South Canterbury Finance Limited

[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.

[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.

Ad Feedback

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.

[Beagle]

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!

[Beagle]

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!

[Beagle]

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.

[Beagle]

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?

[Beagle]

[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.

[Beagle]

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

[Beagle]

"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.

[Beagle]

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 !!

[Beagle]

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?

[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.

Ad Feedback

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

[Breastwork]

http://m.stuff.co.nz/national/7167567/Jean-Hubbard-to-contest-assets-worth-60m

[minimoke]

For the sake of completeness, Edward Sullivan was found guilty on five of the nine of the charges he faced and has been remanded on bail. He'll be sentenced on December 12. Expect the usual wet bus ticket Home DAnother director Bob White and former chief executive Lachie McLeod were both found not guilty on all counts.

[Balance]

For the sake of completeness, Edward Sullivan was found guilty on five of the nine of the charges he faced and has been remanded on bail. He'll be sentenced on December 12. Expect the usual wet bus ticket Home DAnother director Bob White and former chief executive Lachie McLeod were both found not guilty on all counts.

Could be more action yet on the SCF front.

Very little doubt that there was gross incompetence on a grand scale by government Treasury officials. Doubt FMA will take action as it will be all too embarrassing to surface the goings on behind the scenes.

http://www.stuff.co.nz/business/money/63728248/preference-shareholders-want-action

All power though to Chris Lee.

Chris is not a person I have much respect for as he was as arrogant as he was ignorant about what was really happening in the finance company sector, but those who lost a lot of money need a champion.

[minimoke]

Could be more action yet on the SCF front.

Very little doubt that there was gross incompetence on a grand scale by government Treasury officials. Doubt FMA will take action as it will be all too embarrassing to surface the goings on behind the scenes.

http://www.stuff.co.nz/business/money/63728248/preference-shareholders-want-action

All power though to Chris Lee.

Chris is not a person I have much respect for as he was as arrogant as he was ignorant about what was really happening in the finance company sector, but those who lost a lot of money need a champion.
If my memory serves me correctly (and I have to admit to getting a bit doddery now) I seem to recollect Mr Lee has already championed SCF by trying to get his clients into it Indeed as I check back in 2007 he said ""There are some companies that are unarguably good - Marac, Strategic, St Laurence, South Canterbury and UDC."

[Balance]

If my memory serves me correctly (and I have to admit to getting a bit doddery now) I seem to recollect Mr Lee has already championed SCF by trying to get his clients into it Indeed as I check back in 2007 he said ""There are some companies that are unarguably good - Marac, Strategic, St Laurence, South Canterbury and UDC."

You are 100% absolutely right about Chris Lee's calls on the finance company sector. He even had his own rating system which proved as bad as anything the finance companies would dream of!

Nevertheless, it is good he is doing something about the losses sustained by SCF's pref shares holders.

[minimoke]

Nevertheless, it is good he is doing something about the losses sustained by SCF's pref shares holders.I was a late comer to this thread not arriving till page 13 but people should go back to page 1.

I reckon the preference holders ended up with what they deserved . And I reckon Chris Lee Is trying to rewrite the history books with this poor attempt to re image himself.

[Balance]

I was a late comer to this thread not arriving till page 13 but people should go back to page 1.

I reckon the preference holders ended up with what they deserved . And I reckon Chris Lee Is trying to rewrite the history books with this poor attempt to re image himself.

Chris Lee is shameless - that much we know from his behavior pre and post crash with the finance companies.

There is a valid point about SCF preference shares which he makes though - they were still trading when SCF was being managed by Samford Maier. But for the bullish comments from Mr Maier and Hubbard, many might have chosen to bail out.

" Mostly local fans of the late Allan Hubbard, these people attended a Timaru meeting in late 2009 at which Hubbard spoke with great enthusiasm, specifically stating he would not sell his SCF preference shares. He still had high hopes. People believed him.

Then in the period between April 2010 and July 2010 they listened to SCF’s chief executive, the American Samford Maier Junior, issue a series of statements to the NZX and the media, claiming SCF was past its losses and had a bright future.

SCF paid the preference shareholders their quarterly dividend in June 2010, just nine weeks before SCF collapsed. It had been insolvent for more than nine weeks, one would think."

[minimoke]

There is a valid point about SCF preference shares which he makes though - they were still trading when SCF was being managed by Samford Maier. But for the bullish comments from Mr Maier and Hubbard, many might have chosen to bail out.
Laziness, stupidity, blindness and greed are a toxic mix - characteristics displayed by preference holders. You only need to go back to the posts on this thread pre April 2010 and after that to see the writing was well and truly on the wall.

My only hope is that the appalling mess that SCF was has taught people a lesson. Unfortunately I suspect people will have short memories. Anyone who thinks Chris Lee is a white knight late 2014 is frankly mad. I reckon he is using this as an opportunity to enhance his mailing list of dumb f##cks who can be exploited some point in the future.

I'd be much more interested in a class action against financial advisers who put trusting investors money into ticking time bombs like SCF.

[minimoke]

This article in the Sunday Star Times gives a good insight into the advice given on finance companies by Chris Lee. Have a read of this :

http://www.stuff.co.nz/business/personal-finance/2161440/Advice-and-adversity

Excerpts :

"In March 2006 Lee invested the Lindsays' money in Hanover Capital, but in October the next year he withdrew support for the company and wrote in his public blog: "Mark Hotchin and Eric Watson are not bankers, and not the sort of people one would regard as low-risk conservatives." Good one.

"In a letter to the couple in early February, Lee said: "Never did I make your decisions. Not once have I contacted you, or any client seeking to persuade you to invest money in anything. Never have I invested your money for you. You invested your money." Another good one.





Advice and adversity
By ROB STOCK - Sunday Star Times

"It appears to be a collection of investments without any structure, and looks more like something from a DIY investor, rather than one put together by an investment professional."

That's the opinion of senior Spicers' financial planner Jeff Matthews on a portfolio created for retired Southland farmers Clare and John Lindsay on the advice of high-profile Kapiti Coast adviser Chris Lee.

In an assessment paid for by the Lindsays in a bid to get Lee to compensate them for losses, Matthews said: "It is pretty obvious you have a poorly constructed portfolio, which has exposed you to considerable capital loss from investments that should be considered safe.

"A well-constructed bond portfolio should give investors peace of mind and a regular income, and you have neither."

And peace of mind is what the Lindsays say they were after, saying they told Lee when they first contacted him back in 2005 that they considered themselves conservative investors, though they have no written proof of that, and Lee says he does not keep records of clients' risk profiles.

But the Lindsays have been left holding virtually worthless Babcock & Brown subordinated notes, as well as capital notes in St Laurence (in moratorium), debentures in Dorchester Finance (in moratorium), Hanover Capital preference shares (in moratorium), debentures in North South Finance (in moratorium) and two tranches of debentures in Strategic Finance (in moratorium).

The couple said they were private people and asked for the sums involved to be kept confidential, but felt they needed to tell their story because they were infuriated to see Lee continually quoted in the media and criticising others when they feel so badly let down.

"You read his blogs and feel he's a really good guy that is there for the investors, but we feel that is just an illusion," said Clare Lindsay.

Around 60% of their portfolio was in finance companies. Around 30% was in investments with either no rating from a respected international ratings agency, or a rating below investment grade.

Nine of the 18 non-cash investments in their portfolio are in serious trouble, with another bonds in Nufarm trading at a discount to face value.

Missing, noted Matthews, were the large weightings of highly rated, liquid corporate bonds and government stock which would usually underpin a portfolio for conservative investors.

The result has been a big drop in the Lindsays' income.

Lee said that although he sympathised with investors who had lost money, financial markets deteriorated further and faster than anyone forecast. That badly affected and in some cases destroyed reputable organisations that were previously well thought of.

"No financial strategy, other than to buy government stock and use bank deposits only, has been successful," he wrote to the Lindsays earlier this year.

Ad Feedback Clare Lindsay said the couple felt they had been naive. They feel they handed over the management of their retirement nest eggs too casually something they would not have done with the management of their farm.

They have not ruled out legal action, but feel they are not wealthy enough to risk more on a court battle for compensation.

The Lindsays have asked Lee to buy back the investments they say were never suitable for them Hanover Capital preference shares and St Laurence capital notes, both of which are lower ranking than debentures as well as their investments in Strategic Finance, made in late 2007, when they say Lee should have realised there were high risks around the company.

Lee has told the couple he will not do so.

The couple also feel betrayed by Lee's public criticism of companies he had advised them to invest in.

In March 2006 Lee invested the Lindsays' money in Hanover Capital, but in October the next year he withdrew support for the company and wrote in his public blog: "Mark Hotchin and Eric Watson are not bankers, and not the sort of people one would regard as low-risk conservatives."

Lee told the Sunday Star-Times he could understand the criticism, but said his outspoken stances and advice to finance companies had been heeded in cases which had helped preserve the company. He declined to say which firms had been so preserved.

Lee said: "They want to put their side of the story to you, which is their right. It is not something I would do, but I guess it is their choice.

"I won't comment on them individually, but I do accept we are in very stressful times, and that people have every reason to be outraged by losses they have and anyone who has lost 10% of their money would be outraged, but most of the country that have invested money would have lost more.

"The reality is we haven't got everything right, but we have been a little bit more right than wrong."

He estimated that about 12% of $1.2 billion in clients' money was in frozen finance companies, the bulk in Strategic and St Laurence. The outcome for investors in those is uncertain.

The Lindsays say that when they went to Lee in 2005, they thought they were taking on an adviser who would build a portfolio for them. The only difference to other advisers was that they would manage their own paperwork.

Lee said his firm did not work like that. It did offer advice, but as a sharebroker with around 10,000 clients, it did not take responsibility for clients' portfolios. Instead, advice was given when sought on individual securities, and free consultations given on portfolios, Lee said.

"We can't and don't run portfolios for people. We don't charge them fees [Lee is a commission-only adviser] or sit down with people in Auckland."

And at the end of the day, investors were making their own decisions.

In a letter to the couple in early February, Lee said: "Never did I make your decisions. Not once have I contacted you, or any client seeking to persuade you to invest money in anything. Never have I invested your money for you. You invested your money."

Clients are contacted through email alerts, but it is they who pick up the phone and ask whether new issues are suitable for them, or what they should do when an investment they have matures, he said.

In one letter to the Lindsays, Lee does appear to acknowledge that the couple were concerned over risk, saying he believed they expressed their needs as "being above bank rate interest on your capital with as little risk as possible", reflecting their retirement and decision to defer buying a house.

Lee famously offered to compensate clients he had advised to invest in Provincial Finance, which was the first finance company to collapse, back in 2006.

But Lee said that was because he could see that there had been flaws in his researching of the company. It should not be interpreted as an offer to make up for any losses resulting from advice his firm gave, he said.
Heres an insightful post!

[Balance]

Heres an insightful post!

We share the same view of Chris Lee and his antics.

I am hoping that a class action will also surface the role that Forsyth Barr played as well in the collapse of South Canterbury Finance. Forsyth Barr eagerly and furiously raised hundreds of millions of dollars for SCF when SCF obtained the Crown guarantee, imo prolonging and extending the mess that SCF was already in at that stage. It was akin to giving heroin to a cocaine addict.

The Feltex and Credit Sails failures showed that Forsyth Barr was all about milking fees with little regard for the appropriateness of risks/investments to investors.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10459887

Investment analyst and broker Chris Lee also rates finance companies on his website, but says he likes to focus on those good companies, those people should invest in, rather than the bad.

"You've got the dual emotions - what is fair and what will cause queues outside the banks," says Lee.

"There are some companies that are unarguably good - Marac, Strategic, St Laurence, South Canterbury and UDC.

"They are not in the argument and it wouldn't be a bad thing for people to contrast those with Nathans, which was clearly a rubbish company and had been identified - certainly by anyone who does analysis - as a rubbish company a long time ago."

Lee says he correctly identified five of the past six failures as high-risk investments.

"It is possible for an experienced person to get hold of information that allows them to differentiate between the best and the worst.

"None of the As and Bs that we've got have had any trouble."

Chris Lee has of course deleted any reference to his inhouse finance company ratings system.

[minimoke]

I don,t have the energy or enthusiasm to pursue the likes of Chris Lee after digging people out of the bog during the GFC.

All I can say is anyone thinking of going to him with the idea this action will produce results should be put against a wall and shot. We could do with raising the average IQ of the NZ investor and all I can hope for is that these people are past breeding age.

And if investors think I am a bit harsh just wait til the 12 of December. Out of the total mess that SCF was 5 guilty verdicts against Sullicvan is the very best the SFO could do. Seriously - Chris Lee thinks he can do better. For f&8cks sake, give me a break!

Blood pressure rising - time to go!

[minimoke]

Right, my foo foo valve has just burst. 12 months home D and 400 hours community work Is all sullivan gets for being guilty on 5 charges (guilt he incidentally doesnt accept) including making false statements, deceptive conduct and recording a fictitious transaction.

The tax payer had been shafted and once again white collar crime punishment goes soft.

I Off To Become A Hindu So that in my next life ill study law and become a judge. In sullivans next life he would get his just desserts.

[winner69]

Had to laugh that as there was no loss to investors it might have mitigated the crime.


Quote from stuff -The fact that there was no loss to investors occurred only because of the Crown's retail deposit guarantee scheme, which was "purely fortuituous from Mr Sullivan's perspective".

Maybe all taxpayers should sue to recover the billion or whatever.

[minimoke]

Maybe all taxpayers should sue to recover the billion or whatever.
They will be behind Mr Lee in the queue

[Beagle]

We share the same view of Chris Lee and his antics.

I am hoping that a class action will also surface the role that Forsyth Barr played as well in the collapse of South Canterbury Finance. Forsyth Barr eagerly and furiously raised hundreds of millions of dollars for SCF when SCF obtained the Crown guarantee, imo prolonging and extending the mess that SCF was already in at that stage. It was akin to giving heroin to a cocaine addict.

The Feltex and Credit Sails failures showed that Forsyth Barr was all about milking fees with little regard for the appropriateness of risks/investments to investors.

I used too use Forsyth Barr as my broker. For the reasons you've mentioned and others I wont deal with them ever again. The sentence handed down to Mr Sullivan is a sad indictment on the fact that the N.Z. Judiciary simply don't seem to take white collar crime seriously.

[percy]

I used too use Forsyth Barr as my broker. For the reasons you've mentioned and others I wont deal with them ever again. The sentence handed down to Mr Sullivan is a sad indictment on the fact that the N.Z. Judiciary simply don't seem to take white collar crime seriously.

I saw Mr Hubbard and Mr Sullivan in action a good few years ago at a Scales agm.
I had read the annual report a few weeks before hand.It was a disgrace.I rang director H Rolleston and asked him a number of things.Most of his answers were.That should not have been report like that,or that should not have been included in the report.
At the agm another shareholder asked the same questions.Hubbard and Sullivan looked down their stuck up noses,and asked "what page was that on","what was you question again" etc. The arrogant old tossers,did their best to belittle the questioner.
So Roger I agree with you.

[minimoke]

Looks like Crown Asset Management might be looking at some civil action so may not be over yet.

And Mr Lee, your a plonker. - I don't mind contributing towards the $100,000 to lock up Sullivan. Its not about the money. Its about deterring other parasites who will suck the blood out of those who trust and rely on the information handed out by the directors and executives of companies they part own.

[Beagle]

I think its worth remembering that Financial advisors should be able to :-
- Rely on the veracity of financial statements as signed off by directors
- Rely on big name accountancy practices doing a thoroughly professional job in their audits so that when giving their opinion that the financial statements show a true and fair view...that they being one of the very few parties able to actually test the veracity of said financial statements would do a thorough job of their audit
- Expect that Trustees being another party who are privy to significant amounts of information that are not available to the public would execute their duties in a careful, diligent and prudent manner
- Expect that the Crown would have engaged special forensic accountants to do really thorough due diligence on the operations of entities before admission to the Crown guarantee scheme
- Expect that the CEO of an organisation that had been audited, vetted and approved wouldn't give blatantly and grossly misleading statements about the prospects of said organisation, (such statements must surely have been approved for release by the board).
Expect big name share brokers to act in a professional manner in the best interest of their clients.

Financial advisors are simply not remunerated enough, nor do they have the time and resources to independently and thoroughly audit each organisation themselves, nor should investors have the right to expect that they would. Financial advisors are but one link in the chain and if other links are fundamentally weak, corrupt, inept or asleep at the wheel the chain will break and blame should be ascribed where it belongs, not where its simply expeditious to do so.

On the other hand you should expect financial advisors to recommend a well diversified and carefully tailored portfolio of investments that are appropriate for the specific risk tolerance and investment profile of the client concerned. In cases where Financial advisors haven't discharged their duties with a reasonable level of care or have been negligent and it can be proved that contributed to a clients losses this could be an actionable matter. That said, expending, tens and in some cases hundreds of thousands of dollars on litigation needs to be carefully considered on a risk - potential reward basis remembering that its quite possible you'll end up wearing the other parties legal costs too.

This is not a defence of Chris Lee per se, just giving a different perspective to this debate.

[minimoke]

Roger. I think some of that is a cop out.

Of course financial advisors should be able to rely on your points.

But one thing not on your list is an advisor should have the skill to sniff out something suspect and then have the balls (or standard of ethical behaviour) not to support any company that does not alleviate those suspicions.

Joe blogs is quite able to loose his own money - he should not expect to do so when he has taken professional advise.

But at the moment our judiciary seems happy not to provide a disincentive to advisors (and the commercial sector) so i have no expectation that the standards of service and expertise will improve. It Is too easy for those involved to keep clicking the ticket which enables them to prey on the vulnerable and lazy.

[Beagle]

Roger. I think some of that is a cop out.Of course financial advisors should be able to rely on your points.

But one thing not on your list is an advisor should have the skill to sniff out something suspect and then have the balls (or standard of ethical behaviour) not to support any company that does not alleviate those suspicions.

Joe blogs is quite able to loose his own money - he should not expect to do so when he has taken professional advise.

But at the moment our judiciary seems happy not to provide a disincentive to advisors (and the commercial sector) so i have no expectation that the standards of service and expertise will improve. It Is too easy for those involved to keep clicking the ticket which enables them to prey on the vulnerable and lazy.

I disagree. If one of the big accountancy firms who have access too all the records and do a full audit and are happy with the veracity of the financial statements and attest to that, how would you expect a small financial advisory firm without access to the companies internal documents to get a better feel for it ? We are not mind readers mate nor do we have access to documents like the auditors do.
Surely financial advisors should at least in theory be able to draw some comfort from the credit rating agencies ? If extremely well paid analysts at Standard and Poors who have access to the full financial records of the company and are paid extremely well for a thorough professional opinion of same can't get credit ratings right e.g. ascribe AAA credit ratings to CDO's that are little more than a well spread collection of sub-prime loans, how would you expect for example a small suburban financial advisory firm to do better with special insights without access to detailed company records ?

On the other hand you would expect if for example a finance company had a high degree of concentration in one specific risk area like related party transactions, a disproportionate level of lending to the property development sector that finance company might be perceived as having a higher level of risk than some others and perhaps a lower level of investment in that company might be considered prudent or if there were specific risks identified that the financial advisor wasn't comfortable with (s)he might not recommend them.

The idea that financial advisors are out there to prey on the lazy and vulnerable is in my opinion a gross generalisation and misrepresentation of the business model of the vast majority of financial advisors.
In a heck of a lot of cases I think investors are simply taking a "shotgun approach" to potential liability issues and hoping some of the pellets hit the mark somewhere. I guess its only human nature that their personal point of contact, (their financial advisor) is in line for some of that flak but is it warranted... A simple case of many people wanting to shoot the messenger ?....I think so.

[minimoke]

[/B]

I disagree. If one of the big accountancy firms who have access too all the records and do a full audit and are happy with the veracity of the financial statements and attest to that, how would you expect a small financial advisory firm without access to the companies internal documents to get a better feel for it ? We are not mind readers mate nor do we have access to documents like the auditors do.
The role of some of these large accounting firms is questionable. Posters on this thread threw more light than the auditors.


Surely financial advisors should at least in theory be able to draw some comfort from the credit rating agencies ? Some comfort yes but these ratings enable advisors to get too comfortable


how would you expect for example a small suburban financial advisory firm to do better with special insights without access to detailed company records ? I would expect the small suburban advisor to stay out of deep water where sharks lurk


On the other hand you would expect if for example a finance company had a high degree of concentration in one specific risk area like related party transactions, a disproportionate level of lending to the property development sector that finance company might be perceived as having a higher level of risk than some others and perhaps a lower level of investment in that company might be considered prudent or if there were specific risks identified that the financial advisor wasn't comfortable with (s)he might not recommend them. Related party lending should be a big red warning flag - I would expect an advisor to be very wary


The idea that financial advisors are out there to prey on the lazy and vulnerable is in my opinion a gross generalisation and misrepresentation of the business model of the vast majority of financial advisors. Accepted. A gross generalisation which I retract. I should be more focused on a business model which relies upon a certain method of income generation and the maximisation of opportunities to increase that revenue.


In a heck of a lot of cases I think investors are simply taking a "shotgun approach" to potential liability issues and hoping some of the pellets hit the mark somewhere. I guess its only human nature that their personal point of contact, (their financial advisor) is in line for some of that flak but is it warranted... A simple case of many people wanting to shoot the messenger ?....I think so.
I think too many investors don't do their due diligence on their advisor. I'm trying hard not to call them lazy. But really, I'm not sure why people blindly entrust their hard earned cash to these so called advisors. Case in point - how is it that forsyth barr are still around?

[Beagle]

The role of some of these large accounting firms is questionable. Posters on this thread threw more light than the auditors. I agree.

Some comfort yes but these ratings enable advisors to get too comfortable. Yes I think there's a temptation to think that international agencies with specialist staff trained to analyse risk and with the time and experitise for company visits would do a thorough job. Whether that means financial advisors should be able to rely on them is an open question. I don't think it absolves advisors from at least having a thorough look at publicly available information and forming their own opinion.

I would expect the small suburban advisor to stay out of deep water where sharks lurk. I do.

Related party lending should be a big red warning flag - I would expect an advisor to be very waryI agree that a material degree of related party lending should put people on notice that there's materially more risk involved

Accepted. A gross generalisation which I retract. I should be more focused on a business model which relies upon a certain method of income generation and the maximisation of opportunities to increase that revenue.Big name firms tend to attract a lot of business based solely on their name. Its a tough gig for many others.


I think too many investors don't do their due diligence on their advisor. I'm trying hard not to call them lazy. But really, I'm not sure why people blindly entrust their hard earned cash to these so called advisors. Case in point - how is it that forsyth barr are still around?Agreed. No question Forbar shot themselves in the foot in regard to Credit Sails, Feltex, and their involvement in SCF to name just three examples. I think the only reason they're still in business is because of their roots in the South Island and personal relationships their advisors have with their clients, some of whom did well before the GFC. I don't rate their analysts, down there with Morningstar in my opinion.

Not surprising that Sullivan has had to settle some civil claims. I hope the Crown law office appeal the pathetic so called sentence.

[sharer]

The role of some of these large accounting firms is questionable. Posters on this thread threw more light than the auditors.

.. I would expect the small suburban advisor to stay out of deep water where sharks lurk

.. I'm not sure why people blindly entrust their hard earned cash to these so called advisors. Case in point - how is it that forsyth barr are still around?

Roger, i agree with your posts above. Everyone tells us "DYOR" - but in reality even the really diligent amongst us simply cannot overcome the deliberate obfuscation or basic dishonesty existing in published "accounts", regardless of all the auditing certificates attached.
For this reason i also quote some of Minimoke's points above, which i also agree with.
In particular, i think it a complete waste of time & money to pay fees to Financial Providers or Sharebrokers (or to lawyers who also give life-altering advice in the privacy of their consulting rooms when we want to revise our Wills etc). As for sharebrokers, it took me far too long to recognise that they were after their own profits and not giving me accurate advice re SCF (& some others), and so i terminated my relationship with them, as the only practical thing open to me to do. This meant even greater reliance on my own very limited ability in the DYOR department, and also to recognise when it was just too hard for me to do, in which case i must disinvest from entitites i find in the too-hard basket. Some of those were shed with reluctance, as they seemed good investments; i just had to get ruthless about disposing of anything i couldn't get comfortable with. So far my new regime over the past 3 years or so has resulted in about 2.5X the previous capital value, & about 2X the annual income to be taxed. And quite a bit already shed in advance of the estate lawyers getting amongst it.
Maybe my main point is just to ask whether advice to DYOR might be the real cop-out, as there seems so much evidence that it is really not actually possible to do it well?

[winner69]

I thought was funny from Chris Lee ...and rather sad.

Just shows you that mates are mates and their network is very wide.

who financial network in nz is


Extract
AM I the only financial market participant who can see irony in a Deloittes Best Business award being judged by Samford Maier Junior and Neil Paviour-Smith?

These are the two who took the helm at South Canterbury Finance and are now in the spotlight over the question of the veracity of information provided to financial markets in 2010, regarding SCF.

Paviour-Smith is CEO of Forsyth Barr, which was forced to pay out tens of millions to Credit Sails investors, compensating for losses in a product that was ill-designed and wrongly marketed.

And these guys decide who are New Zealand’s best in various business sectors?

I do not get that. Who selects the judges?

[Beagle]

I thought was funny from Chris Lee ...and rather sad.

Just shows you that mates are mates and their network is very wide.

who financial network in nz is


Extract
AM I the only financial market participant who can see irony in a Deloittes Best Business award being judged by Samford Maier Junior and Neil Paviour-Smith?

These are the two who took the helm at South Canterbury Finance and are now in the spotlight over the question of the veracity of information provided to financial markets in 2010, regarding SCF.

Paviour-Smith is CEO of Forsyth Barr, which was forced to pay out tens of millions to Credit Sails investors, compensating for losses in a product that was ill-designed and wrongly marketed.

And these guys decide who are New Zealand’s best in various business sectors?

I do not get that. Who selects the judges?

Yep that was a real shocker although I would hasten to add that they seemed far better at recognising genuine talent than displaying it themselves...ohhh the bitter irony. Quite how these "gentlemen" still have the mana in the N.Z. financial system to be selected as judges beggars belief. Some would say they deserve only to be the judge of which cockroach was the fastest to cross the prison cell floor and I would have sympathy for that point of view.


Maybe my main point is just to ask whether advice to DYOR might be the real cop-out, as there seems so much evidence that it is really not actually possible to do it well?
DYOR - the ultimate disclaimer :)

[minimoke]

Bit by sorry bit this financial disaster is finally getting closed off. CAML have achieved a confidential settlement for an action brought against 4 directors in the past couple of months. Now the Financial Markets Authority has decided not to pursue SCF any further on the basis its not in the public interest. Despite a briefing by the FMA QC it still seems Chris Lee will endeavour to milk this publicity seeking opportunity for a a few months yet.

[minimoke]

I am wondering if Chris Lee is the first Financial Advisor who can loose his clients more than 100% of their investment. I see hes managing to convince people to throw in another average $200 to pursue a class action on behalf of Preferential share holders. $100,000 raised already and punters have no idea who the action will be against. I can guarantee one thing - the barristers can look forward to another Christmas bonus.

One cheery old fellah reckons he made $4,400 out of his $400 "investment" in the Babcock and Brown class action - but I thought the courts threw that one out? And shareholders have to stump up for "costs" which they may be able to avoid since theirs was a no win - no fee type arrangement. Hope they checked the small print in that contract!

[macduffy]

One cheery old fellah reckons he made $4,400 out of his $400 "investment" in the Babcock and Brown class action - but I thought the courts threw that one out? And shareholders have to stump up for "costs" which they may be able to avoid since theirs was a no win - no fee type arrangement. Hope they checked the small print in that contract!

I'm another "cheery old fellah" who "made" $4,400 out of funding - for $400 - the action that secured an advance payment from the B and B debacle. Money well spent, but we're still waiting for the bulk of our subordinated notes - which is looking increasingly doubtful as legal actions and costs drag on. None of which is helpful for SCF investors though!

[minimoke]

I'm another "cheery old fellah" who "made" $4,400 out of funding - for $400 - the action that secured an advance payment from the B and B debacle. Money well spent, but we're still waiting for the bulk of our subordinated notes - which is looking increasingly doubtful as legal actions and costs drag on. None of which is helpful for SCF investors though!
you were a creditor rather than a shareholder werent you? Scf creditors have already received payment from me via the bailout.if we are talking the same situation bandb directors settled without admitting liability. As you say, I suspect none of which is helpful to Scf investors. And can I go ad far as saying - misleading

[macduffy]

you were a creditor rather than a shareholder werent you? Scf creditors have already received payment from me via the bailout.if we are talking the same situation bandb directors settled without admitting liability. As you say, I suspect none of which is helpful to Scf investors. And can I go ad far as saying - misleading?

Sorry if my post has mislead anyone but I was merely following up another "misleading" post. The B and B situation isn't yet settled as far as creditors and subordinated noteholders are concerned.

[minimoke]

Edit .sorry - I may not have been clear. My reference to "Misleading" is reference to the bandb man in the scf update - not Macduffys post. I'm not sure that the banb situation is the same as scf. If it's not then it shouldn't be used to encourage scf people to throw more money into a black hole.

[kiora]

Daahhh!
" Assets like Scales and Helicopters NZ were let go for a song. They have since been resold by the lucky buyers for much more.

"The value of the assets today is something like $2.2b … at least $1b more than we sold them for."

So an orderly exit would have left NZ Inc's current account $1b better off. And it all hinged on that one grumpy exchange."
Yep it was handled PP!
Scales sold for around $34m and within a couple of years making $34m/year profit !
https://www.stuff.co.nz/business/opinion-analysis/112420653/was-the-1b-fate-of-scf-sealed-by-this-one-simple-misunderstanding?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+6+Ma y+2019

[minimoke]

Daahhh!
" Assets like Scales and Helicopters NZ were let go for a song. They have since been resold by the lucky buyers for much more.

"The value of the assets today is something like $2.2b … at least $1b more than we sold them for."

So an orderly exit would have left NZ Inc's current account $1b better off. And it all hinged on that one grumpy exchange."
Yep it was handled PP!
Scales sold for around $34m and within a couple of years making $34m/year profit !
https://www.stuff.co.nz/business/opinion-analysis/112420653/was-the-1b-fate-of-scf-sealed-by-this-one-simple-misunderstanding?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+6+Ma y+2019Hindsight is a marvelously transparent way of looking at things. ( I didnt realise there was a view that he was a self confessed fraudster)

[whatsup]

Chris Lee yesterday launched his book Billion dollar bonfire, well worth a read imo.

[peat]

Chris Lee yesterday launched his book Billion dollar bonfire, well worth a read imo.

relevant article here, https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12228125

and I dont even think its premium so aren't you guys lucky

[minimoke]

"Lee's portrayal of Hubbard makes no bones that he had deep flaws, including operating the same kind of Ponzi scheme that brought down famous fraudsters, New Zealand's own David Ross and New York's Bernie Madoff, both of whom are still serving lengthy prison sentences."

[Balance]

https://www.stuff.co.nz/business/117379180/south-canterbury-finance-investors-dealt-further-blow-as-author-gives-up-compensation-fight

Chris Lee trying to get taxpayers to bail out his clients who he put into SCF preference shares?

Taxpayers are already out of pocket by $1.6 billion, no thanks to the Allan Hubbard and his gross mismanagement and incompetent lending and investing practices.

Suggestion for Chris (he once thought the sun shone out of Allan's posterior and considered him to be a financial giant) - sue Forsyth Barr and himself.

[Aaron]

I haven't read his book but wonder why he thinks taxpayers should bail out South Canterbury Finance shareholders?

Sadly one lot of participants in the collapse of the finance companies who played a big part but were not held responsible were "investment advisors" who advised clients to invest in finance company debentures while they collected commissions from the finance companies. It was outrageous but no one was ever held to account as far as I know. I heard stories like a widower asking a financial advisor how she should invest her life insurance payout and was told to put it all in mix of finance company debentures. I think Northplan in Whangarei got people out of diversified portfolios and overweight in Bridgecorp debentures.

[macduffy]

Yes, Aaron, but we must not forget that finance company debentures were highly popular at the time, particularly amongst those who didn't understand or trust the sharemarket - the 1987 crash still loomed large in many memories - and attractive returns were scarce, apart from finance company rates!
I spent a lot of time convincing a close friend who wanted to put his mother-in-laws nestegg into a variety of finance co.'s to instead seek out good quality industrial debentures on the secondary market. These were available from time to time and he bought a few parcels. Unfortunately, he also put some money into South Canterbury Finance...….

[Aaron]

2.5% over bank deposits according to this article.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10456901

How do you assess risk and the premium you need to justify it. Nearly impossible I would say.

People are currently foolish having money in the bank but it could be worse if there is a crisis and what is the investment alternative in this current environment.

[Tronald Dump]

2.5% over bank deposits according to this article.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10456901

How do you assess risk and the premium you need to justify it. Nearly impossible I would say.

At the time, you could buy 7 year Infratil bonds at issue with an 11% coupon. The problem was, those didn't pay advisers 4% commission.

Both Bridgecorp and Capital & Merchant used to run around talking up the "Lloyd's Guarantee" on their debentures, which was a total fiction. Ironically, you only had to read the Investment Statement to find that out.

Basically most of the finance companies were Ponzi schemes. They were paying quarterly interest on the debentures but capitalising the interest on the loans to property developers, leading to a big funding mismatch. As soon as people stopped investing or reinvesting in the debentures, the whole thing collapsed.

[Aaron]

11% what a juicy yield. Unthinkable today but it makes you wonder how much less risky Infratil is today than it was back then. I am left leaning but I can't help think the market should be left to decide interest rates.

That is the good thing about finance company accounts when the developers stop paying their loans you capitalise the interest so your interest income is growing and your loan assets on the Balance Sheet are also growing. To bad if it is difficult to provision for bad debts. I think it was Hanover Finance that paid its shareholders a dividend just prior to the s**t hitting the fan, basically sucking out any cash left and ensuring the shareholders owed the company nothing and leaving debenture holders high and dry. This is just hearsay though as I never looked at the financial statements.

[Tronald Dump]

11% what a juicy yield. Unthinkable today but it makes you wonder how much less risky Infratil is today than it was back then. I am left leaning but I can't help think the market should be left to decide interest rates.

My point was that Infratil bonds were probably priced appropriately for the risk, whereas clearly debentures were not. Anyone with half a brain could have seen that. The market will decide rates and spreads, but only if it's and informed/intelligent market.

[GTM 3442]

I haven't read his book but wonder why he thinks taxpayers should bail out South Canterbury Finance shareholders?

<snip>



SCF had two types of instruments - plain vanilla bonds, and perpetual preference shares. A whole lot of people were shoe-horned into both by the financial services industry, with no idea of what they were buying. Headlines of the time proclaimed the listing of the perpetual preference meant that "South Canterbury Finance had floated on the NZX".

When it all inevitably hit the fan, the bondholders got a government guarantee, but the preference share holders didn't. Given the way that the things were marketed and bought, I reckon they probably should have.

But the waters were well muddied by the bottomfeeders who were buying both the preference shares and the bonds at about 25c in the dollar. And once the bonds were government guaranteed, it was fantastic - a government guaranteed 20% yeild.

Mister Lee is concerned with the poor sods who were shoe-horned into something they didn't understand at the time of issue , rather than the bottomfeeders.

[Aaron]

Mister Lee is concerned with the poor sods who were shoe-horned into something they didn't understand at the time of issue , rather than the bottomfeeders.

I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

[stoploss]

I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

Problem was many of the elderly people that went to advisers, trusted them .They didn't know they were bad advisers . They had no idea that spreading 100 K , into 10 different finance companies wasn't a spread of risk ......
Pity their advisers didn't know this either, many were tainted by large commissions from the finance companies.

[Aaron]

Problem was many of the elderly people that went to advisers, trusted them .They didn't know they were bad advisers . They had no idea that spreading 100 K , into 10 different finance companies wasn't a spread of risk ......
Pity their advisers didn't know this either, many were tainted by large commissions from the finance companies.

It was a disaster, no doubt about it but still I don't think it is the NZ taxpayers problem. We will stump up for national super but they will have to accept a reduced retirement due to poor investing decisions. What should have happened was their "advisors" should have told them they were actually commission only sales agents for the finance companies. Instead it turns out their "advisors" were deceptive lying pieces of s**t that should have gone to jail. I don't know if the investors had any redress under consumer protection laws for being sold a crappy product.

[GTM 3442]

I would be concerned that NZ taxpayer dollars are being spent reimbursing people who made bad investment decisions or relied on bad advisors.

Oh Aaron! Those taxpayer dollars have already been spent, bailing out SCF and some of the others, getting on for a decade ago.

Mister Lee's book is mainly concerned with the shambles that was the collapse of SCF - the book demonstrating that greed, panic, and incompetence make very dangerous bedfellows.

[Aaron]

Oh Aaron! Those taxpayer dollars have already been spent, bailing out SCF and some of the others, getting on for a decade ago.

Mister Lee's book is mainly concerned with the shambles that was the collapse of SCF - the book demonstrating that greed, panic, and incompetence make very dangerous bedfellows.

Sorry not very knowledgeable just thought Balance's article (post 2929) was to do with Chris Lee wanting preference share holders to get taxpayer money as well.

[peat]

the ultimate irony of course with SCF was how (after the government guarantee ) it became the best investment in town. Not that I would ever have played that game.
How did it work out for those invested? Did the loss of opportunity cost cripple the (I presume) full return one eventually got from the government?

[GTM 3442]

Sorry not very knowledgeable just thought Balance's article (post 2929) was to do with Chris Lee wanting preference share holders to get taxpayer money as well.

Well the bondholders got the benefit of the government guarantee, but the holders of the preference shares didn't. And seeing that both instruments were marketed to the same target audience, the difference seems rather inequitable.

That's the point of that little exercise - simple fairness.

[GTM 3442]

the ultimate irony of course with SCF was how (after the government guarantee ) it became the best investment in town. Not that I would ever have played that game.
How did it work out for those invested? Did the loss of opportunity cost cripple the (I presume) full return one eventually got from the government?

One of my roles is as an inveterate bottom-feeder, and I bought both the bonds and the preference shares.

By the time that I bought them, the bonds came with a government-guarantee, and were yielding about 20%.

I bought the preference shares at about 25c , and sold out at about 60c, although IIRC they went higher. Later, the price went back down to about 30c and I got greedy and used half the profit I'd made to buy more in anticipation of a successful resolution. But then the "rescue plan" failed, and I got wiped out.

All three purchases were sheer speculation. Two wins, one loss.

[peat]

Well the bondholders got the benefit of the government guarantee, but the holders of the preference shares didn't. And seeing that both instruments were marketed to the same target audience, the difference seems rather inequitable.

That's the point of that little exercise - simple fairness.

Its not the audience in finance that determines outcome though, and shares are equity and equity is taking more of a risk than bonds - well that's the way I see it anyway.


One of my roles is as an inveterate bottom-feeder, and I bought both the bonds and the preference shares.

By the time that I bought them, the bonds came with a government-guarantee, and were yielding about 20%.

I bought the preference shares at about 25c , and sold out at about 60c, although IIRC they went higher. Later, the price went back down to about 30c and I got greedy and used half the profit I'd made to buy more in anticipation of a successful resolution. But then the "rescue plan" failed, and I got wiped out.

All three purchases were sheer speculation. Two wins, one loss.

It was a smart thing to do and in another time or place I might have as well.

[GTM 3442]

Its not the audience in finance that determines outcome though, and shares are equity and equity is taking more of a risk than bonds - well that's the way I see it anyway.

Peat, you know about this stuff, I know a little about this stuff, but those poor b*ggers were just fish in a barrel.

I suspect that many if not most of the good (but financially illiterate) folk who bought these things had no idea what they were buying. None. Zero. Zip. Nada.

Blissfully ignorant of any difference between debentures, bonds, and term deposits, there's a good chance that they thought that "Equity" might be good for a place in the 3:30 at Trentham.

In many cases, seeking professional advice provided no better outcome (if not worse) than clipping the coupon in the paper and sending it off to one of the abysmally-supervised and appallingly-regulated many finance companies which blighted the early 21st century New Zealand landscape.

Now, given that financial markets regularly blow up about every ten years or so, where should we look for the next explosion?

[Balance]

Peat, you know about this stuff, I know a little about this stuff, but those poor b*ggers were just fish in a barrel.

I suspect that many if not most of the good (but financially illiterate) folk who bought these things had no idea what they were buying. None. Zero. Zip. Nada.

Blissfully ignorant of any difference between debentures, bonds, and term deposits, there's a good chance that they thought that "Equity" might be good for a place in the 3:30 at Trentham.

In many cases, seeking professional advice provided no better outcome (if not worse) than clipping the coupon in the paper and sending it off to one of the abysmally-supervised and appallingly-regulated many finance companies which blighted the early 21st century New Zealand landscape.

Now, given that financial markets regularly blow up about every ten years or so, where should we look for the next explosion?

Always interesting how the good folks will spend days and weeks checking and researching before a new car or a new fridge - but do bugger all when entrusting their money to someone.

[Aaron]

Well done GTM3442 smart investing but you cost the rest of us taxpayers $1.7billion or $405 each at the time so well done, but fu at the same time.

I recall reading predictions regarding the imminent demise of the finance companies long before they happened. Although this isn't the article I recall reading I think it was Bruce Sheppard predicting the demise of the finance companies. Wish I had listened more closely to him when investing in Cadmus.

http://www.stuff.co.nz/waikato-times/business/549249/Shareholders-warn-more-finance-firms-to-collapse

Although he wasn't very charitable towards Hanover investors after trying to advise them. Possibly his comments might be considered ageist in this more enlightened age. Watson & Hotchin sucked up all the available cash with dividends that could have been challenged although I do not understand the situation well enough to comment.

http://www.stuff.co.nz/business/756282/Sheppard-labels-Hanover-investors-stupid-lunatics

Stupid lunatics might be an accurate label for finance company investors. Although the same label could be put on me after investing in companies I have not put much effort researching.

[GTM 3442]

Well done GTM3442 smart investing but you cost the rest of us taxpayers $1.7billion or $405 each at the time so well done, but fu at the same time.

I recall reading predictions regarding the imminent demise of the finance companies long before they happened. Although this isn't the article I recall reading I think it was Bruce Sheppard predicting the demise of the finance companies. Wish I had listened more closely to him when investing in Cadmus.

http://www.stuff.co.nz/waikato-times/business/549249/Shareholders-warn-more-finance-firms-to-collapse

Although he wasn't very charitable towards Hanover investors after trying to advise them. Possibly his comments might be considered ageist in this more enlightened age. Watson & Hotchin sucked up all the available cash with dividends that could have been challenged although I do not understand the situation well enough to comment.

http://www.stuff.co.nz/business/756282/Sheppard-labels-Hanover-investors-stupid-lunatics

Stupid lunatics might be an accurate label for finance company investors. Although the same label could be put on me after investing in companies I have not put much effort researching.

Oh Aaron! I shall take that as a compliment - albeit somewhat backhanded.

However I think that in the interests of fairness, you should save a word or two of criticism for the directors and managers of the various finance companies, as well as their trustees and auditors.

However, at the time, I don't think that the government had any real choice other than to implement some form of guarantee scheme. The economic, social, and political risks at the time were such that some such scheme was inevitable.

Personally, I like government guarantees. That's why I have a whole bunch of term deposits in Australia rather than New Zealand - the Australian guarantee scheme is still running. Mind you, given the interest rates currently on offer in Australia, I doubt that I'll be rolling them over at maturity.

Looking ahead, what do you think will blow up this time round?

[macduffy]

That's right, GTM. Once Australia had a guarantee the NZ govt had no option but to follow suit to prevent a massive outflow of funds over the Strait. And, of course, the (mainly) banks paid a fee for that, little as it was.

All water under the bridge - until the next time?

[Balance]

That's right, GTM. Once Australia had a guarantee the NZ govt had no option but to follow suit to prevent a massive outflow of funds over the Strait. And, of course, the (mainly) banks paid a fee for that, little as it was.

All water under the bridge - until the next time?

There's no law against stupidity - as long as investors believe in what the crooks out there tell them, there will be the next time.

New cases emerge every month of more scams and ponzi schemes out there.

Meanwhile, the naive and gullible continue to send money overseas in search of love from Nigerians - tens of millions of dollars every year.

[peat]

Musing regarding 'next time', some of the hybrid debt issues out there are shall we say are a little bit interesting. One hopes the default clauses never operate, though even with my cynical view it is hard to actually envisage these company's defaulting. Just taking as a random example with no slur attached at all , but say, Wellington Airport has a fair bit of debt out there even though the company isn't listed for shares. I mean its a steady business right?. Travellers all the time, including politicians whizzing around everywhere on our expense. But just say something went wrong.... the obvious one is an earthquake and I'm sure there is insurance so its probably something else. But just say something went wrong, theres $400 million of debt out there with hungry coupons.

10896

Debt issues have been the lifestay of the NZX for a while now. Theres quite a few. 144 to be precise. With total capitalisation of $34,000 M so I'll call that 34 billion.
https://www.nzx.com/markets/NZDX

They are all rock solid of course though.
Right?

[Aaron]

Looking ahead, what do you think will blow up this time round?

I am not smart enough to know what will blow up but if central banks keep dropping interest rates then maybe all debt will be OK, especially if we get to negative rates, no problems, no need to ever pay it back(even better than inflation but more obvious and still morally and intellectually wrong). No limits on asset prices either. If things get too farcical the concept of money might be questioned and if there is a loss of faith in money it will happen pretty quickly I imagine, but that is unlikely.
In NZ the finance companies provided finance which helped property development and bridging finance and banks easy lending pushed land prices up. The new higher valuations meant more money could be borrowed which pushed asset prices up further which improved valuations and on and on until the money stopped flowing. Sounds a little bit like Auckland house prices currently but Central Banks seem to be indicating they will drop interest rates as required and won't stop the flow of credit so perhaps we just keep going this time.
I am wanting to have a small amount of debt rather than savings in the bank but cannot decide on what to invest in as cash might be a good option if the "next thing" blows up. Sadly I still can't see into the future.

[GTM 3442]

Whatever blows up, it's always something to do with debt that kicks it off. But who knows whose debt it will be - who is getting worried about who else has lent how much, and to whom, and what's that debt worth now?

As an aside, you don't have to go too far through the alphabet of nations to find some interesting "opportunities"

https://www.bloomberg.com/opinion/articles/2019-06-25/a-100-year-austrian-bond-at-1-2-what-fresh-madness-is-this

https://www.cnbc.com/2017/06/20/argentina-sees-strong-demand-for-surprise-100-year-bond.html

[Aaron]

As an aside, you don't have to go too far through the alphabet of nations to find some interesting "opportunities"

https://www.bloomberg.com/opinion/articles/2019-06-25/a-100-year-austrian-bond-at-1-2-what-fresh-madness-is-this

https://www.cnbc.com/2017/06/20/argentina-sees-strong-demand-for-surprise-100-year-bond.html

Whoever is buying that debt must think there will be little or no inflation in Austria for the next 100 years and a lot less than there is currently in Argentina.

More likely though they are waiting for the next round of rate cuts and QE.

Someone who can value debt might be able to explain just how much the face value of the 2.1% coupon bonds will have increased from the original $1 value in light of the current 1.2% yield only two years later. That would be a significant gain I would imagine. It makes the buyers of the 2.1% bonds look like investment geniuses.

[GTM 3442]

I reckon it should be a 75% gain.

But just remember that there are a whole swag of institutions out there whose asset allocation mix is/are mandated by trust deeds and the like.

So they have no choice but to buy. . .