The Serious Fraud Office (SFO) says its investigation into Allan Hubbard and associated entities will continue after consideration of a preliminary investigation report.
(Update adds more detail).
The SFO's announcement comes after accounting firm Grant Thornton, Hubbard's statutory manager, released its second report on Friday.
SFO chief executive Adam Feeley said as Grant Thornton's report noted, there were issues in relation to Hubbard Management Funds (HMF) that required consideration.
Feeley said the SFO's initial inquiries focused primarily on Aorangi Securities.
However, it had become apparent that there was "considerable overlap" between Aorangi and the investments in HMF.
"Our further inquiries will be considering both these and related entities.”
After receiving the preliminary report Feeley had three options, - decide there was insufficient evidence of serious and complex fraud and drop the investigation, to say the SFO’s initial inquiries confirmed a need for further investigation, or lay charges.
Read the SFO's statement below:
The Serious Fraud Office (SFO) today said that its investigations would continue following consideration of a preliminary investigation report into the affairs of Aorangi Securities Limited (ASL).
Chief Executive, Adam Feeley, said “This investigation was commenced because the SFO, after very careful consideration of the information received from the Registrar of Companies, believed offences involving serious or complex fraud may have been committed. With the additional information acquired since then, I consider that it is appropriate to further our inquiries.”
Mr Feeley said that the recent reports by the statutory managers had highlighted the range of issues which were emerging the inquiries into ASL and Hubbard Management Funds (HMF).
“This is a major investigation into a very complex range of issues. It would be foolish to think that some investor interviews and a cursory examination of the documentation would do justice to the issues that have been raised.”
“The SFO is carrying out an investigation which is thorough and mindful of the need to move as swiftly as possible, but we will not compromise the integrity of our investigations for the sake of a quick result.”
Mr Feeley added that, as the statutory managers’ reports had indicated, there were issues in relation HMF that required consideration.
“Our initial inquiries focused primarily on matters raised by the Registrar in connection with investors funds deposited with ASL, but it has become apparent that there is considerable overlap between ASL and the investments in HMF. Our further inquiries will be considering both these and related entities.”
Mr Feeley said that, while the initial inquiries and preliminary report had significantly progressed the investigation, there were still several interviews along with considerable financial analysis to be undertaken before a further report would be completed for consideration.
22 Comments
Yes, I agree. It is the 'Heil Hitler' mentality - they have thought that he could do no wrong for so long, that to come to grips with reality is scary to them.
Pyschiatrists are likely to have plenty of clients in Timaru over the next few months as people try to come to grips with reality.
I think a well researched biography would reveal that his particular fetish was simply money itself, that there was no greater thrill for him than to see the numbers continually increasing, other than possibly the gratification he obtained by buying local popularity for himself by dishing out big lumps of cash to charities in South Canterbury (most of which he had a strong influence over, so the money was still not entirely out of his control).
Irrespective of the names involved, folk like me were always expecting this bubble to burst.
They all bought into 'growth forever', not just the Hubbard types, not just the sleazier types either, but the 'mum and dad' investors too.
I could - was, to anyone who would listen - expounding just this scenario, this decade, and doing so back in the '80's.
caveat emptor, methinks.
Anyone who thought that, en masse, a whole generation could 'invest', and that somehow just handing over the 'money' would guarantee 'more back for everyone', was living in lalaland.
Even if they're getting flaky, Musical Chairs should be in their long-term memory.
When do we get to start on the regional finance compoanies that SCF took over a few years back. Now that Im looking forward to.
Remember the day when we had a go at SCF over dairy lending on this site and they responded with 'we have minimal exposure to agriculture'. ha,ha,ha,ha,ha,ha
interesting that the recently dumped CEO of SCF, Lachie Mcleod is getting no blame for this debacle..even though he drew a $15 million interest free loan out of SCF which is yet to be repaid.
he was in the news last week for a prop.development in paratai drive of high end townhouses that have been placed in receivership.
this dude drove the agenda for SCF for the last few years.
where's some srutiny on him?
anyone got any info there?
You'll probably see AH start dishing out this sort of stuff - Lachie was a very useful scapegoat for Alan when it all started to turn sour...
While Lachie was obviously fairly loose with the company chequebook, I would say he wouldn't have got away with too much without AH's say-so.
i work for a contractor in south cantabury 100% of our work is for farmers, if hubbard backed farms are sold up im sure will wont see a cent of what we are owed fr work done, thus the flow on effect of us not being able to make payments etc its a circle of tough times i see ahead
GG can't be revoked. Would mean that nz govt. could not be relied upon and would not be able to continue borrowing.
Only banana republic do that.
Re ratings, what did they do wrong. Look at what their rating mean. Also rating is not investment advice, it's an opinion. Decision is still up to investor.
See reserve bank for details about ratings.
Chip, You said
Perhaps you could Double Shot Sam Kelt? He doesnt seem too camera shy! Ask what (if anything) he paid SCF to 'buy out' SCFs 75% of the $39m advance to Kelt Finance. All whilst Sandy Maier at the helm. Should provide some useful insight at very least.
This is i think where Taxpayers will finally overheat. If its going to cost us over 1 billion, then it would be nice to think that somewhere someone is sleeping in a cold Jail room, getting eyed up by a couple of body builders.
Personaly Im getting to the end of what I can tolerate from the National and Labor parties, If we get to give the GG to these guy's then why not the dairy farmer or the corner store,talk about moral hazard. The quality of our leadership in the past is woefull, the future looks to be more of the same. If the Taxpayer gets to bail these guys then lets open the books, its the least we should expect.
you don't fool us Wally/wolly...now that you've sobered up and re-read your posts you're now creeping back on here as "anonymous" having dumped your evil twin,Gerald the Screamer with his pants down and CAPS LOCK ON etc....so go to the sin bin for a week and listen to Katy Perry's latest CD on high rotate until you're cleansed of your madness.
p.s it was a good rave though, mate..
We are deleting Gerald. We agree. A reminder to all. Keep your comments informative and fun.
Ask yourself the question. Would you say such a thing to a person's face after buying them coffee?
We like robust debate, particularly when its backed up with evidence and arguments. But keep it respectful.
cheers
Bernard
fresh in from NBR:
South Canterbury Finance – destined to fail? Duncan Bridgeman | Tuesday August 31, 2010 - 07:34am
If John Key needed an excuse not to bail out South Canterbury Finance he found it in the finance company’s founder, Allan Hubbard.
While the prime minister is refusing to rule out an injection of cash into South Canterbury, up against a deadline to raise capital today, he gave strong hints yesterday that doing so would be unwise.
It was fair to say, Mr Key said, that the degree of back office book keeping and general observance of standard accounting practices at South Canterbury was in line with Mr Hubbard’s other private companies, currently in statutory management and subject to a Serious Fraud Office inquiry.
It was also fair to say, Mr Key said, that South Canterbury chief executive Sandy Maier has been faced with significant challenges since he took over in late December.
South Canterbury’s perilous state was the doing of Mr Hubbard and previous management, Mr Key added dryly.
The government should know the state of South Canterbury because Treasury has been intimately involved with the company for quite some time, certainly before the company was granted entry into the extended retail deposit scheme on April 1, and most likely before it dumped its previous auditors in February.
Since then South Canterbury’s impaired loans have ballooned from roughly $200 million to $600 million, and now estimates are as high as $700 million.
These assets have been ring fenced into a “bad bank” leading to speculation the government might use funds provisioned for the deposit scheme to buy these assets to help facilitate private investment in the rest of the company.
There is $934 million set aside for the crown scheme, thought to be enough to cover all the companies which signed up to it.
Mr Key said the crown liability for South Canterbury was about $600 million.
He said cabinet has been considering options but the priority was minimising the bill to the taxpayer.
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