if the Labour / Greens shambles with or without Mana / Internet (I don’t believe you Cunliffe, you’ll find a way) get in.

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  2. flipper (4,084 comments) says:

    Heh Duggles…

    I agree with the sentiments, but disagree over whether the guarantees should have been put in place. Banks yes; finance companies no.

    It has always seemed to me that the fundamental reason why it was extended to include finance companies related solely to earlier collapses, unrelated to the GFC , and to the coming (then) General Election (or have I got the timing slightly adrift?)

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  3. wreck1080 (3,923 comments) says:

    The defendants can present their story, unfortunately Anal Hubbard cannot.

    But, we cannot discuss various factors because it is before the courts of course.

    I was appalled when the govt bailed them out — but , it was even worse than just a capital bailout, the govt guaranteed investor returns when they should have just been happy to get back some money.

    If anything, someone from the government should also be in the dock but they engaged in legalised theft so it is ok.

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  4. Elaycee (4,393 comments) says:

    “The evidence has been that he had a disdain for disclosing related party transactions, a peculiar view of what constituted one, a penchant for swapping cheques to cleanse the accounts … and took assets off the balance sheet if they were impaired,” Crown lawyer Colin Carruthers QC said. …

    This paragraph says it all….. and it cost the taxpayer over $1.6 Billion.

    Totally appalling.

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  5. OneTrack (3,114 comments) says:

    duggle – But Cunliffe has never flip-flopped before. Yeah. Nah.

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  6. hj (7,033 comments) says:

    It appears that those around him knew the game: Hubbard was a money magnate (the volkswagen and all that) but he fiddled results.
    Rolleston was a long-term business partner of Allan Hubbard, the pair having first met in the early 1970s. Rolleston owned a 23% share of the Southbury Group, but sold his share of the business to Hubbard in 2004.
    http://en.wikipedia.org/wiki/Humphry_Rolleston_%28businessman%29

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  7. hj (7,033 comments) says:

    The receivers of Hubbard managed funds went to court to decide how to divide funds as it appeared to be a pool (despite immaculate statements). One investor has challenged the court findings claiming $9m (reduced to $5) over the definition of “cash”. If they are successful it is back to the drawing board for the other duped investors.

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  8. hj (7,033 comments) says:

    I’m picking Hubbard suffered from narcissistic personality disorder: he loved the adoration and his narcissism blurred the line between him and his subjects.

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  9. flash2846 (287 comments) says:

    The accused stating they were aware of the misrepresentations etc.? Well if they had resigned I would have some sympathy for them but they didn’t and creamed massive salaries. Lock em up.

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  10. RRM (9,933 comments) says:

    It wasn’t me, your Honour!

    It was all my dead bosses’ doing!

    He was dodgy as hell…

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  11. Colville (2,272 comments) says:

    SCF was a total clusterfuck.
    I had dealings with them twice.
    Once I borrowed a bunch of money against 2 sections, they lent 80% of bare land “valuation” from my valuer who was an obvious hired gun. The cash I “borrowed” was probably 30% above market value and 50% above forced sales value.
    Another time I sued someome and had the pleasure of forcing sales of all his properties. One had a SCF loan of (memory) $160K and we sold it for $95K less costs. It was a derilict beach house with a cranked valuation.

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  12. Scott1 (552 comments) says:

    “So remember everyone saying how hard done by Hubbard was”

    Who were these people?
    There seemed to be a lot of anonymous posters (and some real protesters, I admit) who like to put “TRUTH” in capitals and go on about innocent until proven guilty and use it as an argument that the most likely scenario is that he was innocent.

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  13. Scott1 (552 comments) says:

    Of course – it would be hard not to love a guy who was willing to lend you far more than the value of your property against your property. A very good man indeed – good for the borrowers anyway…

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  14. Huevon (222 comments) says:

    As someone who had dealings with SCF in its heyday, before we trash Hubbard, let’s be clear about one thing. Hubbard was old school – he believed a man’s word was his bond. His style worked fine in a small, tight-knit community with implicit trust. His disdain for lawyers and accountants was no different to what most people on the Right have for red tape. Much of the red tape is pointless compliance – can any investor in SCF honestly say they read the investment prospectus? But – and this is a biggie – once his business grew to the size it did, he should have changed his approach. Finance is one of the most heavily regulated industries around, and once you become a big player you have to follow the rules, as pointless as many of them are.

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  15. YesWeDid (1,048 comments) says:

    ‘Thanks for the government guarantee Helen, meaning we had to bail the silly old fool’s company out.’

    I guess you are happy to ignore the extension to the scheme in 2010 that Bill English signed off and SCF happily signed up to.

    http://www.beehive.govt.nz/release/government-extend-retail-deposit-guarantee

    http://www.treasury.govt.nz/economy/guarantee/retail/approved/p-s/index.htm#scant

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  16. hj (7,033 comments) says:

    His disdain for lawyers and accountants was no different to what most people on the Right have for red tape.
    …………
    I thought accounting and law had a purpose!?????? (Silly me).

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  17. hj (7,033 comments) says:

    No doubt a few people love Ross (Asset Management).

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  18. hj (7,033 comments) says:

    Since when did “old school” invest on one’s behalf (as per yearly statement) without apportioning assets in the investors name and in the end the total value of assets is overstated by a considerable amount? That’s old school fraud.

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  19. hj (7,033 comments) says:

    Thanks for the government guarantee Helen, meaning we had to bail the silly old fool’s company out. The Clark administration put not just one, but a series of millstones around the country’s neck, especially when you take into account the Local Govt Act’s long tail of irresponsible spending finishing up with the massive debt councils now carry, not to mention student loans and a railway. And she was only moderate compared to what’s coming if the Labour / Greens shambles with or without Mana / Internet (I don’t believe you Cunliffe, you’ll find a way) get in.
    ……..
    lending to property developers caused SCF to collapse.

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  20. Colville (2,272 comments) says:

    Lending to property developers was the reason they existed.

    You cant pay out twice bank intrest rates to depositors unless you are lending to second/third tier risky borrowers.

    Like me :-)

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  21. G152 (350 comments) says:

    Scammers don’t drive around in old VW’s…

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  22. Akld Commercial Lawyer (165 comments) says:

    I will await the decision of the Court before commenting on the issues that led to the SFO prosecution.

    However, acquaintance with a few facts would assist any debate about SCF’s involvement in the Crown retail deposit guarantee scheme. The Reserve Bank has made the relevant material available via its website. Descriptions, from officials, such as underwater and sinking aid the reader to get to grips with the issue – and in doing so you might want to ask yourself what might have happened if the 250+ dairy farms that they had financed (when no-one else would) had all come onto the market at once – in the depths of the recession.

    Ultimately, I suggest that the govt (and it mattered little which shade of govt) had little choice.

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  23. dubya (236 comments) says:

    “Scammers don’t drive around in old VW’s…”

    Hah. As a former neighbour of Mr and Mrs David Ross, I can confirm there was an old German car in the driveway!

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  24. peterwn (3,276 comments) says:

    Seems similar to people who complain when their mortgages turn sour that the banks should have waited until the property market improved. The Courts have consistently and strongly indicated that lenders can force sales immediately and not wait for a better market. Hubbard fans seem to be of the same view – the authorities should have waited until things improved and it would all been ‘as sweet as’.

    I perceive him as being an old fashioned ‘roll-top desk’ businessman who got right out of his depth. In USA he would have probably worn a green eye-shade too.

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  25. Kimble (4,440 comments) says:

    Hubbard was old school – he believed a man’s word was his bond.

    He relied on that to make things easier.

    It isn’t “old school” to ignore procedure and correct business management. It is incompetence.

    There is a reason the “old school” is the old school. It was flawed and financially dangerous.

    Let’s not get all hagiographic about a man running a shitty business into the ground just because he was born in the 30’s.

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  26. hj (7,033 comments) says:

    I’m fairly sure that back in 2001 insiders knew he was dodgy (or “old school”).

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  27. Scott (1,805 comments) says:

    No I think he was a decent bloke who maybe got out of his depth or more likely his powers were on the wane due to age.

    Far too many people on this blog keen to put the boot in at every possible opportunity.

    My question to you is this-who do you admire,who do you look up to?

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  28. duggledog (1,559 comments) says:

    Scott

    Tough. He caused enormous damage, and ruined people. This was not a trifling matter

    Who do I admire / look up to? My old man. Well, I did. And Colin Meads.

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  29. Scott (1,805 comments) says:

    Well that’s your opinion. I believe he was a man of integrity who stayed on too long in the business and his powers and judgement wained as he got older. I have seen it happen when people stay on too long and ruin what could have been a great legacy. Sad really.

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  30. howitis (14 comments) says:

    I am not sure if you are being facetious here duggledog as Colin Meads was the advertising face of Provincial Finance which was the first of the nearly 30 Finance companies to fail starting in 2006. This lost about three hundred million dollars($300 mill) of savers money. They were savers not investors as constantly reported by the MSM.
    Hubbard was a very arrogant man.
    He was economic with the truth by presenting himself as the honest guy from a humble world and cute little yellow volkswagon.
    He was a chartered accountant himself and ran a practice based in Timaru for 50+ years. He employed chartered accountants. If he has disdain for accountants then it was self-hate.
    He knew what the rules were. He just did not follow them.
    There were a lot of people who came out in his defence in the 2010 – 2012 period.
    In many cases they benefited from money he gave away. This money was not his to give. It is the taxpayers of NZ. It is over bilion dollars of taxpayers money. These people endorsing Hubbard who received these handouts were in fact the recipients of the proceeds of crime. Let us be quite clear on that.

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