South Canterbury Finance Limited

[Enumerate]

Hubbard is like that - takes credibility from others.

Maybe you have a point, Balance ... he has certainly taken your credibility.

[Balance]

Good for you ... I'll stand by Hubbard.

Now you know why you are such a psycho study case for the universities of delusionary behaviour?

[Enumerate]

Now you know why you are such a psycho study case for the universities of delusionary behaviour?

Well, Balance, you certainly hold your views with absolute conviction.

Further, these views tend to be held firm despite compelling counter argument and even demonstrations of proof to the contrary.

I am sure your marking Allan Hubbard as a mastermind of fraud would seem completely implausible or even patently untrue to the people who know him.

(By the way: this certainty/incorrigibility/falsity content are the three main criteria marking delusional belief).

Are you sure, when you go to this University clinic, that they are studying delusional behaviour on this thread? Do they give you any pills to take? Are they particularly concerned with how you are going on the thread?

[Awamoa]

Our self oppointed expert on all matters that he has never made an investment in has now made 2284 posts saying the same thing over and over and over....
Talk about a psycho study case.
Instead of polluting this site go and preach your sermons on your local street corner

[Balance]

Maybe you have a point, Balance ... he has certainly taken your credibility.

Try to be a bit original, o'delusionary one. Makes for a better exchange, right?

Remember we tried to warn you against buying those SCFHA's? That Hubbard character - he knows how to suck them in.

[Balance]

Our self oppointed expert on all matters that he has never made an investment in has now made 2284 posts saying the same thing over and over and over....
Talk about a psycho study case.
Instead of polluting this site go and preach your sermons on your local street corner

Still sore at getting NZOG wrong, I see.

It's okay - you go listen to the Noggers.

[Enumerate]

Remember we tried to warn you against buying those SCFHA's? That Hubbard character - he knows how to suck them in.

You did warn me, indeed ... You know something else - you were right! Investment in the SCFHAs turns out to be a very poor investment.

My belief was SCF would be restructured and that an investment in the prefs would turn out to be an excellent "speculation" on the recovery of SCF. You would have to concede from the Treasury eMails that there were plenty of attempts to restructure SCF - the Hubbard aligned proposals preserved preference share capital value.

As I have posted previously, what I did not count on was the profound stupidity of Treasury and Commerce officials in forcing the restructure efforts off the table and liquidating SCF.

SCF was the largest non-bank finance institution. It was the largest finance institution even including Kiwi owned banks. It was and is unacceptable for Treasury to veto viable restructuring efforts at the eleventh hour. They should have been working actively to broker a deal leading to a Hubbard restructure or to force new ownership. Their passive and fearful actions are shameful.

Central Bankers in first world economies must be amazed that Treasury/Reserve Bank Officials in New Zealand behaved like junior administrators. No leadership, no insight, no spine.

This was their test ... they failed.

Count me in as someone who was expecting a better innings.

This financial issue has broadened into very real concerns for the way Allan Hubbard is being pursued as the scapegoat.

The lack of insight and leadership, when it counts; does not mean there is a lack of cunning and guile in making Allan Hubbard the bag man for this fiasco. It is this fact that makes concerns me vastly more than the loss of money. That is why we have these robust discussions ...

[Balance]

Think about this act of extreme generosity by Allan Hubbard.

Lachie McLeod as CEO of SCF diversified SCF's loan book into property development in a big way (hundreds of millions, including loans to himself and other SCFers) and grew the loan book enormously. There is little doubt that he followed in the footpath of the other great South Islander finance company ex CEO of Marac, Brian Jolliffe, in deciding that property was the way to go. We all know the result of that foray into property development - boom and BUST!

For his efforts, Lachie was given a $15m loan by SCF to buy shares in Southbury from Hubbard - an appropriate reward by the ever generous Hubbard for work well done by Lachie.

In Nov 2009, Lachie was let go from SCF after it became clear the magnitude of losses being sustained by SCF on its property related loans.

Again, Hubbard was ever generous - a goodbye package of $500,000 (tax free), part ownership of two farms, holiday pay of $80,000 (poor chap needs to recuperate after so exhaustively built up hundreds of millions of property related loans) and a forgiveness of the $15m loan!

That's typical of Hubbard - ever generous with other people's money. In this case, taxpayers' guaranteed funds.

Want another example of Hubbard's generosity? Have a chat with a certain property developer in Auckland who specializes in coastal property developments who received a 8 figure contribution from Hubbard. All gone. But as the developer paid himself and his hanger-ons multi-million dollar salaries and fringe benefits (entertainment expenses, first class air travel, 5 star hotel accommodation, BMW, Porsche, Audi etc) while the going was good, please do not worry about him and his hanger-ons. They are doing okay.

[Enumerate]

Balance, I see you have been reading Chris Lee at www.chrislee.co.nz.

Mr Lee is such a wind bag. He alleges all sorts of impropriety at SCF. Why doesn't he take some action? He could, at least, assemble a register of those to whom he offers financial advice of who hold SCFHA. It would be appropriate to prepare for the liquidation of SCF when SCFHA holders become unsecured, subordinated creditors. I would have thought his litany of SCF crimes would have been a basis for involving a litigation funder, like IMF, to make some effort towards recovery actions.

There would be the supreme irony of Chis Lee organising an action against Standard & Poors for assignment of a fraudulent credit rating!

If the SCF saga demonstrated a woeful lack of leadership within the public service; it also demonstrates the same failing in the broader financial service community.

[Balance]

Balance, I see you have been reading Chris Lee at www.chrislee.co.nz.

Mr Lee is such a wind bag. He alleges all sorts of impropriety at SCF. Why doesn't he take some action? He could, at least, assemble a register of those to whom he offers financial advice of who hold SCFHA. It would be appropriate to prepare for the liquidation of SCF when SCFHA holders become unsecured, subordinated creditors. I would have thought his litany of SCF crimes would have been a basis for involving a litigation funder, like IMF, to make some effort towards recovery actions.

There would be the supreme irony of Chis Lee organising an action against Standard & Poors for assignment of a fraudulent credit rating!

If the SCF saga demonstrated a woeful lack of leadership within the public service; it also demonstrates the same failing in the broader financial service community.

Actually, I read of Hubbard's generosity on another web-site. Cannot stand that guy, Chris Lee.

So what do you think of Hubbard being so generous with taxpayers' money?

[Enumerate]

And you think that Hubbard is right to be so generous with taxpayers' money?

Do you actually take Chris Lee's allegations at face value? It would appear his gets his information from his web of personal contacts. Whoever is feeding him his information needs to be disclosed. This situation requires the skills of an experienced NEU/ASIC investigator - oh, right - you weren't happy with the last one who researched and wrote a comprehensive report. You would rather take Chris Lee at face value (or even worse - as gospel truth).

[Balance]

Do you actually take Chris Lee's allegations at face value? It would appear his gets his information from his web of personal contacts. Whoever is feeding him his information needs to be disclosed. This situation requires the skills of an experienced NEU/ASIC investigator - oh, right - you weren't happy with the last one who researched and wrote a comprehensive report. You would rather take Chris Lee at face value (or even worse - as gospel truth).

What Chris Lee has stated in bold print is defamatory in the extreme if it is untrue. I would expect Lachie and Hubbard to sue him for millions. They have not.

I m happy to accept his words in this instance. He was extremely close to Hubbard and was a huge cheerleader until he found out the true Hubbard.

Again, you typify the average Hubbard supporeter - ask a simple question and like that character Paul Carrethurs, you think you are being clever by avoiding it and talking about something else.

Oh well, to be expected.

LOL.

[Enumerate]

As a Chris Lee aside: I remember reading Michael Warrington grappling with the physical reality of electricity. His conclusion, after much discussion, was that electricity was mobile electrons energised by heat.

This is a hybrid of 20th Century physics (the notion of the electron) and medieval thinking (the notion that heat energy creates mobile electrons in a metal).

Of course, the physical fact is that electricity has nothing to do with electrons. Electricity is caused by the presence of an electric field (which induces forces on charged particles). In conducting metals - electricity is manifest as the flow of electrons or positrons, if the metal is anti-matter. In a plasma, electricity is manifest as the flow of positive and negative ions.

I suppose the moral of the story is to be wary of financial advisers treating outside their field of expertise (or even within the field of their expertise if you consider Chris Lee's track record on risk ratings of financial instruments).

[minimoke]

She has an impressive set of credentials - if you read her report to the end. In particular, her NEU experience stands out - this is the only investigative unit of government to respond to the collapse of the finance sector with distinction.



Her report is excellent. An excellent chronology and a coherent interpretation of events. I note you can get a copy from the Stand by Hubbard team.
I came into the report with an open mind but have only got as far as the second paragraph which says "The Companies Office enquiries started and concluded within three weeks. It appears to have been rushed and I suspect that the allegations in the report were substantiated with innuendos and misinformation."

If she has a suspicion, there is an onus for her to provide evidence or grounds for her suspicion.. Alleging the Companies office works on the basis of innuendo and misinformation is a very serious accusation yet the Author does not make it immediately apparent why she has come to such an opinion.

If the rest of the article is going to be based on the Authors suspicions rather than on evidence I'm not sure I can be bothered reading much further. It strikes me that she is laying a tone which is one of a lack of validity so scuppers her own position from the beginning. Should I read on?

[Enumerate]

So what do you think of Hubbard being so generous with taxpayers' money?

Ok - lets break it down:

1) You allege a number of transactions.

2) You do not detail the time or context of these transactions

3) SCF was a very large financial services organisation

4) Allan Hubbard was not an operational manager in the recent days of SCF, prior to the collapse

5) Allan Hubbard was one of number of Directors of SCF and was "President for Life" in the days prior to the collapse

To prove your point, you need to show that Allan Hubbard had operational responsibility to conduct the transaction, proceeded to execute the transaction with authority and acted in a defined context of the transaction at a particular time.

You have provided none of these details.

Further, you report that the basis for your allegation is Internet scuttle-rumour "on another web-site". Maybe someone's brother-in-law tweeted about this conversation he overheard between the friend of someone who worked with a mate who had it on good authority that a person close to the action thought ...

Please don't tell me you have been following David Hillary on interest.co.nz ...

(There is also the small point that taxpayers money was not involved in SCF until the receivership event - at which point Allan Hubbard, in Statutory Management, certainly had no ability to execute any transactions at SCF in any way shape or form).

[Balance]

Ok - lets break it down:

1) You allege a number of transactions.

2) You do not detail the time or context of these transactions

3) SCF was a very large financial services organisation

4) Allan Hubbard was not an operational manager in the recent days of SCF, prior to the collapse

5) Allan Hubbard was one of number of Directors of SCF and was "President for Life" in the days prior to the collapse

To prove your point, you need to show that Allan Hubbard had operational responsibility to conduct the transaction, proceeded to execute the transaction with authority and acted in a defined context of the transaction at a particular time.

You have provided none of these details.

Further, you report that the basis for your allegation is Internet scuttle-rumour "on another web-site". Maybe someone's brother-in-law tweeted about this conversation he overheard between the friend of someone who worked with a mate who had it on good authority that a person close to the action thought ...

Please don't tell me you have been following David Hillary on interest.co.nz ...

(There is also the small point that taxpayers money was not involved in SCF until the receivership event - at which point Allan Hubbard, in Statutory Management, certainly had no ability to execute any transactions at SCF in any way shape or form).

Not involved in court room tactics here.

Just want your opinion on what you think of Hubbard's generosity. Humor me - assume that I am asking the right questions with the right facts.

I am sure you can record this down for future reference if I am wrong.

LOL.

[Enumerate]

Should I read on?

Breastwork made this point, as well.

As an ex-NEU staffer (and hence, part of the Companies Office - if you define "Companies Office" as the domain of the Registrar of Companies), she is probably entitled to raise this issue.

If I was to edit this report - I would take out or tone down some of these "value judgements". The report needs to be objective to be valuable.

However, I do advise reading through. It is an excellent chronology. It also reveals some hidden detail about the securities regulation/enforcement process. Ms Grass also points out that this version of the report is in some way "draft" - she advises a complete version will be released at the end of August.

I for one am grateful for her excellent work. Compare her efforts to those of the Receiver - she presents a vast amount of fact and cogent argument; he writes boilerplate banality.

[Breastwork]

If she has a suspicion, there is an onus for her to provide evidence or grounds for her suspicion.. Alleging the Companies office works on the basis of innuendo and misinformation is a very serious accusation yet the Author does not make it immediately apparent why she has come to such an opinion.

If the rest of the article is going to be based on the Authors suspicions rather than on evidence I'm not sure I can be bothered reading much further. It strikes me that she is laying a tone which is one of a lack of validity so scuppers her own position from the beginning. Should I read on?


"The Companies Office enquiries started and concluded within three weeks. It appears to have been rushed and I suspect that the allegations in the report were substantiated with innuendos and misinformation."

"The impact of statutory management on share value was demonstrated in 2001 when Air New Zealand’s share price fell by 40% in one day after media speculation that statutory managers might be appointed."

"Hubbard’s business acumen was built on integrity – not greed. An illustration of this is the operations of the TeTua Charitable Trust. Through that entity he provided loans with an interest-free period of up to 5-years."

"Hubbard’s business enterprises give an indication of the level of Hubbard’s expertise. That Hubbard was additionally managing one of NZ’s best performing funds in 2010 (as claimed by PriceWaterhouseCoopers) shows that Allan Hubbard was an astute businessman. When he was forced out of SCF in 2010 as a consequence of a management restructure (a condition required by Treasury) the pillar that was the strength of SCF went with him."

"It was recapitalising and had weathered the storms."

"On 20 June 2010... ....South Canterbury Finance was still standing and its good reputation was resulting in strong demand for its interest bearing products"

etc etc

Answer your question?

[Breastwork]

Was the PWC report ever published?

[Balance]

I for one am grateful for her excellent work. Compare her efforts to those of the Receiver - she presents a vast amount of fact and cogent argument; he writes boilerplate banality.

Says it all!

Bravo!

[minimoke]

"Hubbard’s business acumen was built on integrity – not greed. An illustration of this is the operations of the TeTua Charitable Trust. Through that entity he provided loans with an interest-free period of up to 5-years."

Answer your question?
But if she thinks AH has business accumen as evidenced by Te Tau Trus why would the Stat Man say:

"There are 26 {non - performing} loans in this category.
We have referred many of these loans to Mr. Hubbard as the terms of the loans advised by the borrower have not been documented by Te Tua."

Then "Te Tua is generally an unsecured lender"

and "We are at an advanced stage of negotiating a lease for a property for which rent had not been paid in the 12 years prior to our appointment"

And Te Tua had a book value of $27.8m but by the time you account for provisioning its value is at $10.8m.

So the author holds this as evidence of a man showing business acumen.

I think this shows a bias by the author and her judgement is not credible. I don't think I'll read any further.

[Enumerate]

Just want your opinion on what you think of Hubbard's generosity. Humor me - assume that I am asking the right questions with the right facts.

I am not about to speculate on a persons reputation or morality as some kind of "Internet game".

I have no personal connection with Allan Hubbard. He will be facing serious charges in the High Court. I imagine that these events will be personally devastating, for someone with his character and background.

He can rely on my voice when it comes to debating the issues of his right to be treated fairly. His Statutory Management and the "Hollywood" style of the SFO are two immediate outrages.

He can also rely on the fact that my voice will not be added to ugly speculation and cowardly innuendo that currently shrouds his life.

[Enumerate]

I don't think I'll read any further.

Given the obvious difficulties you have in reading anything that challenges your entrenched views - your conclusion offers no surprises.

[minimoke]

Given the obvious difficulties you have in reading anything that challenges your entrenched views - your conclusion offers no surprises.
Generally I'll express a view based on evidence that is verifiable and reliable.
Your latest author begins her article on the basis of a suspicion with no supporting evidence.

She then asserts AH is a man with business acumen as evidence by the Te Tua trust.

I am prepared to have my views challenged - but I expect a standard of proof a little higher than that provided by your author so far to encourage me to move my view formed so far.

Perhaps someone could enlighten me on how the Te Tua Trust shows AH is a man with business acumen, cos I'm not seeing it.

[Enumerate]

Perhaps someone could enlighten me on how the Te Tua Trust shows AH is a man with business acumen, cos I'm not seeing it.



What can a charitable trust do? (http://www.societies.govt.nz/cms/charitable-trusts/learn-about-charitable-trusts/what-can-a-charitable-trust-do/)


Charitable trusts are normally formed to undertake charitable activities and are less suitable for commercial activities. A charitable trust may make profits on their trading activities but the profits must be used for their charitable purposes and cannot be distributed to members.


So, maybe the Te Tua charitable trust was setup to conduct charitable activities that were less suitable for commercial activities. Maybe these charitable activities include rent and interest forgiveness to designated beneficiaries of the trust?

Maybe the Statutory Manager had some difficulties in understanding the structure and intentions of the trust? The questions they raise point to obvious difficulties and the fact they did not engage in any dialogue with Allan Hubbard would point to some inefficiency in resolving these difficulties.

You also seem to hint darkly about the intent and operation of the trust. Given a year long SFO investigation and the fact that no charges have been laid concerning Te Tua; it would appear that further fretting and worrying can only lead to loss of sleep and a potential for an outbreak of hives.

[belgarion]

You guys don't like uni students do you? This discussion will send them to sleep.:)

[Enumerate]

You guys don't like uni students do you? This discussion will send them to sleep.:)

Maybe we should spice things up a bit?

We could pickup the Michael Warrington "electricity" ideas. Surprisingly, the coupling between the vibrational states of a material ("heat") and electrons in the material gives rise to a phenomenon known as superconductivity. (I doubt Warrington had superconductivity in mind when he was talking about electricity). (Maybe this is more appropriate to the Scott Technologies forum).

Just goes to show ... out of the factually and logically incorrect - interesting developments might arise. Balance's posts spring to mind for some reason.

[minimoke]

So, maybe the Te Tua charitable trust was setup to conduct charitable activities that were less suitable for commercial activities.
What do we know about Te Tua Charitable trust.
From Stat Man report no 1: "As noted earlier in this report, Te Tua Trust has provided interest-free loans to business people. We are undertaking a complete review of Te Tua Trust’s loan portfolio of approximately 170 loans". So it was loans to business people not charities. Where is the business acumen there? Does this not have a whiff of something wrong?

Fro Stat Man report #2 "Many of the loans are made to farmers and share milkers in the early years of their business to give them a "helping hand". So business acumen means interpreting farming activities are a charitable purpose.

From Stat Man report #3 "Mr Hubbard advised us that he introduced approximately $25 million of Te Tua assets to Aorangi with the purpose of strengthening the Aorangi balance sheet." So Aorangi is now a charity case?

From Stat Man report # 4 "The state of Te Tua’s loan records is very poor" In my world, being a charity does not excuse poor record keeping by people with business acumen.

I'm not sure I need to hint darkly about Te Tua because its activities speak for itself.

[Enumerate]

Minimoke is in danger of encouraging bad habits in our University student followers.

He only reads Statutory Manager reports and spurns everything else. No student is going to do very well without reading widely (including work on both sides of a point of view).

He elevates Statutory Manager reports to some form of "revealed truth". No student is going to do very well without maintaining a skeptical attitude to authority.

I would go so far as to suggest that Minimoke is corrupting our University youth by projecting the image of the Statutory Manager as a fair arbiter. The fact is that the Statutory Manager is closer to a paid assassin. They are neck deep in gravy and gravy will flow as long as they can draw out and prolong their investigations. This teaches our University students the nature of corruption and gives tacit approval to this process. Hemlock, Minimoke ... that is the classical remedy!

[minimoke]

Minimoke is in danger of encouraging bad habits in our University student followers.

I'm sure students are quite capable of developing bad habits of their own without me taking credit for any of them.

[Breastwork]

ROFL, have just asked my 14 year son to read and critique Kerry Grass's review.

His responses;

"My teacher would circle that statement and ask for an example or supporting evidence"
"There is no list of references"
"You can't just say that without saying why"

Now, I know I've got a pretty amazing kid, but do you think the NEU is recruiting?

[Enumerate]

You should give him the Statutory Managers report and ask him: "Is this worth suspending all a mans property rights; like being put in prison?"

[Balance]

You should give him the Statutory Managers report and ask him: "Is this worth suspending all a mans property rights; like being put in prison?"

Response will be : "Is this guy not in jail yet?"

[Enumerate]

What do we know about Te Tua Charitable trust.

I suggest you re-read my post #2775.

The reason Allan Hubbard attracts such staunch support in his region is because he has dedicated significant resources to the development of farming and support businesses and infrastructure. These developments are not for his direct benefit - but for others; this is the nature of charity.

Te Tua activities are a case in point. If Allan Hubbard wants to promote the economic prosperity of the South Canterbury region by helping people achieve their business goals; by donating his own assets all well and good. Further, if a percentage of his commercial activities are directed to charitable purposes; this has precedent in the commercial world. Do you not understand that this is actually viewed as "best practice" by significant corporates - to support the community they operate in through charitable works?

Finally, on the point of record keeping. Do you think that the Statutory Manager acting in the most efficient manner by not even talking to Allan Hubbard before raising record and bookkeeping questions? I think you should direct some of your ire to the mischievous behaviour of the Statutory Manager - maybe you could productively whittle away the hours to consider what possible benefit the Statutory Manager derives from prolonging, extending and deepening their investigations into Aorgangi/HWM/Trusts?

[Balance]

I suggest you re-read my post #2775.

The reason Allan Hubbard attracts such staunch support in his region is because he has dedicated significant resources to the development of farming and support businesses and infrastructure. These developments are not for his direct benefit - but for others; this is the nature of charity.

Te Tua activities are a case in point. If Allan Hubbard wants to promote the economic prosperity of the South Canterbury region by helping people achieve their business goals; by donating his own assets all well and good. Further, if a percentage of his commercial activities are directed to charitable purposes; this has precedent in the commercial world. Do you not understand that this is actually viewed as "best practice" by significant corporates - to support the community they operate in through charitable works?

Finally, on the point of record keeping. Do you think that the Statutory Manager acting in the most efficient manner by not even talking to Allan Hubbard before raising record and bookkeeping questions? I think you should direct some of your ire to the mischievous behaviour of the Statutory Manager - maybe you could productively whittle away the hours to consider what possible benefit the Statutory Manager derives from prolonging, extending and deepening their investigations into Aorgangi/HWM/Trusts?

Simple. The more they dig, the more horrified they are at how callously Hubbard had been using investors' money as his own. And at how he has used false statements and accounts to entice their money.

That is what the 50 criminal (yes, criminal ) charges are about.

SCF probe still going on. Potentially more charges yet.

As for staunch support, any donkey can get that kind of support if he generously give out other people's money left, right and center. Interest free loans, anyone? Better still, non-recourse interest accumulating loans like that Lachie McLeod.

Even Madoff had many supporters to the end.

[Balance]

http://www.stuff.co.nz/timaru-herald/news/5192148/Pair-seek-to-unlock-Hubbard-entities

Excerpt : "Mr Borren says he has talked with statutory managers still battling with the complexity of Mr Hubbard's financial affairs. He says his efforts are free and he is taking no cut. "I still have enormous respect for his first 75 years." But "things had gone pretty bad since"."

[minimoke]

These developments are not for his direct benefit - but for others; this is the nature of charity.


Thanks for the correction. Here was me thinking charity was all about the giving of ones own things and the caring without thought of personal recognition for others.

Are we certain the investors in Aorangi thought their money was going into charity - I thought it was going into safe as houses year on year growth investments.

Interesting you think farming is charity - here was me thinking it was NZ largest industry.

By your definition our banking system is a charity - best you let them know as I think you'l find they have a different idea.

[Pumice]

So if Mr Hubbards companies are registered charities, but have made loans to commercial ventures, does that ammount to fraud?
Surely it must do.

[Balance]

Thanks for the correction. Here was me thinking charity was all about the giving of ones own things and the caring without thought of personal recognition for others.

Are we certain the investors in Aorangi thought their money was going into charity - I thought it was going into safe as houses year on year growth investments.

Interesting you think farming is charity - here was me thinking it was NZ largest industry.

By your definition our banking system is a charity - best you let them know as I think you'l find they have a different idea.

Poor Enumerate.

He has just ran into quicksand. Previously he was in deep water.

[Enumerate]

Before you guys get too excited, run off with the pitchforks and the torches ... I suggest you all calm yourselves.

Consider, if you are able, the Macquarie Fortress Notes (FTNFA.NZX, MFNHA.ASX). This is setup as a charitable trust. This entity will reward the serious student with a number of key observations on how these trusts can be setup and operate ...

Forgive me, if I wait to see some demonstration of actual insight into the situation before I comment further.

However, I suggest you can put away the pitchforks and the torches ... you will not be needing them.

[Enumerate]

When bad audits go worse ...

http://www.nzx.com/news/5195161/Losses-put-auditor-in-spotlight

Statutory Managers from Grant Thornton may have difficulty understanding the Aorangi/Wealth/Trust accounts due to issues that are less Allan Hubbard's bookkeeping and more a basic level of incompetence ...

[minimoke]

When bad audits go worse ...

http://www.nzx.com/news/5195161/Losses-put-auditor-in-spotlight

Statutory Managers from Grant Thornton may have difficulty understanding the Aorangi/Wealth/Trust accounts due to issues that are less Allan Hubbard's bookkeeping and more a basic level of incompetence ...

Pretty game of you to raise the issue of Auditors Enumerate. We only have to look back at SCF's Ashburton based auditors for a sense of AH's desire to have books audited to a kosher standard.

[Enumerate]

Out of the frying pan, into the fire ...

[minimoke]

Before you guys get too excited, run off with the pitchforks and the torches ... I suggest you all calm yourselves.

Consider, if you are able, the Macquarie Fortress Notes (FTNFA.NZX, MFNHA.ASX). This is setup as a charitable trust. This entity will reward the serious student with a number of key observations on how these trusts can be setup and operate ...

Forgive me, if I wait to see some demonstration of actual insight into the situation before I comment further.

However, I suggest you can put away the pitchforks and the torches ... you will not be needing them.The issue of Charitable Trusts is probably worthy of its own separate thread. But to stay on topic, lets not forget that AH has yet to account for the trusts he was rapidly setting up in March 2010 and transferring assets into them before he was knobled.

Then you have the sophisticated Aorangi investors who put $96m into Aorangi with expectations which seems bit at odds with a charity. That aside, some $24m went from Aorangi into Te Tua. So its not so much that AH is charitable, its more his investors are. And then when things at Aorangi get a bit dicey AH offers to transfer $28m of the Trusts assets into Aorangi. Some may say propping up Aorangi is pretty charitable but I think it may be more of a matter of AH realizing that charity begins at home.

I'm not sure any of those Timaru investors need to consider themselves serious students of how trusts get set up and run. If they understand how and why AH moved funds I suspect they are the Tutors.

[Enumerate]

Forgive me, if I wait to see some demonstration of actual insight into the situation before I comment further.

[minimoke]

Forgive me, if I wait to see some demonstration of actual insight into the situation before I comment further.
You and me both. I think we are all looking for some insight which will no doubt come from the evidence that is presented - assuming the matter ever gets to court. I have a sneaky feeling though it will be like the final SCF Annual report and unlikely to ever see the light of day.

[Balance]

What Hubbard had been up to.

Aorangi investments non-existent: SFO
EMMA BAILEY Last updated 10:12 01/07/2011

Some investors in Allan Hubbard's Aorangi Securities believed they had seven-figure sums in the company, but these did not actually exist, the Serious Fraud Office alleges.

Details of the 50 fraud charges laid by the SFO against the Timaru financier are emerging this morning.

Hubbard was due to make his first appearance in the Timaru District Court on Monday, but that was yesterday adjourned to August 29 by agreement between his lawyer and the SFO.

However, documents relating to the case were made available to the media at the court this morning.

One of the charges reads: ''He, with intent to deceive [an investor] made or caused to be made, or concurred in the making of, a false entry in an account. A statement of account for the period 31 December 2009 to 30 June 2010 showing an investment of $5,821,441, when in fact no such investment existed in Aorangi Securities Ltd.''

Another similar charge relates to a different investor's investment of $1.45 million, which the SFO also alleges did not exist.

The SFO laid the charges on June 20 under sections 220, 242 and 260 of the Crimes Act, after a 12-month investigation.

The charges relate to theft by a person in a special relationship, false statement by a promoter and false accounting.

Charges under the latter two sections carry a maximum term of 10 years' imprisonment.

Hubbard's wife, Jean, who was placed in statutory management along with her husband, their companies Aorangi Securities and Hubbard Management Funds, and a number of charitable trusts, has not been charged.

[winner69]

Balance - might have been an input error of Jean's that Alan never picked up on .... kosher

If not seems he was cooking the books eh

[Balance]

Enumerate would say of course that these charges are but sloppy accounting.

How can anyone expect an 80 year old to remember how many shares are held by HFM and Aorangi in various entities? Especially when his pencils are down to the last 1 inch (waste not, see?).

Heck, what's the big deal between a first and second mortgage? Our school system these days says it's okay to come last - as long as you try hard.

As for the $210,000 deposited into Hubbard's own nominee account instead of paying down debt, that's just a temporary arrangement. He just forgot to take it out later. After all, he is an old man.

These are all trumped up charges, designed to destroy an honorable man who will never dream of deceiving anyone.


Aorangi investments non-existent: SFO
EMMA BAILEY Last updated 12:12 01/07/2011

Some investors in Allan Hubbard's Aorangi Securities believed they had seven-figure sums in the company, but these did not actually exist, the Serious Fraud Office alleges.

Details of the 50 fraud charges laid by the Serious Fraud Office (SFO) against the Timaru financier have been released this morning.

Mr Hubbard was due to make his first appearance in the Timaru District Court on Monday, but that was yesterday adjourned to August 29 by agreement between his lawyer and the SFO.

The SFO laid the charges on June 20 under sections 220, 242 and 260 of the Crimes Act, after a 12-month investigation.

The charges relate to theft by a person in a special relationship, false statement by a promoter and false accounting.

Charges under the latter two sections carry a maximum term of 10 years' imprisonment.

In a statement on the day charges were laid, Mr Hubbard's lawyer, Mike Heron, said he ''strenuously denied'' the charges and ''at the appropriate stage'' an application would be filed ''to stop the prosecution''.

Two charges allege investors believed they had seven-figure investments when they were not held.

The first charge, of false accounting, reads: ''He, with intent to deceive [an investor] made or caused to be made, or concurred in the making of, a false entry in an account. A statement of account for the period 31 December 2009 to 30 June 2010 showing an investment of $5,821,441, when in fact no such investment existed in Aorangi Securities Ltd.''

The SFO claims a second investor believed they held $1,456,253 when there was no such deposit.

Another charge alleges the same investor believed funds had been deposited in South Canterbury Finance (SCF) but the SFO alleges the bulk of the funds had not been.

A farm partnership, it is alleged, sent $210,000 to accounting firm H C Partners for payment of debt but this was instead paid to Mr Hubbard's Forresters Nominee Company.

Another charge relates to a letter sent to an investor, stating that the majority of Aorangi Securities investments were held by first mortgages. The SFO alleges that this was not the case.

Another charge of false accounting relates to a statement of account sent to 367 investors, showing that approximately $89 million was secured by way of mortgage when according to the SFO ''in fact the majority of investments were not secured by way of mortgage to Aorangi''.

A charge of theft by a person in a special relationship alleges that 500,000 Marac Finance shares held for an estate were transferred without payment to another individual.

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Twenty-five charges relate to Aorangi investors with investments made on the basis that they were secured by way of mortgage, many by first mortgage.

Ten of the charges of false accounting relate to securities said to be held by Hubbard Management Funds, which allegedly did not exist in the amounts they were said to.

''He, with intent to deceive investors in Hubbard Management Funds made a false entry in an account or document for accounting purposes.

''A statement to Hubbard Management Funds investors showing Fletcher Building Limited securities allocation to investors of 336,300 when that number of securities were not held, resulting in a shortfall.''

The other nine charges relate to the level of securities held in Freightways, NZ Oil and Gas, Pacific Edge, Pyne Gould Corporation, Rakon, Ryman Healthcare, Smartpay, Marac, and Diligent Member Services.

Seven charges of false accounting under Sections 260 and 261 relate to ''statement of account to Aorangi Securities investors reporting investments secured by way of a mortgage when in fact the majority were not''.

Mr Hubbard's wife, Jean, who was placed in statutory management along with her husband, their companies Aorangi Securities and Hubbard Management Funds, and a number of charitable trusts on June 20 last year, has not been charged.

[minimoke]

Forgive me, if I wait to see some demonstration of actual insight into the situation before I comment further.
Perhaps you might like to comment on the recent Charities Commission High Court case which emphasised that to qualify as a charitable trust its purpose must be within the spirit of the age old Charitable Uses Act 1601. This essentially say the purpose of a charitable trust must be for :
- the relief of aged, impotent, and poor people;
- the maintenance of sick and maimed soldiers and mariners;
- schools of learning;
- free schools and scholars in universities;
- the repair of bridges, ports, havens, causeways, churches, sea banks, and highways;
- the education and preferment of orphans;
- the relief, stock, or maintenance of houses of correction;
- marriages of poor maids;
- support, aid, and help of young tradesmen, handicraftsmen and persons decayed;
- the relief or redemption or prisoners or captives;
- and the aid or ease of any poor inhabitants covering payments of fifteens, setting out of soldiers, and other taxes.

How does "Mr Hubbard advised us that he introduced approximately $25 million of Te Tua assets to Aorangi with the purpose of strengthening the Aorangi balance sheet" fit into the spirit of this Act?

[Balance]

Perhaps you might like to comment on the recent Charities Commission High Court case which emphasised that to qualify as a charitable trust its purpose must be within the spirit of the age old Charitable Uses Act 1601. This essentially say the purpose of a charitable trust must be for :
- the relief of aged, impotent, and poor people;
- the maintenance of sick and maimed soldiers and mariners;
- schools of learning;
- free schools and scholars in universities;
- the repair of bridges, ports, havens, causeways, churches, sea banks, and highways;
- the education and preferment of orphans;
- the relief, stock, or maintenance of houses of correction;
- marriages of poor maids;
- support, aid, and help of young tradesmen, handicraftsmen and persons decayed;
- the relief or redemption or prisoners or captives;
- and the aid or ease of any poor inhabitants covering payments of fifteens, setting out of soldiers, and other taxes.

How does "Mr Hubbard advised us that he introduced approximately $25 million of Te Tua assets to Aorangi with the purpose of strengthening the Aorangi balance sheet" fit into the spirit of this Act?

His lawyers (along with Enumerate undoubtable logic and free help) are considering the category of 'marriages of poor maids".

[minimoke]

His lawyers (along with Enumerate undoubtable logic and free help) are considering the category of 'marriages of poor maids".
Makes sense - there was me thinking it might be "relief of the aged"

[fungus pudding]

Forgive me, if I wait to see some demonstration of actual insight into the situation before I comment further.

It's getting near that time.

http://www.nbr.co.nz/article/hubbard-charges-leak-db-96316#comments

[minimoke]

It's getting near that time.

http://www.nbr.co.nz/article/hubbard-charges-leak-db-96316#comments
What do we have:
- an intent to deceive (telling someone there was a $5m investment when there was none)
- theft by a person in a special relationship (stealing from a dead person and taking some farmers loan repayment and sticking it in his own account)
- false statements by a promoter (saying money was secured by first mortgage when it wasn't)
- false accounting ($89m in mortgages weren't actually secured by mortgage).

We now know the SFO has enough evidence to lay these charges. So we can look froward to AH's version of the truth and see if he can prove beyond reasonable doubt he's not guilty. Oh dear - I smell another David Bain type thread starting - Is AH "innocent" or was he just "Not Guilty". Assuming of course we ever hear a verdict - which I doubt we will.

Either way, seems like charity begins at home.

[Balance]

Very simple now for Hubbard to refute. Were there assets or weren't there assets?

The SFO gave Hubbard and his lawyers all the time in the world (since Nov 2010) to come up with reasonable explanations. All they could come up with were : "This is ridiculous. We are innocent." and of course, the infamous brain scan!

The fact that Hubbard is now charged points towards the obvious.

Enumerate would of course state that it's just a jay walking charge. Wonder how he would feel if it's aged parents who were told by Hubbard that they had $5.8m of investments when the investments do not exist.

"Documents revealing details about the case were released yesterday, including information on charges that he allegedly deceived investors into thinking they had seven-figure sums invested in his company Aorangi Securities.

One of the charges says a statement showing an investment of $5,821,440 was given to an investor "when in fact no such investment existed". Another similar charge related to an investment of $1.45 million which the SFO also says did not exist."

[fungus pudding]

Very simple now for Hubbard to refute. Were there assets or weren't there assets?



Exactly; and if these assets existed anywhere other than Mr. Hubbard's imagination, they would have been identified or discovered by now. It all reminds me of the book, Jones on Property: quote " There was one curious common demominator with all the major, and minor, NZ property crashes. Almost without exception, the principal of each company has had strong, religious convictions. It makes you wonder, doesn't it .....where the hell was God when the heat was on?"
I suspect Hubbard may have thought his mate, God, had it all under control. After all, he was doing his work for him.

[Balance]

Read page 6 of the latest SM's report :

http://www.grantthornton.co.nz/Assets/documents/statutory-managers/aorangi-statutory-managers-7th-report.pdf

"In our introduction to this report we commented on the difficulty being encountered with the
purported introduction of Hubbard Interests into Aorangi. Most of the Hubbard Interests recorded
in Aorangi were introduced by way of journal entry. There are no records of cash transactions in
return for the introduction of the Hubbard Interests."

So it's Hubbard Interests - Credit $xm.
And for Aorangi - Debit ????

And there are those who still believe it's sloppy accounting!

[Enumerate]

We know exactly as much as we knew when the "50 charges" were announced by press release (that, in and of itself, should cause some concern).

We now have the trial proceeding in the court of Kangaroo, presided over by the dishonourable Injustice Balance ...

Forgive me, if I cannot see any dignity in this squalid display ... I will wait to see what finally emerges at indictment.

[Balance]

Where is the Receiver's report that projects SCF losses at "over $1 billion"?

Also, I believe the 50 charges apply to Aorangi, HWM and the Trusts - maybe $30m loss, worst case. Does this mean that Mr Hubbard will face a pro rated total of 15,000 charges for SCF?

... untidy handwriting

... willful bending of paper clips

... jay walking in Timaru

...

50 charges is absurd. How about demonstrating 1 charge in which there is clear cut criminality or fraud. Where is the "smoking gun" Mr Feeley? Where is your justification of Statutory Management?

This looks more and more like a government vendetta. They dug themselves a hole, with Statutory Management. They are determined to bury Allan Hubbard in it. Dishonest and corrupt practice always emerges when the bureaucracy is given power to cover up its own mistakes.

LOL - this is Enumerate's take on the charges when they were released.

If you don't like the charges, then by all means do not read them.

But do not make jest of them at Hubbard's expense - they are serious - fraud and criminal charges.

[Roger]

Balance me ol mate. Enumerate will chew up and waste endless amounts of your time if you let him. You will never ever correct his myopic vision and you know it so why bother trying ??? Surely there's a more productive use of your time ???.
Hubbard is a silly old sick fool, (albeit well intentioned), who should have known better and has become dellusional in his mission to do good. Greater and greater "errors" and creative accounting were tolerated by Mr Hubbard under the guise of working for a higher purpose.

The takeaway lesson from this extremly sad saga is we all need checks and balances in our life.
There's better and more productive ways to spend my time which is why I havn't bothered posting on this thread for many months.

[Balance]

Thanks, Roger.

Hardly a waste of time to see delusionary behaviour in action when one reads Enumerate postings. Best study of a deluded human being I have seen in a while.

Kinda brings a smile to my face every day.

Cheers!

[Roger]

Fair enough pal, I enjoyed it for quite a while too. Funny thing with working for a higher purpose from what I've seen, little sins get swept under the carpet on the basis that it doesn't matter the greater good justify's the means and little by little by little the circle of deception grows to the point that self rightiousness creeps in and almost anythying is justifable on the basis of the higher purpose. That and juggling a 101 different balls to stay afloat during the GFC is all what's happened here, that said there are many players who are culpable in this sorry protracted saga, heck has anyone emerged from this mess without sufferring at least some degree of reputation loss ?

An extremly well meaning, well intentioned, very sick old man who should have retired years ago and quit while he was ahead. That so many people believed in him is the real scandal. I for one am looking forward to the possibility of seeing the auditors and directors personally sued.
Its perhaps the saddest and most ironic collapse of the GFC era...

[Balance]

Fair enough pal, I enjoyed it for quite a while too. Funny thing with working for a higher purpose from what I've seen, little sins get swept under the carpet on the basis that it doesn't matter the greater good justify's the means and little by little by little the circle of deception grows to the point that self rightiousness creeps in and almost anythying is justifable on the basis of the higher purpose. That and juggling a 101 different balls to stay afloat during the GFC is all what's happened here, that said there are many players who are culpable in this sorry protracted saga, heck has anyone emerged from this mess without sufferring at least some degree of reputation loss ?

An extremly well meaning, well intentioned, very sick old man who should have retired years ago and quit while he was ahead. That so many people believed in him is the real scandal. I for one am looking forward to the possibility of seeing the auditors and directors personally sued.
Its perhaps the saddest and most ironic collapse of the GFC era...

Roger me-ole-mate, agree totally.

What is sickening (and not so amusing) is the fact that there are people out there who continue with the deception of the already deceived investors - by spinning the yarn that it is all the government or somebody's else faults that investors are going to end up losing money. Nothing to do with Hubbard - he is a honest man who somehow got on the wrong side of the government!

Don't let the truth get in the way - that Hubbard was busy cooking and forgot that red wine does not mix with seafood!

[Roger]

Yes mate, Hubbards not the only silly old man in N.Z. by any stretch of the imagination :)

[minimoke]

An extremly well meaning, well intentioned, .....
Thats not what the charges against him infer.

Since when has "with intent to deceive...." considered to be well intentioned or well meaning.

Or what about when the noose begins to tighten he sets up a pile of trusts and starts transferring loot into them faster than a Jew can count a stash of $100 bills. (if "jew" offends feel free to replace with "Brian Tamaki" "South Auckland Money Lender"; "High Class Hooker" or whatever takes your fancy.

Or what about making a journal entry and never actually transferrring the loot.

Or misleading investors... The list goes on.

How is it well intentioned to declare yourself "President for life". You wouldn't call Mugabe "well intentioned". I'm not suggesting AH is a RM but you get a sense of the ego and the man when these sorts of things start happening.

And if you still are in doubt theres the "no-one in the SFO has the brains to understand the transactions" Newsflash - they do understand the transactions and we are learning about the brains behind them.

Well intentioned - my arse. Theres the "I am a New Zealand hero, nobody in the history of New Zealand has done what I have done." Too bloody right.

What his intentions were we may never know. Getting a free pass to the side of his Lord is probably up there.

[minimoke]

Anyone remember the fable about the near bankrupt Plasterer. AH, through SCF, lent him $100,000. When $60,000 had been paid off AH took the remaining repayments and invested them on the mans behalf. He told the man he wouldn't be able to grow his business (despite making $20,000 in loan repayments each year) and without AH's intervention it would be worth nothing. Who knows where the money went - it may have found its way into Aorangi and then into Te Tua but its said AH grew the investments so they became worth $1.5m. This is how AH helped people - belittling their abilities, taking their money and telling them it was worth a truck load more. So wheres the plasterer now? Again who knows. Probably $40,000 in debt with $1.5m of journal entry assets worth nothing. But AH gets home help for free. Maybe someone can tell us how this story actually ended and we can work out what the moral of it is.

[Roger]

minimoke - I was referring too how he started out, there's no doubt whatsoever in my mind that the wheels well and truly came off in later years and there's no question his ego got the better of him along the way too. As mentioned sinning always starts off in a small way and eventually grows little by little to the point of almost moral indignation, (how dare you question my methodoloigies ??) when almost anything is justifable in Alan's mind based on the higher end cause justification theory.

I'm more than happy to leave it to Enumerate's "infinite wisdom and insights" to try and defend "Uncle Alan's" actions.

[Enumerate]

I'm more than happy to leave it to Enumerate's "infinite wisdom and insights" to try and defend "Uncle Alan's" actions.

What kind of person is prepared to pickup a stone and throw it at someone without a care or concern for the justification of that action?

What kind of person is prepared to defend the right of an accused to face his accusers and answer charges?

That is the difference between us.

[Balance]

What kind of person is prepared to pickup a stone and throw it at someone without a care or concern for the justification of that action?

What kind of person is prepared to defend the right of an accused to face his accusers and answer charges?

That is the difference between us.

LOL - that is not the difference.

Do not give yourself any credit for making light of the serious fraud and criminal charges against Hubbard.

Remember this :

... untidy handwriting

... willful bending of paper clips

... jay walking in Timaru

50 charges is absurd. How about demonstrating 1 charge in which there is clear cut criminality or fraud.

----------------------------

What's the moral of this story?

A man was chosen for jury duty who very much wanted to be dismissed from serving. He tried every excuse he could think of but none of them worked.

On the day of the trial he decided to give it one more shot. As the trial was about to begin he asked if he could approach the bench.

"Your Honor," he said, "I must be excused from this trial because I am prejudiced against the defendant. I took one look at the man in the blue suit with those beady eyes and that dishonest face and I said, 'He's a crook! He's guilty, guilty, guilty.' So your Honor, I could not possibly stay on this jury!"

With a tired annoyance the judge replied, "Get back in the jury box. That man is his lawyer."

[minimoke]

minimoke - I was referring too how he started out, there's no doubt whatsoever in my mind that the wheels well and truly came off in later years and there's no question his ego got the better of him along the way too.
I guess it depends on where you consider "where he stared out" to actually begin.

If you track his roots you'll find he started out as a local hooligan involved in petty crime who was well known to the local constabulary. His charismatic personality shone through early as a local gang leader and he was smart enough to avoid getting caught.

They were depressing times back then and being beaten by your dad wouldn't have helped his mental health. Which might explain his bought of depression and suicidal thoughts. Add to that the addictive personality of his grandfather and father, exposure to fundamentalism christian beliefs and a feeling of social inadequacy you have a recipe for what.

Now I have no doubt he believed he was doing gods work and I have no doubt the benificiaries of his largesse held him in reverential regard. But somewhere along the way the wheels fell off. To some extent thats life however I tend to draw the line when an individual is going down he knowingly or unwittingly takes others down with him.

Enumerate asks what kind of person is prepared to throw stones. Clearly I am since I am one of the people that has had to pick up the pieces of the mess AH has left behind.

I support Enumerates view that an accused should have the opportunity to face his accusers and defend the charges. We haven't seen all the evidence yet and none of us are in a position to to form a view on his guilt or innocence in relation to the charges he faces. However there is sufficient information in the public domain upon which each of us can form a view on AH's business practices and we might even form a view on the morals of his actions.

That doesn't mean our views are set in concrete - we are entitled to reshape our views as more information comes to light. Thats why its worth popping into this thread from time to time, just to see if there is any kind of rigorous analysis being added to the debate. Its also about get a sense of the seriousness of the issues. Being charged with intending to deceive is a whole lot different from jay walking. I guess that's why some posters don't think its too big a deal when unsophisticated old folk have been taken for a ride.

[Enumerate]

Being charged with an offense under the Crimes Act means ... nothing. Being convicted of an offense ... well, that is a very serious matter.

Why is it so difficult to understand that Allan Hubbard deserves very careful treatment because of the highly unusual circumstances of the "investigation" into his affairs. He is subject to Statutory Management and conventional powers of investigation have been amplified beyond anything present in the Companies Act. Yet his "offenses" do not appear to be anything like the dark and ominous "defence of the public interest" used to justify Statutory Management.

The "hail fellow, well met" brigade are happy to gossip and slander on this forum. These are not men of principle, these are followers of the herd. It is unsurprising that the NZ financial services market is full of these people - they have been richly rewarded, in the past, by trading information in advance of an informed market. Fortunately, the FMA regulations and FSP will usher in a new generation who do not define ethics as "what you can get away with".

Since we are on the subject of stoning ... I wonder if we are witnessing "those without sin, casting the first stones"; or whether we are in the presence of a pack of wolves turning on the one they view as the weakest?

[minimoke]

Being charged with an offense under the Crimes Act means ... nothing.
Are you serious? It means the police believe they have enough evidence to support a prosecution. Thats not a good look in anyone books. Being charged with one offence is bad enough but 50!. And that's only the Crimes At. What about the Companies Act or the Securities Act or the Financial Reporting Act.

You may not think it in the public interest to try to work out how / where the Aorangi money went. But I do since I'd prefer the techniques money managers use to obtain funds from the public and how they are distributed be more widely known. If you prefer these to be kept as little trade secrets kept in that glorified air of Financial Managers then so be it - history is doomed to repeat.

[Balance]

Fortunately, the FMA regulations and FSP will usher in a new generation who do not define ethics as "what you can get away with".



Well said, Enumerate.

For once we are in agreement.

If the FMA regulations were in force, Hubbard would have been stopped a long time ago - not $1 billion plus damage to taxpayers' funds later.

[Balance]

http://www.stuff.co.nz/business/money/5238806/Hubbard-firms-owe-SCF-190m

How devious.

The Hubbard money-go-round.

It's the equivalent of turning diamonds into coal - that 's what Hubbard has done. SCF took deposits/cash from investors, Hubbard then took the cash from SCF and then, pledge his shares in SCF as security to SCF!!!!!

[Enumerate]

... and who was it that took deliberate and calculated steps to turn the equity value of SCF to zero ... the NZ government.

Statutory Management of Allan Hubbard at a time of the greatest stress to SCF was the critical damaging blow.

However, the passive attitude Treasury took to the reconstruction attempts and the veto of a viable reconstruction proposal was the killing blow.

NZ government actions to reduce SCF equity to zero value are a gigantic "own goal".

[minimoke]

... and who was it that took deliberate and calculated steps to turn the equity value of SCF to zero ... the NZ government.

A bit of re-writing history there Enumerate. You don't have to go to far back to see it was the Government that allowed SCF into the Guarantee Scheme. That gave SCF some breathing space which they exploited to the detriment of the tax payer. If you have any anger against the government perhaps it should be pointed towards treasury and how on earth they let SCF into the Extended Guarantee Scheme.

You can also blame the government for moving when they did as that has prevented us from seeing the SCF Year End accounts (which were late anyway). Had they delayed a bit further SCF might just have squeezed at an year end report and we would have seen their latest version of their position.

Had AH had a succession plan and delegated authority to others well before the GFC (as he should have at his age and health) the fall out wouldn't have been so great - it would have been a retired ex accountant in Stat Man rather than a pig headed and delusional man who allowed the blind and mislead to continue to pump funds into his business for no other reason than to support AH.

[Enumerate]

... it was the government guarantee that got SCF into vast problems to begin with.

It was a market distortion, when SCF ranked well; it killed them when they ranked poorly.

Government meddled, got cold feet and killed the company.

[Balance]

... it was the government guarantee that got SCF into vast problems to begin with.

It was a market distortion, when SCF ranked well; it killed them when they ranked poorly.

Government meddled, got cold feet and killed the company.

So if donors contribute food generously to those in need but those in need choose to over-indulge and die, it's the donor's fault?

Very profound logic!

[minimoke]

... it was the government guarantee that got SCF into vast problems to begin with.

So you're saying that in 2008 all was rosy in the SCF camp. There were no problems with exposure to property developments or ramping up the values of diary farms? Lachie was doing such a sterling job there was no need for him to leave? You're saying there was no need for related party lending to bolster diminishing capital requirements?
Was it some One World plot to haul those reliable Ashburton Auditors over the coals for their dodgy practices in the 2008 YE accounts?

Don't you remember what the Auditors said back in early 2009. They said that SCF's Chief Financial Officer and Group Accountant weren't being kept in the loop about major transactions. Don't you remember that despite the obvious speed wobbles in 2008 the Directors couldn't be bothered meeting. Was that the government pulling the strings or was it AH?

After SCF got into the Guarantee Scheme the Directors continued with their practice of related party loans on the back if minimal notation at board meetings. Lending out of Timaru continued without the controls applied to other branches. There was no Audit Committee; documents for major transactions were sketchy and no one was in a hurry to provide them. Related party disclosures wasn't happening and "off market" transactions weren't properly documented. The Finance Department as under resourced adn - jeez the list goes on. And you think this is all the Governments Fault?

What the Guarantee did do that was wrong was to allow Finance Companies under its umbrella in the first place. They were paying higher interest to (supposedly) cover the additional risk and SCF used it as an opportunity to offer well over the odds rates. You can blame the govt for letting them get away with it - but not for SCF's downfall.

If you want to see who was responsible for getting SCF into its vast problems you really need to get more creative than trying to blame the government. There is no evidence to support that view - despite it being a labour government run by that twit Cullen.

[Enumerate]

So you're saying that in 2008 all was rosy in the SCF camp.

I will leave it to the intelligence and fair-mindedness of thread readers to determine if this is what I have said.

However, I have a feeling this will lead to some kind of "straw man" argument ...


There were no problems with exposure to property developments or ramping up the values of diary farms? Lachie was doing such a sterling job there was no need for him to leave? You're saying there was no need for related party lending to bolster diminishing capital requirements? Was it some One World plot to haul those reliable Ashburton Auditors over the coals for their dodgy practices in the 2008 YE accounts?

*snip*

Yup, looks like I was right.

[minimoke]

I will leave it to the intelligence and fair-mindedness of thread readers to determine if this is what I have said.

It is you who is asserting "... it was the government guarantee that got SCF into vast problems to begin with." Its for you to front up with your evidence to show SCF did not have vast problems prior to the Govt Guarantee. I suspect we'll have a long wait.

[Enumerate]

It is you who is asserting "... it was the government guarantee that got SCF into vast problems to begin with." Its for you to front up with your evidence to show SCF did not have vast problems prior to the Govt Guarantee. I suspect we'll have a long wait.

The government guarantee engineered a vast flood of "hot money" into SCF due to the fact that the deposits were government guaranteed.

Clearly, SCF was not in a position to rationally allocate all this money. Given, at the the time, SCF was held in high regard ... this money kept flowing.

The key problem loans originated during this period as SCF sought to expand its loan book outside the core domain of lending.

Once the retail deposit guarantee began to look tenuous; following on from Hubbard's Statutory Management - the "hot money" took flight.

Without the retail deposit guarantee ... a classic market distortion ... SCF would not have the level of bad debts entry in to property development lending foreshadowed.

This point is quite different from: "in 2008 all was rosy in the SCF camp".

[minimoke]

The government guarantee engineered a vast flood of "hot money" into SCF due to the fact that the deposits were government guaranteed.

Clearly, SCF was not in a position to rationally allocate all this money. Given, at the the time, SCF was held in high regard ... this money kept flowing.

The key problem loans originated during this period as SCF sought to expand its loan book outside the core domain of lending.

Once the retail deposit guarantee began to look tenuous; following on from Hubbard's Statutory Management - the "hot money" took flight.

Without the retail deposit guarantee ... a classic market distortion ... SCF would not have the level of bad debts entry in to property development lending foreshadowed.

This point is quite different from: "in 2008 all was rosy in the SCF camp".
Lets not forget the Deposit guarantee scheme was an "opt in" scheme. There was no compunction for SCF to join. But they did - and that was probably the wise thing to do. So SCF is responsible for entering the scheme.

It was SCF, not the govt, that set SCF deposit rates and it was SCF that set them a couple of points above the the market rate. SCF was responsible for setting their rates.

It was SCF that spruiked their deals. It was them that spruiked at rates over the odds.That they could not do it rationally is their problem. Not the government.

Its debatable if SCF was held in high regard. in 2008 finance companies were not held in high regard. There was risk of people running scared - that's why the Scheme was set up.

It was SCF who decided to extend loans outside its core business. Blame that on an ineffective Board, not the Government.

SCF had its problems before their entry into the Scheme. Refer to the Auditors letters for an idea of just how bad they were. If that doesn't interest you don't forget SCF had difficulty entering the original scheme - there were already issues around capital sufficiency ratios. You can blame the govt for letting SCF in on that basis - it was thought SCF's Tier 1 capital ratio was less than 5% where as the recognised minimum was around 6% for banks and 8% for finance co's.

And if you look closely SCF wasn't properly reporting where its loans were going (they had a broad interpretation of ANZIC codes) - so its probably not fair to say they had problems only when they got into Property Development. In early 2008 they had already sunk mega millions (some thing like $38m) into dodgy developments like Denerau.

You are right to be cross with the government - but only insofar that they let SCF into the original scheme.

The Guarantee was not supposed to cover related party loans - I guess we can blame the government on their intervention so that we may never get to know the extent of these loans. But we know SCF continued with these loans after their entry into the original scheme. Again SCF's responsibility.

[macduffy]

The government guarantee engineered a vast flood of "hot money" into SCF due to the fact that the deposits were government guaranteed.

Clearly, SCF was not in a position to rationally allocate all this money. Given, at the the time, SCF was held in high regard ... this money kept flowing

I can't buy that!

just because money carried the govt guarantee is no reason to keep on accepting it. The sensible course was surely to close the issue and withdraw the prospectus before the point was reached when money couldn't be "rationally allocated".

[Enumerate]

just because money carried the govt guarantee is no reason to keep on accepting it. The sensible course was surely to close the issue and withdraw the prospectus before the point was reached when money couldn't be "rationally allocated".

At the risk of labouring the point ... the reason why I am not saying things were rosy in 2008 was the fact that SCF were clearly not able to cope with the flood of money that came their way.

They should have borrowed long, to forestall a credit crunch due to short loan liquidity issues. They should not have borrowed as much - just to reset equity as a percentage of debtor assets at the high end of the scale. They did neither.

[Enumerate]

Lets not forget the Deposit guarantee scheme was an "opt in" scheme.

Are you seriously proposing that once the scheme was enacted that there was any option to "opt out"? Failure to "opt in" would have been commercial suicide.


Its debatable if SCF was held in high regard.

Chris Lee, circa 2008, would beg to differ.

Mini, you keep addressing your "straw man" point that SCF will fine and dandy in 2008. No one is arguing this ... just you, in reverse ...

[minimoke]

They should have borrowed long,
They should have - but no one would lend to them.

[Balance]

Chris Lee, circa 2008, would beg to differ.

.

And Chris Lee also thought that Strategic, St Laurence and Provincial were all fine as well.

In actual fact, Chris Lee thought that Allan Hubbard walked on water. Needless to say, not any more.

[fungus pudding]

In actual fact, Chris Lee thought that Allan Hubbard walked on water. Needless to say, not any more.

I think Mr. Hubbard himself thought the very same thing.

[Balance]

I think Mr. Hubbard himself thought the very same thing.

Notice how Chris Lee has taken all of his pre 2010 articles out of archives? Also, all the wonderful articles he used to do on rating the finance companies etc.

Strange behavior that.

PS. Forsyth Barr used to think the sun shone out of Allan Hubbard's nostrils?

[Roger]

[QUOTE PS. Forsyth Barr used to think the sun shone out of Allan Hubbard's nostrils?
That's a reputation that was already in tatters before the SCF fiasco. Credit Sails, Feltex e.t.c. Forbar's list of winners just goes on and on.
Wonder if they'll get named in any forthcoming legal action.

[minimoke]

Counsel for "Kosher as" honest AH may be looking at Nathans Finance Directors convictions with interest. Despite acting honestly they distributed misleading information which conveyed a false impression. We are still waiting for the SFO's view on SCF. John Hotchin pleaded guilty and got a bit of Home D. These guys couldn't see the error of their ways so will be interesting to see what their sentence is. It might give AH a sense on how to plead for his current charges. I'd be surprised if the collapse of NZ's largest finance Co could be let pass by without some charges being laid.

[Roger]

Counsel for "Kosher as" honest AH may be looking at Nathans Finance Directors convictions with interest. Despite acting honestly they distributed misleading information which conveyed a false impression. We are still waiting for the SFO's view on SCF. John Hotchin pleaded guilty and got a bit of Home D. These guys couldn't see the error of their ways so will be interesting to see what their sentence is. It might give AH a sense on how to plead for his current charges. I'd be surprised if the collapse of NZ's largest finance Co could be let pass by without some charges being laid.

The real problem my friend is that maximum penalties under the Secutities Act are totally pathetic, $300,000 or 5 years imprisonment and of course nobody gets anywhere near the max.
Go into your local bank with a gun and rob them of $1,000, the tellers will all suffer terrible trauma for sure and you'll probably get 7-10 years if you get caught.
On the other hand, if he's at the very least found to be culpable for the loss of $1 billion plus, amoung other things and he'll probably get Home D. Worse still the other directos of other finance companies who are confirmed criminals and who have been sentenced to date have received absolutly pathetic sentences considering the tens of thousands of people's lives that have been incredibly seriously affected.

N.Z. Securities Laws are very, very seriously flawed. If the Govt doesn't write legislation that really allows the judges to bite hard on these bastards how can they ? Until we get really meaningful deterrant sentences and judges that will impose the maximum where the heck is the deterrant to committ serious white colour crime ? At present it simply doesn't exist. Many finance company directors are laughing all the way to their family trust private bank fund in Switzerland and with the Swiss currency going through the roof, they're laughing even harder.

[Marilyn Munroe]

The real problem my friend is that maximum penalties under the Secutities Act are totally pathetic, $300,000 or 5 years imprisonment and of course nobody gets anywhere near the maxium.
Go into your local bank with a gun and rob them of $1,000, the tellers will all suffer terrible trauma for sure and you'll probably get 7-10 years if you get caught.


"The best way to rob a bank is to own one"

William Crawford, California Savings and Loan Commissioner.

Boop boop de do

Marilyn

[Roger]

"The best way to rob a bank is to own one"

William Crawford, California Savings and Loan Commissioner.

Boop boop de do

Marilyn

Not sure Northern Rock or Bank of Scotland shareholders would agree with you :)

[Balance]

Latest from NBR - Hubbard and Ed Sullivan agreed to a $20m golden parachute goodbye package for Lachie McLeod - without the knowledge and support of other directors.

This is Mr Hubbard at his best - dishing out taxpayers' monies like lollies to his mates.

And Mr Ed Sullivan is Lachie McLeod's business partners on other things.

Wonder if it's to keep Lachie's mouth shut?

[minimoke]

Latest from NBR - Hubbard and Ed Sullivan agreed to a $20m golden parachute goodbye package for Lachie McLeod - without the knowledge and support of other directors.

Is that on top of the $15m loan to LM which was "paid back" n November 2009. There is certainly a gagging clause attached to that loan

[Balance]

Is that on top of the $15m loan to LM which was "paid back" n November 2009. There is certainly a gagging clause attached to that loan

The $20m was part of the package.

NBR managed to get a copy of the agreement and talked to the other directors.

Best part of the package is that Hubbard valued the $15m loan secured by Southbury shares - presumably as being worth $15m!!!!!!

The guy is a magician!

[minimoke]

The $20m was part of the package.

NBR managed to get a copy of the agreement and talked to the other directors.

Best part of the package is that Hubbard valued the $15m loan secured by Southbury shares - presumably as being worth $15m!!!!!!

The guy is a magician!

I think perhaps NBR is mistaken. Back in July Sandy Maier was very clear. He recognised these as related party loans ans was quite categorical that all such loans were overseen by the Board. SM wasn't misleading the market was he?

Any mention made of Ed's $750,000 loan?

[Balance]

I think perhaps NBR is mistaken. Back in July Sandy Maier was very clear. He recognised these as related party loans ans was quite categorical that all such loans were overseen by the Board. SM wasn't misleading the market was he?

Any mention made of Ed's $750,000 loan?

Lachie went out in Nov 2009 and Sandy came in Dec 2009.

If it was not taxpayers' money, it would be such a laugh.

And many in NZ scream blue murder when a beneficiary makes off with an extra $100 a week! Lachie and Hubbard just did taxpayers out of $15m just on this goodbye deal!

[Balance]

An Allan Hubbard and Lachie McLeod special - being fleeced by an Aucklander!

Arundel Park development - 6 units to be sold at 3m each = $18m.

SCF advanced developer $15.6m.

So far, 4 units sold for $6.6m and remaining 2 being marketed at $1.8m each.

Oh well, not as bad as the $15m advanced by SCF to Lachie to buy shares off Hubbard.

[minimoke]

An Allan Hubbard and Lachie McLeod special - being fleeced by an Aucklander!

Arundel Park development - 6 units to be sold at 3m each = $18m.

SCF advanced developer $15.6m.

So far, 4 units sold for $6.6m and remaining 2 being marketed at $1.8m each.

Oh well, not as bad as the $15m advanced by SCF to Lachie to buy shares off Hubbard.
Actually , I think you'll see its taxpayers being fleeced by SCF.

Arundle Parks went into receivership initially owing SCF $14.4m I think SCF plonked in another $1.2 m (if not SCF then someone else is a secured creditor who will get first dibs on the cash)

Four units did sell - but it was for a total of $6.6m (and SCF got $5.5m) leaving quite a shortfall.

Good old tax payer. Standing behind Alan so he could take in the loot and dole it out to who - his mates Ed and and Lachie!

[Balance]

Alas, you are right. Mini.

[Roger]

The $20m was part of the package.

NBR managed to get a copy of the agreement and talked to the other directors.

Best part of the package is that Hubbard valued the $15m loan secured by Southbury shares - presumably as being worth $15m!!!!!!

The guy is a magician!

There's little doubt that McLeod was personally responsible for some of the most poorly considered commercial lending ever undertaken in N.Z.'s corporate history, he had a free option to explore growth, (appently with gross disregard for the risks), at any cost.
To be rewarded with one years salary on departure when he should have been on the hook for the $15m loan repayment is a scandal all of its own. This guy deserves to have been bankrupted allready in my opinion.

[minimoke]

To be rewarded with one years salary on departure when he should have been on the hook for the $15m loan repayment is a scandal all of its own. This guy deserves to have been bankrupted allready in my opinion.
In one sense he has departed but if we check out his directorship history we'll see he's still tied to SCF. Here's what he' been up to. There is very little activity outside SCF.

He’s a Director of West Coast Finance Limited and Whangarie Finance Limited, owned by Forresters Nominees which is owned by AH.

He was a Director of North Harbour Finance, owned by FN / AH. That company was struck off 22 June 2010. Same with Marlborough Finance Limited and Nelson Finance Limited.

He’s a Director of Tauranga Financial Services, owned by FN / AH. They were a bit tardy with their Annual return and about to be struck off because no longer trading. Same with Westland Finance Limited.

Still a Director of Southbury Finance owned by DN / AH.

Still a Director of Hedgehope Holdings Limnited. A bit more complex. Owned by Buckie Holdings Limited, which is part owned by Hornchurch Limited (in receivership), which is owned by South Canterbury Finance. Pretty much the same with Micah Holdings Limited

A Director and owner of River Valley Limited. No direct ownership by AH but Hubbard Churcher registered the Docs. So if you dig a little deeper you find AH was an original shareholder.

There was Sybil Holdings Limited (originally Finance House Limited) which was owned by Strathallan Nominee Company Limited and that ones part owned by Ed Sullivan. Lahie’s no longer a director. Same with Division Holdings Limited.

He’s no longer a Director of AFL Properties Ltd as they amalgamated to form Hornchurch Limited. This was another Ed, AH and Stuart Natrass company.

He was a Director of Regency Carparks Limited resigned 30 Nov 2009. You might be thinking he was diversifying his portfolio but regency was owned by Regency Auckland Limited which is owned by Regency Hotel Holdings Limited which is owned by SCF.

He and Ed were Directors of Syd Investments ltd now struck off.

There was SCF Hawkesbay Limited, Ashburton Finance Limited and Southland Finance Limited owned by SCF. Ceased his directorship in November 2009. Same with Ecaf Limited

He was a Director of Angel Place Limited until Feb 2010. Ed followed him a few months later. Another company owned by Regency Auckland Limited. Pretty much the same with Regency Operations Limited

He’s owner / Director of Dunvegan Seadown Limited incorporated in December 2007.

He ceased being a Director of Revolver Management Limited in Oct 2010. That one’s part owned by Sophia Investment Limited which is owned by SCF.

He and Peter Bosworth have set up Bosworth Mcleod Capital Limited in 2010.

He had a six week stint as Director of Lund Administration Limited in 2008.

But perhaps his shortest stint along with Mr Ed was Director of Hilltop Hotels Limited. This one lasted 2 weeks at the end of 2008. Hilltop was owned by Quadrant Holdings Limited which is owned by SCF.

[minimoke]

Despite their financial shenningans I hope Mr and Mrs H are OK. Doesn't sound like AH is too health though. Multiple injuries not a good sign.
(has the VW been traded?)

[QOH]

Yes I wish them both well, perhaps the volkswagon had been written off previously

[winner69]

Sad news ... nobody wants to see people killed in a road accident

Probaly only crystalise peoples views and emotions further ..... and many questions will remain unanswered

Edit - Herald says he died ... radio just said he may have survived

[percy]

Sad news.
I noticed on wednesday there was a Hubbard supporters sign in a paddock at about the place where the accident occured.
I just think how different things would have turned out if he had sold out ten years ago.

[Sideshow Bob]

I think you are right Percy, the sign is very close to where the accident must have been.

Very sad news and condolences to their family.

[Enumerate]

Tragic news for Mrs Hubbard and the family. Events have further conspired against the Hubbards to clear their good name - I am deeply saddened by this.

[Marilyn Munroe]

David Hillary has posted a reflective view of the life and times of Allan Hubbard on his biog.

http://www.lostsoulblog.com/


Boop boop de do

Marilyn Munroe

[Enumerate]

I read the Hillary "eulogy" for Mr Hubbard.

Hillary grapples with his own ontological dilemmas as he tries to say something about Mr Hubbard's life. After much rambling about ... he arrives at the conclusion that he doesn't know.

Not much of a "eulogy" - just another dimension of David Hillary "vanity".

Where Hillary sees nothing that does not confuse him, in the life of Allan Hubbard - I see a profound simplicity. Mr Hubbard made money the "servant" in his relationships with people; not the "master". While Mr Hubbard was clearly deeply religious; this obviously motivated his desire to do good. However, his core values transcend religion - he simply applied these core values completely and logically, in his life. Perhaps it is a generational thing - if you lived through a depression and a few wars; you may view the people in your community differently from those who have only known an affluent NZ society.

[minimoke]

Anyone care to explain this for me. Struggling to make sense of the South Island Farm Holdings arrangements: http://www.stuff.co.nz/timaru-herald/news/5605196/Complex-deal-70m-in-limbo

[Enumerate]

Even the NBR is part of the chorus demanding that Feeley should go:

http://www.nbr.co.nz/article/nbr-editorial-champagne-charlie-must-go-102035

Of course "the end justifies the means" brigade cannot see any form of issue ... I wonder how many charges under the crimes act Feeley will face? Theft as a servant ... ?

[Balance]

Even the NBR is part of the chorus demanding that Feeley should go:

http://www.nbr.co.nz/article/nbr-editorial-champagne-charlie-must-go-102035

Of course "the end justifies the means" brigade cannot see any form of issue ... I wonder how many charges under the crimes act Feeley will face? Theft as a servant ... ?

Oh wow! Suddenly the NBR is worthy of quote?

Now let's see : Home detention for hundreds of millions done the tubes for directors of finance companies.

1 bottle of champagne? 10 minutes home detention?

[Enumerate]

1 bottle of champagne? 10 minutes home detention?

Works for me ... charge him under the crimes act and give him 10 minutes of home detention.

Then ask yourself: is this the standard you expect for the head of the SFO? Does this ugly gloating build public confidence that the SFO is impartial? Do you believe the public wants to see the humiliation of Allan Hubbard to proceed beyond his death? It is clear that the SFO does not respect the law of the land and the presumpion of innocence in "due process".

The SFO, in its current state, cannot claim the moral right to investigate serious fraud on behalf of the NZ government.

[Balance]

Works for me ... charge him under the crimes act and give him 10 minutes of home detention.

Then ask yourself: is this the standard you expect for the head of the SFO? Does this ugly gloating build public confidence that the SFO is impartial? Do you believe the public wants to see the humiliation of Allan Hubbard to proceed beyond his death? It is clear that the SFO does not respect the law of the land and the presumpion of innocence in "due process".

The SFO, in its current state, cannot claim the moral right to investigate serious fraud on behalf of the NZ government.

Who in the right mind wants the SFO to be impartial when prima facie, fraud has been established?

The SFO must go, hammer and tong, after that to bring to trial - the court will decide guilt or not.

You seem to think that the SFO is investigator, prosecutor, judge, jury and executioner?

[Enumerate]

Who in the right mind wants the SFO to be impartial when prima facie, fraud has been established?

You actually concede my point with your reference to "prima facie" - what you probably mean is "res ipsa loquitur".

However, even if this is what you mean, I doubt you would get anyone of any significance defending your point of view. You are advocating a lynch mob mentality.

[Balance]

You actually concede my point with your reference to "prima facie" - what you probably mean is "res ipsa loquitur".

However, even if this is what you mean, I doubt you would get anyone of any significance defending your point of view. You are advocating a lynch mob mentality.

Prima facie, my dear Enumerate, is exactly what I mean.

And who cares a monkey's arse about anyone of significance - did anyone of them do anything re frauds perpetuated by those in charge of finance companies?

Go hard, Adam Feely and nail them in court.

[Enumerate]

Prima facie, my dear Enumerate, is exactly what I mean.

If this is the case ... then your view has been unfashionable, in legal circles, since the Magna Carta.

[Balance]

If this is the case ... then your view has been unfashionable, in legal circles, since the Magna Carta.

Who cares?

As long as Adam Feely brings to trial those who commit fraud.

[Enumerate]

... and anyone else Adam Feeley imagines have committed fraud ...

... and exempting those Adam Feeley imagines haven't committted fraud, but actually have ...

... and anyone who pissed Adam Feeley off and he can charge with fraud, becuase he can ...

[Balance]

... and anyone else Adam Feeley imagines have committed fraud ...

... and exempting those Adam Feeley imagines haven't committted fraud, but actually have ...

... and anyone who pissed Adam Feeley off and he can charge with fraud, becuase he can ...

Who cares?

[Enumerate]

Reductio ad absurdum

[Balance]

Reductio ad absurdum

Who cares?

Crown guarantee used to borrow hundreds of millions of dollars and recklessly lent, and lost.

Who cares?

[Breastwork]

Reductio ad absurdum

Love those Harry Potter spells....

[minimoke]

Reductio ad absurdum
Greek is not one of my strengths - would you mind keeping it to English or one of the other two of NZ's official langauges.

[Enumerate]

Απο μικρό και απο κουζουλό μαθαίνεις την αλήθεια

[minimoke]

Μπράβο, έχετε κερδίσει ένα ποτό

[Balance]

Sine fieri maior inter vos, stultus

[Enumerate]

Μπράβο, έχετε κερδίσει ένα ποτό

I'll have a nice Thasos port

[minimoke]

If only the SCF accounts were so easy to translate!

[minimoke]

Latest Receivers report out PE 31 August 2011. SCF had book assets of $1.9b prior to receivership. We'll recall govt bailed out SCF to the tune of $1.6b

Receivers have so far obtained $463m. (loan book $371m, sale of assets and property $45m, sale of investments $40m, other cash $7m).

On the other side of the ledger the recievers have spent $56.5m($39m on operating costs, $9.5m on asset realisation costs, $7.7 on admin costs)

As at 7 October the tax payer has been given $395m back.

Looks like there is now around $350m of assets left to flog off - but chances are this full amount may not be achievable.

At best SCF had assets worth $813b - a long way short of the reported $1.9b.

At best the tax payer will get back $745m out of its $1.6b bailout. More likely scenario is a total of $600m coming back to the taxpayer which means we have given SCF investors $1b more than they were worth.

So thats Alan's legacy. For all his "good deeds" its taken the tax payer to cough up $1b to stand behind him

[Enumerate]

The government shot down a restructure deal that would have see their exposure capped at $300m.

I bet Bill English is feeling pretty stupid that he took such bad advice.

[macduffy]

Not strictly an SCF issue but it will be interesting to see the final cost of the govt G/- of finance co's and banks once the dust settles. Not much is said about the premiums paid by these parties but, in the case of the banks at least, it's been all "profit" for the govt.

[minimoke]

Not strictly an SCF issue but it will be interesting to see the final cost of the govt G/- of finance co's and banks once the dust settles. Not much is said about the premiums paid by these parties but, in the case of the banks at least, it's been all "profit" for the govt.
As at 30 June 2010 Govt had collected around $237m in fees from banks etc. This covered around $133b in deposits.

The likes of SCF saw a 25% increase in deposits once the Deposit Guarantee Scheme was implemented.

The tax Payer has coughed up around $2b which went to around 42,000 depositors in finance companies that failed. Govt expects to recover around $900m of the $2b.

Can't see how the tax payer ("govt") has profited from this Scheme. The ones who profited are the likes of Alan Hubbard who used the Scheme to increase interest payable on deposits and the greedy/blinded/dense depositors took advantage of these rates and consequently took advantage of the tax payer.

[Balance]

As at 30 June 2010 Govt had collected around $237m in fees from banks etc. This covered around $133b in deposits.

The likes of SCF saw a 25% increase in deposits once the Deposit Guarantee Scheme was implemented.

The tax Payer has coughed up around $2b which went to around 42,000 depositors in finance companies that failed. Govt expects to recover around $900m of the $2b.

Can't see how the tax payer ("govt") has profited from this Scheme. The ones who profited are the likes of Alan Hubbard who used the Scheme to increase interest payable on deposits and the greedy/blinded/dense depositors took advantage of these rates and consequently took advantage of the tax payer.

"The true measure of a man is how he behaves in good times, but how he manages the hard times."

On that score, Allan Hubbard failed miserably.

BUT - he was ably assisted by a number of parties.

Forsyth Barr for example was very happy to promote a few hundred million dollars worth of SCF bonds on the basis of the crown guarantee. Easy sell - they made the big fees, SCF got the money to squander on bad loans and taxpayers pick up the tab.

[macduffy]

Thanks for those numbers, minimoke.

My comment about "profit" applied only to the part of the scheme involving banks, which has turned out to be a nice little earner for the revenue but in no way offsets the huge losses from a poorly administered guarantee of the finance companies.

[minimoke]

Thanks for those numbers, minimoke.

My comment about "profit" applied only to the part of the scheme involving banks, which has turned out to be a nice little earner for the revenue but in no way offsets the huge losses from a poorly administered guarantee of the finance companies.
From the recent banking sector profit announcements it looks like the Schem fee hardly made a dent in their profits. Looks like they knew what they were doing when it came to attracting funds and lending them back out again.

[Balance]

From the recent banking sector profit announcements it looks like the Schem fee hardly made a dent in their profits. Looks like they knew what they were doing when it came to attracting funds and lending them back out again.

The scheme made a lot of sense for the responsible financial institutions like the banks or finance companies - like Marac.

In the hands of the irresponsible (and/or desperate) like Allan Hubbard and SCF, it was as bad a scheme as could ever be put in place.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10765225

$103m ponzi scheme - $65.5m of loans from SCF.

Would have gone on for a few more years for sure if SCF was not placed in receivership last year and the fraud discovered.

Sop much for SCF being a highly profitable finance company and for business being done a a hand-shake.

[sharer]

Amongst today's news feeds: Labour has promised that if elected they will open a new enquiry into the South Canterbury collapse.
Further interesting entertainment to look forward to?

[GTM 3442]

Amongst today's news feeds: Labour has promised that if elected they will open a new enquiry into the South Canterbury collapse.
Further interesting entertainment to look forward to?

More depressing than entertaining, I should have thought.

But, looking forward, what's going to be the Next Big Thing which will end with tears and The Punters Separated From Their Money ?

[Lizard]

More depressing than entertaining, I should have thought.

But, looking forward, what's going to be the Next Big Thing which will end with tears and The Punters Separated From Their Money ?

Kiwisaver?

[Pumice]

Fraud charges laid.

http://www.stuff.co.nz/business/industries/6101880/SFO-charges-five-in-South-Canterbury-Finance-probe

[whirly]

$1.7 billion thats a hell of a lot of beneficiary fraud needed to be exposed to not make these white collar crims not look like the biggest fraudsters in NZ. Time to get our priorities right and stop these rich w@nk3r'5 ripping us all off. John Key - your mates are in the firing line. I'm looking foward to seeing these lot convicted and some real consequences spelled out to those who have more than most already - Don't rip off NZ or we'll fight back. Makes beneficiary bashing small change surely.

Thanks for letting me get that out.

[iceman]

$1.7 billion thats a hell of a lot of beneficiary fraud needed to be exposed to not make these white collar crims not look like the biggest fraudsters in NZ. Time to get our priorities right and stop these rich w@nk3r'5 ripping us all off. John Key - your mates are in the firing line. I'm looking foward to seeing these lot convicted and some real consequences spelled out to those who have more than most already - Don't rip off NZ or we'll fight back. Makes beneficiary bashing small change surely.

Thanks for letting me get that out.

This allaeged fraud represents around 1% of GDP, not very insignificant. Makes Bernie Madoff in the US look like an amateur on a per capita basis !!

[Roger]

I wish that Alan Hubbard hadn't died in that car "accident" that way he could now face the music.
Where there's smoke there's fire, they wouldn't be laying those charges if there wern't very good grounds.
It will be good to see justice served.

[Marilyn Munroe]

Todays Christchurch Press has a statement from Lachie McLeod saying he has not been charged.

Boop boop de do

Marilyn

[GTM 3442]

This allaeged fraud represents around 1% of GDP, not very insignificant. Makes Bernie Madoff in the US look like an amateur on a per capita basis !!

Anybody got a figure on beneficiary fraud so we can compare ?

[whirly]

National says there were 690 benefit fraud prosecutions in 2010/2011 involving more than $22 million. A further $183 million was counted as overpayment because it fell below the prosecution threshold.

National party social development spokesperson Paula Bennett says increased data-matching will cost about $700,000 and save an estimated $200 million over four years.

Council for Civil Liberties chairman Batch Hales says that wasn't the case the last time this method was used - and it turned out that rather than people abusing the system, the system itself was to blame.

"Some of them had been trying to pay back this money which they kept on getting, and couldn't get it back," he said.

"Most people aren't trying to abuse the welfare system, most people are trying to get off welfare. This is beneficiary bashing."

http://www.radionz.co.nz/news/election-2011/91198/critics-say-national's-plan-to-stop-benefit-fraud-flawed

[Misc]

Have to laugh at Sam Kelts 'Sargent Schultz' mumblings over his roll in this.. including the doozey..

"""You have to remember that at that time there was never any inkling of trouble at SCF," Mr Kelt said.""

http://www.stuff.co.nz/business/money/6112275/Kelt-a-victim-in-10m-fraud-charge

Perhaps he was asleep in 2009??

http://www.nbr.co.nz/article/marac-south-canterbury-finance-downgraded-junk-107458

This reminds me of the European Pacific debacle after the 87 crash where all the execs had 'memory loss' !!

Misc

[Marilyn Munroe]

I am surprised that those charged with fraud regarding South Canterbury Finance were granted continued name suppression in the Timaru Court today.

I hope that those charged are not currently giving advice on, or handling other peoples money..

Boop boop de do

Marilyn

[macduffy]

I am surprised that those charged with fraud regarding South Canterbury Finance were granted continued name suppression in the Timaru Court today.


I guess - and it's only an uninformed guess that the rationale is to prevent gossip about those accused having some effect on the court proceedings. Certainly not to "allow family members to be advised" at this late stage, I would think.

Perhaps some legal brain could explain?

[belgarion]

I hope that those charged are not currently giving advice on, or handling other peoples money..


They could well be significant businesses associated with them that would suffer unduely ...

[blockhead]

I hope the five involved have got all their loot safely stashed in the wifes name or the family trust, be a shame if the Wanaka bach or the Sounds crib had to go.

[winner69]

Todays Christchurch Press has a statement from Lachie McLeod saying he has not been charged.

Boop boop de do

Marilyn

and today he is no longer seeking name suppression and his lawyer says 'he is disappointed the Serious Fraud Office (SFO) had included him in the charges which he would defend.'

The circus continues .... whats the next act

[Kees]

Hopefully 10-20 years each if found guilty

[Enumerate]

Remember David Hillary's analysis of the value of Dairy Holdings:


The asset sale I am most looking forward to is the Dairy interests. David Hillary is on record that he believes that Dairy Holdings Ltd is insolvent:

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by David Hillary
One of South Canterbury Finance's largest assets is a 33.59% shareholding in Dairy Holdings Limited. This post casts doubt on the value of this asset: The most recent disclosure of Dairy Holdings Limited's books works out to about $48,900/effective hectare, and about $46/KgMS. I understand that these values appear to be about 58-71% more than the $29/KgMS and $28,523/ha similar farms are currently offered for sale at (adjusted to remove livestock that Dairy Holdings largely does not own). Dairy Holding's debt levels are 60.6% of total assets, calling into question the company's solvency.



The gist is that Hillary believes that Dairy assets were overvalued by almost 60% and that since total debt is about 60% of assets - the expected return is less than zero. (Let $x be the asset value - 0.6$x will be realised, yet 0.6$x will remain as debt liabilities - net result zero).

I hope that Hillary's absurd analysis will be exposed as nonsense by a thumping good sale of Dairy Holdings.


http://www.depositrates.co.nz/news/976498956/scf-receivers-sell-dairy-holdings-stake.html

The transaction values Dairy Holdings in excess of $535 million, enterprise value. SCF will receive $56.4 million from the sale of its 33.6% interest.

Fortunately, Mr Hillary now has the perfect job - he is a credit analyst. In the current environment of de-leveraging; Mr Hillary will happily tell you your multi-million dollar business is insolvent and give you the "bums rush" out the door of his financial institution.

[Balance]

David was 0.1% wrong, and 99.9% right regarding SCF and Alan Hubbard.

Enumerate in contrast is 99.9% wrong, and 0.1% right.

[Enumerate]

Balance, what are you going on about? 0.1% wrong is 100% wrong. Balance exists in some kind of quantum state of "wrong" and "right" - perhaps we collapse the wave function to "idiotic".

Let me see: David Hillary was completely wrong about his "valuations" of the assets Alan Hubbard stumped up to try to save SCF. Looks like despite a sale process being conducted by an insolvency team steeped in government "gravy" - that the Hubbard assets held up pretty well. I wonder what they would have got if the sales hadn't been forced and managed by more astute parties?

The notion that Hubbard was shifting valueless assets into SCF was absurd to start with and is proven to be absurd, in fact.

Allan Hubbard's legacy remains - he tried to save SCF.

Hillary should devote himself to explaining why the liquidator sold performing loan books at an apparent significant discount to asset value.

I wonder why the preference shareholders have not been given any information as to the financial state of the their company given their de facto state as unsecured creditors?

[Balance]

SCF directors and management have been charged with fraud.

Mr Hubbard would have been charged (unquestionably as well) but for his death.

Those charged will be directing all inquiries and faults to Mr Hubbard as their key defense. Most disgraceful of them but birds of a feather flock together.

Revelations will be most unpleasant and unfortunately, Mr Hubbard will not be there to defend.

What else needs to be said about at this stage? Save that those who believed in Mr Hubbard better brace themselves for how wrong they were.

[Balance]

SCF getting into trouble is no surprise when you look at how Hubbard was using the finance company as his private piggy bank to do exactly as he likes - with no heed to credit risk or cash flow considerations.

This is a prime example - Hubbard took the money, and SCF took ALL the risks.

http://www.nbr.co.nz/article/key-south-canterbury-personnel-lost-23m-loans-shares-deal-132712

You need to be a subscriber to be able to access the article.

Essentially the deal was SCF advancing McLeod and gang $21.5m interest only-capitalising loans to buy shares off Allan Hubbard in Southbury - the loans were non-recourse and repayment limited to the lower of Southbury shares or the loan value! How sweet a deal is that?

So $21.5m went to McLeod and gang from SCF and was then, paid to Allan Hubbard.

History records that SCF got zippo out of the loans but Hubbard received $21.5m.

No words can describe the contempt investors in SCF should have towards the totally reckless and blatant self-serving use of their money.


Unfortunately, Mr Hubbard chose NOT to refute or justify such type of lending when he was alive. Wonder why?

[Balance]

Yet another great example of what Allan Hubbard and SCF were up to - lending and investing recklessly and freely to finance the lavish lifestyles and non-productive activities of many speculators, con-men and hanger-ons :

http://www.nbr.co.nz/article/103m-south-canty-fraudster-pleads-guilty-high-living-lifestyle-exposed-mn-111364

Guilty plea in $23m SCF fraud case
DAVID CLARKSON Last updated 12:48 01/03/2012

A former company director admits he ripped off South Canterbury Finance (SCF) to the tune of $23 million - spending more than $1m on "various female companions".

The Serious Fraud Office (SFO) has revealed Gavin Clifford Bennett's spending habits after the former Datasouth Finance director pleaded guilty to six charges of dishonestly using documents, and two charges of false accounting.

The six charges involved $23 million in fraud against SCF and related to 894 false transactions.

SCF went into receivership in August, 2010 and triggered a $1.6 billion Government payout under the Crown's retail deposit guarantee scheme.

In the Christchurch District Court today, Judge Oke Blaikie said due to the "magnitude" of Bennett's offending the 54-year-old would be held in custody until his sentencing on May 3.

The SFO presented a summary to the court, showing expenses listed in his bank statements and credit card statements.

The expenses included the rental for two luxury residential apartments in The Rocks, Sydney of $A463,000 (NZ$595,000), and regular payments to various female companions of $A900,000.

Other costs included international air travel for himself and various companions totalling $A161,000, including to Argentina, New York, Hong Kong, Las Vegas, Paris and London.

He also purchased luxury goods from Louis Vuitton, Cartier and Chanel, totalling $A163,000.

The fraud was a Ponzi scheme where Bennett had SCF provide funds for false customers who were supposedly taking up IT services and hardware.

The scheme was kept going for six years by Bennett making scheduled repayments as further false leases provided more finance.

In court, SFO prosecutor Catherine Butchard opposed bail. Defence counsel Carol Morgan asked that bail be granted because Bennett had surrendered his passport and posed no flight risk.

He had returned to New Zealand to face the matters and had co-operated with the inquiry. He was a first offender, apart from one traffic conviction.

But, Judge Blaikie refused bail because of the size of the fraud. He asked for a pre-sentence report to consider Bennett's suitability for home detention so that "all options" could be considered.

Bennett established a business that became known as Datasouth in 1993. It comprised several companies which included Datasouth Finance.

The company leased IT hardware and the purchase of the equipment to be leased was financed initially by SCF.

Customers would enter an equipment rental agreement and mostly the IT hardware would be leased by the customer for 36 months at an agreed interest rate.

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Datasouth Finance would submit copies of the equipment rental and individual assignment agreements to SCF which would then approve the loan - or not - and advance the money.

Crown prosecutor Catherine Butchard said: "During the period from April 1, 2011, to March 31, 2011, the defendant (Bennett) created false equipment rental agreements and individual assignment agreements using details of genuine customers to obtain funds dishonestly from South Canterbury Finance."

Similar offending processes were used by Bennett at least 894 times over those six years.

"To cover up the offending the defendant would make scheduled repayments on false leases using funds obtained from subsequent false leases in a manner similar to a Ponzi scheme."

The amount involved in the offending was about $65 million with a total loss to SCF of $23 million.

"In this regard a civil judgement debt has been entered against the defendant in the sum of $23 million," Butchard said.

In 2008, SCF was approved to become covered by the Government Guarantee Scheme. When SCF went into liquidation the Government committed $1.6 billion to reimburse losses incurred by investors of SCF.

"The loss to SCF as a consequence of the defendant's offending is at least $23 million, which is a loss that will ultimately be borne by the New Zealand taxpayer," said Butchard.

Between April 2005 and March 2011, about $7.8 million was paid either to personal New Zealand and Australian bank accounts controlled by Bennett or applied to business credit cards that he used for personal expenses.

The SFO has accepted that a small proportion of the $7.8 million could be attributed to business related expenses.

Datasouth went into liquidation in March 2011 and 42 staff lost their jobs.

Bennett made an unexpected appearance at court today to enter his guilty pleas. He had been scheduled for a post-committal conference on the charges later this month, as though the case was heading for tri