South Canterbury Finance Limited [Archive] - Page 6

Balance

13-07-2010, 10:12 PM

Unfortunately it is not as simple as just seeing the word investor.

You may want to read the Securities Act and specifically what classes of investors mean that a person is making an 'offer to the public' (which then triggers provisions regarding the need for a prospectus and other requirements).

For example, I am an 'investor' in a number of companies, but not all of them have made an offer to the public, since my investment was made as a close personal friend.

Alan.

Cut to the chase :

Aorangi Securities, which was formed in 1974, is owned by Allan and Margaret Hubbard and they are the only directors. It was a contributory mortgage company but seems to have been transformed into a finance company, raising funds from investors and on-lending these funds to investors.

As the diagram shows it borrowed around $98 million from over 400 investors in Otago and Canterbury and this was supposed to be on-lent on a first mortgage security basis.

One of the first issues is the absence of a prospectus. This seems to be inconsistent with securities regulations which require a prospectus to be issued when an offer is made to the public. As far as debt securities are concerned the issuer must also "appoint a person as a trustee in respect of the security" and that person must "sign a trust deed relating to the security".

Aorangi doesn't appear to have either a prospectus or trust deed.

According to Power's diagram an undefined proportion of this money was lent to commercial interests, some of which was secured, and the remaining went to the Hubbards on an unsecured basis.

According to Power's fact sheet many of the loans made by Aorangi:

* Are inadequately documented by way of term loan contracts or loan agreements.

* Appear to be unsecured.

* Appear to be made contrary to instructions given by investors that their deposits be lent under the security of a first registered mortgage.

If this is correct then unsecured loans to Hubbard and his wife are inconsistent with the instruction to lend this money on a first registered mortgage secured basis.

This is an important matter and was the main issue in the huge $45 million settlement reached between ING (NZ) and ANZ National Bank with the Commerce Commission, which was announced this week.

The commission was more concerned about where monies in the ING Diversified Yield Fund and ING Regular Yield Fund were invested, and the misrepresentation of risk, than the amount of money lost by investors.

According to the Commission: "It is important that consumers are able to make properly informed decisions, based on clear and accurate information. Investors decide where to invest their money based largely on their appetite for risk. Throughout our investigation investors have told us that they would not have invested in these funds if the actual risk had been represented accurately."

The same should apply to Hubbard. If investors were told that their Aorangi money would be invested on a first registered mortgage security basis then that is where it should have gone and not into unsecured loans to the company's directors.

The day after the statuary management decision Hubbard released a statement with the following Aorangi figures:

* Aorangi has $88 million of depositors' money, not the $98 million released by the Commerce Minister.

* The company had $126 million of loans, $2 million of cash and equity of $40 million.

The announcement didn't say how much of the $126 million of loans was to directors but Hubbard promised that if investors were not paid in full then he would meet any shortfall "provided it is within my resources" to do so.

The Hubbard issue is somewhat similar to the controversy over politicians and the use of their credit cards for personal expenditure.

It is wrong for politicians to use ministerial credit cards for personal expenditure, even if they pay the money back, as it is inappropriate for company directors to access money on a unsecured basis, when the funds are supposed to be secured, even when they intend to pay it back.

The Securities Commission and Serious Fraud Office seem to be concerned with Hubbard because he took money from Aorangi on an unsecured basis, with inadequate documentation and security, and this is a misrepresentation of risk as far as investors are concerned.

Would the major trading banks allow their directors to take money out of client accounts on the basis they would be able to pay it back? This is a ridiculous suggestion yet there seems to be widespread support for this sort of behaviour at Aorangi.

What would be the outcome if something happened to Hubbard? Would his beneficiaries be prepared to meet his promises to Aorangi? What would happen if Hubbard ran out of money and was unable to meet any shortfall? Hubbard argues that none of his investors have lost money but South Canterbury Finance, which had a large number of related party loans, had total losses of $362 million for the 18 months ended December 2009.

The company would probably have failed without its government guarantee.

The issue here is whether Hubbard's indiscretions are little more than oversight and laxness, as John Kidd of McDouall Stuart has argued, or it is more serious than this.

Timaru lawyer Edgar Bradley, a long time friend of Hubbard, told the media: "If a sometime criticism of Allan is a lack of documentation then it must be remembered he is a product of days when trust was more important than paperwork. Sadly the reverse is now the case."

Bradley's view is misguided because trust and documentation are both vitally important in the modern era and the former has not replaced the latter.

The clear message from the Hubbard's statutory management and Serious Fraud Office investigation is that regulators believe that he has obtained funds from Aorangi on an unsecured basis when investors have been told that their money would be secured.

Regulators cannot condone this behaviour on the basis that Hubbard, or anyone else in the same situation, promises to meet any shortfall."

Enumerate

13-07-2010, 10:14 PM

You obviously have not read the SM Report.

Or if you did, you are so overwhelmed with emotion that you are preferring to not understand the content and gravity of the Report?

You accuse me of being emotional - when I am correcting your mistakes of logic?!? Are you delusional?

I have read the Statutory Managers report. With a great deal of comprehension - and an overall conclusion that if this is all they can produce after three weeks - then I expect some High Court Judge is going to explain to Minister Power why the powers of Statutory Management should not be applied to Allan Hubbard.

Enumerate

13-07-2010, 10:18 PM

Balance ... old news. We now have the Statutory Manager's report - that is what we are talking about.

God, I wish we had some moderation.

Alan3285

13-07-2010, 10:21 PM

Cut to the chase :

Aorangi Securities, which was formed in 1974, is owned by Allan and Margaret Hubbard and they are the only directors. It was a contributory mortgage company but seems to have been transformed into a finance company, raising funds from investors and on-lending these funds to investors.

As the diagram shows it borrowed around $98 million from over 400 investors in Otago and Canterbury and this was supposed to be on-lent on a first mortgage security basis.

One of the first issues is the absence of a prospectus. This seems to be inconsistent with securities regulations which require a prospectus to be issued when an offer is made to the public. As far as debt securities are concerned the issuer must also "appoint a person as a trustee in respect of the security" and that person must "sign a trust deed relating to the security".

Still, nothing there means that Aorangi was making an offer to the public at any time.

It doesn't mean it wasn't either, but there is significant doubt on that point.

As others have pointed out, Aorangi has only 400 investors, whereas most businesses that are dealing with the public will have thousands of investors.

The whole problem I have here is the apparent lack of due process.

The ends do not justify the means and the issue is far greater than just AH and the specifics of this case.

Alan.

Balance

13-07-2010, 10:29 PM

You make a number of mistakes in logic here.

Because Aorangii had manual systems - you claim they breached their duty of care in record keeping?!? False conclusion

No - because the Report refers to : "In our opinion the accounting systems for HMF are not adequate.
 Because of the nature of HMF’s accounting systems, it is not possible to accurately calculate the
value of HMF at any time. HMF is presently estimated to be $70 million. The actual value of
HMF will not be known until the reconciliation is completed as at 31 March 2010 and then
updated to 20 June 2010."

"A lack of paper work is also impeding our progress. The standard of the paper work for the entities
is not what we would have expected to have found for business entities of this size and complexity.
As a result, we will need some time to complete a review of the position and to decide what action is
needed."
Because Aorangi is criticised for its record keeping - you claim this applies to SCF?!? False conclusion

That is your inference - not mine. My point is that AH had access to billions via SCF, Aorangi and other entities. There is a duty of care pertaining top investing the funds and use of the funds.

You claim evidence has been presented and imply some dark overtones?!? Are you attempting to mislead, or deceive?

What do you think the SM report is, Enumerate? Just some flight of fancy narratives written by some school kids?

It pays to read the SM Report carefully. I am sure Russell McVeagh will be reading through it word by word - and then, seeing if they can use its content for the judicial review.

Balance

13-07-2010, 10:31 PM

Still, nothing there means that Aorangi was making an offer to the public at any time.

It doesn't mean it wasn't either, but there is significant doubt on that point.

As others have pointed out, Aorangi has only 400 investors, whereas most businesses that are dealing with the public will have thousands of investors.

The whole problem I have here is the apparent lack of due process.

The ends do not justify the means and the issue is far greater than just AH and the specifics of this case.

Alan.

Alan, if just 1 investor is a member of the public and invested with Aorangi - Aorangi required a prospectus.

The duty of care to have a prospectus is with AH - not with the investor.

Alan3285

13-07-2010, 10:39 PM

Alan, if just 1 investor is a member of the public and invested with Aorangi - Aorangi required a prospectus.

The duty of care to have a prospectus is with AH - not with the investor.

There is no statement in the SM Report that Aorangi made an offer to the public. As I said above, that doesn't mean there wasn't, but your statements are astoundingly biased in one direction with no apparent 'balance' whatsoever.

You seem to be willing to convict AH before any definitive evidence is actually presented.

I don't know for certain whether he is or is not guilty, but I do know that I believe in the rule of law, whereas your posts support 'kangaroo courts' and summary judgement.

If he is guilty, then why are you so scared of due process? If he is guilty, then he will be convicted and rightly so.

However, if he is not guilty, then the arbitary seizure of his assets by the state will have been a heinous act.

Alan.

Enumerate

13-07-2010, 10:43 PM

It pays to read the SM Report carefully. I am sure Russell McVeagh will be reading through it word by word - and then, seeing if they can use its content for the judicial review.

Lol Balance

HMF is NOT Aorangi

The inadequacy of HMF accounting systems is NOT a breach of the duty of care, even for HMF much less Aorangi.

What do you think the SM report is, Enumerate? Just some flight of fancy narratives written by some school kids?

The Statutory Manager's report is sub standard. It fails to address the critical question of why Allan Hubbard was subject to this extreme regulation. It is quite clear that Allan Hubbard was put under statutory management with insufficient grounds. There is not a single matter of the "public interest" addressed in the report. There are a number of matters that could be reviewed under standard commercial intervention. There is NOTHING that justifies the statutory management of Allan Hubbard as a matter of public interest.

The Statutory Manager is proceeding without professional integrity. He clearly believes he is in some kind of insolvency assignment - he is not. He simply cannot proceed to do a pile of "best practice" type of investigations, under classical insolvency guidelines. He needs to demonstrate the issues of vital "public interest" that do not have conventional commercial remedy.

Everyone, in this process, has forgotten about Allan Hubbard's rights.

That is why the judicial review is now urgently needed.

Balance

13-07-2010, 10:49 PM

Lol Balance

HMF is NOT Aorangi

The inadequacy of HMF accounting systems is NOT a breach of the duty of care, even for HMF.

The Statutory Manager's report is sub standard. It fails to address the critical question of why Allan Hubbard was subject to this extreme regulation. It is quite clear that Allan Hubbard was put under statutory management with insufficient grounds. There is not a single matter of the "public interest" addressed in the report. There are a number of matters that could be reviewed under standard commercial intervention. There is NOTHING that justifies the statutory management of Allan Hubbard as a matter of public interest.

The Statutory Manager is proceeding without professional integrity. He clearly believes he is in some kind of insolvency assignment - he is not. He simply cannot proceed to do a pile of "best practice" type of investigations, under classical insolvency guidelines. He needs to demonstrate the issues of vital "public interest" that do not have conventional commercial remedy.

Everyone, in this process, has forgotten about Allan Hubbard's rights.

That is why the judicial review is now urgently needed.

The reference to inadequate records is to Aorangi as well. Please read carefully.

Enough said.

Enumerate

13-07-2010, 11:00 PM

The reference to inadequate records is to Aorangi as well. Please read carefully.

Well, they why did YOU quote the HMF commentary?

No - because the Report refers to : "In our opinion the accounting systems for HMF are not adequate.
 Because of the nature of HMF’s accounting systems, it is not possible to accurately calculate the
value of HMF at any time. HMF is presently estimated to be $70 million. The actual value of
HMF will not be known until the reconciliation is completed as at 31 March 2010 and then
updated to 20 June 2010."

"A lack of paper work is also impeding our progress. The standard of the paper work for the entities
is not what we would have expected to have found for business entities of this size and complexity.
As a result, we will need some time to complete a review of the position and to decide what action is
needed."

I am reading carefully. Maybe it is you that should be following your own advice?

Balance

13-07-2010, 11:05 PM

Well, they why did YOU quote the HMF commentary?

I am reading carefully. Maybe it is you that should be following your own advice?

It was a trap - obvious you have not read the report carefully! If you have, you would not have referred to the second excerpt as that of HMF.

Refer to Page 3 of Report.

Balance

13-07-2010, 11:09 PM

There is no statement in the SM Report that Aorangi made an offer to the public. As I said above, that doesn't mean there wasn't, but your statements are astoundingly biased in one direction with no apparent 'balance' whatsoever.

You seem to be willing to convict AH before any definitive evidence is actually presented.

I don't know for certain whether he is or is not guilty, but I do know that I believe in the rule of law, whereas your posts support 'kangaroo courts' and summary judgement.

If he is guilty, then why are you so scared of due process? If he is guilty, then he will be convicted and rightly so.

However, if he is not guilty, then the arbitary seizure of his assets by the state will have been a heinous act.

Alan.

I am not scared of due process - that is what sets NZ apart from Russia.

There is acse for SM in my view however in circumstances which warrant it - I prefer the Government to act rather than wait for AH to continue his way of taking funds from the public and dispensing the funds as he saw fit. The mess would have only gotten bigger.

Especially when it is becoming clear the bulk of funds raised were being put to related party use.

That has always been my beef with AH and SCF - now the truth is coming out.

Meanwhile, the govt has not seized his assets - it has moved to protect investors' funds. The assets and funds are frozen. Big difference.

How do you read the transfer of assets to charitable trusts?

BTW - I commend Enumerate and you on your principled stand on due process. Good on you.

Enumerate

13-07-2010, 11:29 PM

It was a trap - obvious you have not read the report carefully! If you have, you would not have referred to the second excerpt as that of HMF.

Refer to Page 3 of Report.

And the reason we were talking about this is your assertion of a breach of a duty of care - that there is too much on paper - and the second excerpt is about the fact there is not enough on paper. Neither point justifies your breach of a duty of care.

Clever, cunning, Balance ... I was so distracted by your illogical argument - I fell right into it.

Pity, I thought we were talking about serious issues. I thought this was something other than an idle game.

Balance

13-07-2010, 11:36 PM

And the reason we were talking about this is your assertion of a breach of a duty of care - that there is too much on paper - and the second excerpt is about the fact there is not enough on paper. Neither point justifies your breach of a duty of care.

Clever, cunning, Balance ... I was so distracted by your illogical argument - I fell right into it.

Pity, I thought we were talking about serious issues. I thought this was something other than an idle game.

It is serious.

You are concerned about due process and rightly so.

I am concerned about how AH has been using investors' money - read back this thread. Everything coming out now reinforces my concerns and confirms the need to act.

Enumerate

13-07-2010, 11:40 PM

There is acse for SM in my view however in circumstances which warrant it - I prefer the Government to act rather than wait for AH to continue his way of taking funds from the public and dispensing the funds as he saw fit. The mess would have only gotten bigger.

As pointed out before, there is a case for Aorangi investors (and certainly HMF investors) to be eligible people, exempt from the section 2 provisions of the Securities Act.

Especially when it is becoming clear the bulk of funds raised were being put to related party use.

That has always been my beef with AH and SCF - now the truth is coming out.

Related party transactions are not illegal. If you consider a company like Macquarie - almost everything it does is a related party transaction.

Do not confuse an Allan Hubbard investment with the related party loans of Hanover or Bridgecorp.

Balance

13-07-2010, 11:51 PM

As pointed out before, there is a case for Aorangi investors (and certainly HMF investors) to be eligible people, exempt from the section 2 provisions of the Securities Act.

Related party transactions are not illegal. If you consider a company like Macquarie - almost everything it does is a related party transaction.

Do not confuse an Allan Hubbard investment with the related party loans of Hanover or Bridgecorp.

I am not confused at all! The SM Report makes it clear that AH's related party loans may not even be properly documented or secured!

Excerpts : Some investors, who believed their investments were secured over land, may not in fact have this
security.

The level of investments in (including loans to) businesses associated with Mr and Mrs Hubbard
without registered security is of concern. Most of these investments are in or to farm businesses
that have loans from banks secured by a mortgage over the assets of the farm. This could mean,
in the case of direct investments in those farm businesses, that Aorangi would only be paid after
the creditors of those businesses were fully paid. There may therefore be a risk in certain
circumstances that Aorangi does not recover all the money due to it.

Alan3285

14-07-2010, 12:05 AM

I am not scared of due process - that is what sets NZ apart from Russia.

There is acse for SM in my view however in circumstances which warrant it - I prefer the Government to act rather than wait for AH to continue his way of taking funds from the public and dispensing the funds as he saw fit. The mess would have only gotten bigger.

Especially when it is becoming clear the bulk of funds raised were being put to related party use.

That has always been my beef with AH and SCF - now the truth is coming out.

Meanwhile, the govt has not seized his assets - it has moved to protect investors' funds. The assets and funds are frozen. Big difference.

How do you read the transfer of assets to charitable trusts?

BTW - I commend Enumerate and you on your principled stand on due process. Good on you.

Thank you.

However, I just don't understand how putting Allan Hubbard and his wife (them as individuals) into Stat Mgt in any way furthers the protection of investors in Aorangi above and beyond putting that company into Stat Mgt.

It is all about degrees perhaps, but what has happened seems out of all proportion to the situation.

Alan.

Balance

14-07-2010, 12:09 AM

Thank you.

However, I just don't understand how putting Allan Hubbard and his wife (them as individuals) into Stat Mgt in any way furthers the protection of investors in Aorangi above and beyond putting that company into Stat Mgt.

It is all about degrees perhaps, but what has happened seems out of all proportion to the situation.

Alan.

AH's affairs are so intertwined with that of Aorangi and other entities - that's why.

Ah has too high a public profile and is too highly regarded for anything to be swept under the carpet if the SM is proven to be unjustified and unwarranted. Heads will roll. Of that I have total confidence.

Enumerate

14-07-2010, 12:30 AM

I am not confused at all! The SM Report makes it clear that AH's related party loans may not even be properly documented or secured!

It's been over 3 weeks since Hubbard was put into Statutory Management. The report comes back with the word "may" ....

Imagine you were a High Court judge reading this ... you had to sign a warrant putting Allan Hubbard into Statutory Management ... and the evidence presented is ... "may" ...

In all fairness, what would you do?

You seem to be advocating the use of exceptional powers of regulation on the suspicion, or hint of impropriety.

Even if you turn your "may" into a more definite tense - you can prosecute under the Finance Act or Securities Act or whatever - you have a conventional remedy. You do not need Statutory Management.

If, however, you want to go on a evidence gathering "fishing expedition" while trampling on Allan Hubbard's basic rights - the right to due process - which is the principle that the government must respect all of the legal rights that are owed to a person according to the law - the Statutory Management regulations are ideal. You can do what you like - there are no pesky laws of evidence to check or limit your actions.

The only public commentator to say much about this is David Hillary - the advocate of natural justice. He is perfectly happy to have almost every major point of natural justice overturned, in this case (he defends statutory management on his blog).

These are key elements of natural justice according to Wikipaedia:

* A Right to Advanced Warning. Contractual obligations depriving individuals of their Rights cannot be imposed retrospectively. Allan Hubbard has all rights extinguished with no warning or sufficient time to prepare an answer to the questions that lead to his statutory management
* A person accused of a crime, or at risk of some form of loss, should be given adequate notice about the proceedings (including any charges). Allan Hubbard has all rights extinguished with no charge
* A person making a decision should declare any personal interest they may have in the proceedings. Simon Botherway declared his interest after making the statutory management decision
* A person who makes a decision should be unbiased and act in good faith. He or she therefore cannot be one of the parties in the case, or have an interest in the outcome. This is expressed in the Latin maxim, nemo iudex in causa sua: "no man is permitted to be judge in his own cause". Simon Botherway comes uncomfortably close on this one
* Proceedings should be conducted so they are fair to all the parties - expressed in the Latin maxim audi alteram partem: "let the other side be heard". Where is Hubbards right of reply - how can he present his case
* Each party to a proceeding is entitled to ask questions and contradict the evidence of the opposing party. Again, where are Hubbard's rights on this matter
* A decision-maker should take into account relevant considerations and extenuating circumstances, and ignore irrelevant considerations. The fact that Allan Hubbard kept manual journals and these were copied into an information system - the fact that he did not have fancy automation systems, that he would not have used - are not crimes, and are irrelevant to Allan Hubbard's statutory management - yet this is presented as a key element of criticism in the Statutory Manager's report
* Justice should be seen to be done. If the community is satisfied that justice has been done, they will continue to place their faith in the courts. Epic fail on this one Minister Power - in terms of your order in council. Let's hope that the true arbiters of justice can restore some reputation

Not a good look for David Hillary, supporter of natural justice?!?

winner69

14-07-2010, 06:54 AM

How do you read the transfer of assets to charitable trusts?

I think you'll find this is the key issue ..... urgently setting up several charitable trusts and transferring assets into them just didn't seem right in the prevailing circumstances .... think about it

macduffy

14-07-2010, 09:01 AM

Another article by Chalkie in today's DomPost should be required reading for followers of this thread.

minimoke

14-07-2010, 09:38 AM

These are key elements of natural justice according to Wikipaedia:
[/QUOTE]
"Natural Justice" is a bit difficult in the context of this discussion. Firstly AH's rights are well enshrined in legislation - arguably the most important being the Bill of Rights which gives him access to the principles of Natural Justice. However these rights can be overtaken by rights and obligations contained in other statutes. As far as I can tell AH is being the afforded the rights available to him. Furthermore the Stat Man report tells us he has been given independent legal and financial advice.

But what about the rights of investors, be they expert investors or Moms and Pops. These people have rights to. Many of these rights are also enshrined in law. As far as I can tell these investors may not have had the protection of these rights.

Since when does being an "old fullah", a "good bloke", a "kindly uncle type person" give an individual person the opportunity to override the rights of the many.

It seems to me that AH is a bit like SCF - and there should be no surprise there. We have the AH who is the "good books" - a benefactor to the community, a philanthropist and coach and financial supporter of those in need etc etc. And then we have AH who is the "Bad books" - the person whose largesse only extended as far as members of the "inner circle"; a person who deliberately failed to move with the times; a person who would not keep proper records; a person who single handedly created what will possibly be one of the most complex webs of money movements in NZ recent history etc etc.

But what we do seem to be getting a picture of is a financial world view according to AH. Is it possible to teach a dog new tricks? As the prominent Timaru lawyer has indicted, in this case, probably not. So we can take from the Statutory Managers report a glimpse into that world - and what do we see:
- an intricate and complex relationship between AH and separate entities and associated entities
- a standard of paper work not expected in relation to the size and complexity of the entities
- the creation of new trusts just prior to the Stat Man (and perhaps after the Regulators alerted AH to the potential of statutory intervention)
- the existence of an entity (hubbard Management Funds) previously unknown
- there are a large number of related party transactions associated with AH's interests
- in Aorangi investors have given AH $96 m which has gone into entities in which AH has a financial interest
- there appears to be a lack of security attached to some of the investment's and some of the money placed in entities contrary to the investors understanding or authority.

And we've seen the rest of the report. But we should exercise some caution. The Stat man report is only the first of many - its really only going to throw a very broad brush over the canvass. Clearly we are going to have to wait for the detail.

However it is possibly fair to assume that the old Dog AH has applied the same tricks he applied to SCf to Aorangi and HMF.

Now SCF had a pretty good clean out when the old auditors were moved on and the new ones took some time, and revisions to come up with the last set of accounts. Unfortunately though since then AH still had a firm hand on the tiller of SCF and it was only very recently that it has been able to be prised off. I think we will find added layers of complexity in SCF accounts and again it will take a while before the final audited accounts are released. In a normal world this may not be a problem. But with the clock already ticking on SCF this latest news on AH does not bode well for SCF.

winner69

14-07-2010, 09:48 AM

Another article by Chalkie in today's DomPost should be required reading for followers of this thread.

**** o day ..... either Chalkie is Bernard Hickey or Chalkie just syndicated this from interest.co.nz

Soem will not be happy .... Chlakie will not be welcome in Timaru

Balance

14-07-2010, 09:55 AM

winner69

14-07-2010, 09:59 AM

Chalkie has done a bit of work like David Hilary has done recently and seems pretty concerned ..... even uses the word suicidal in describing one transactions

But this seems to sum it up (quote) Chalkie has long held a theory that even the best people's moral character is soundly tested when they are faced with the prospect of bankruptcy (or on the other side huge wealth). People tend to be able to justify more marginal actions to themselves under such circumstances (end quote)

Balance - yes those charitable trusts are a key piece of the jigsaw

Beagle

14-07-2010, 10:03 AM

Excellent summary. Minimoke.

The truth will out.

One thing will become clear as well in coming months - if AH never missed a payment to anyone, why would anyone complain to the authorities?

And I am with W69, shifting assets to newly set up Charitable Trusts in March 2010 - that is highly unusual behaviour especially when he has pledged support for SCF.

Yes the amount, speed and nature of those transactions has a bad look to it, I agree.

Re: Last nights debate, don't you guys ever sleep ?

Enumerate, you obviously have very strong feelings on the matter, maybe if you think all is so well, you should double all bets on SCF pref shares, I have a feeling you could buy all you want at 15 cents. Put up a bid at that price for a million and see what happens........

minimoke

14-07-2010, 10:04 AM

And I am with W69, shifting assets to newly set up Charitable Trusts in March 2010 - that is highly unusual behaviour especially when he has pledged support for SCF.

The main difficulty I have with these transactions (and lets face it we don't know the details) is managing the difference between Perception and Reality. On the face of it these transactions don't look good. AH, and through his close association to SCF, cannot afford to do anything that does not look good. Every step he took he needed to be transparent and above board - for anything he does or is percieved to do, does impact on SCF. The reality of the situation may be that everything is actually well above board and fair dinkum but SCF doesn't have the time to recreate new perceptions.

Balance

14-07-2010, 10:32 AM

Yes the amount, speed and nature of those transactions has a bad look to it, I agree.

Re: Last nights debate, don't you guys ever sleep ?

Enumerate, you obviously have very strong feelings on the matter, maybe if you think all is so well, you should double all bets on SCF pref shares, I have a feeling you could buy all you want at 15 cents. Put up a bid at that price for a million and see what happens........

What have happened and continues to happen with SCF and AH are extra-ordinary events, worthy of robust debate and discussions.

Every country and market need the Enumerates of the world - democracy and the rule of law must be defended and upheld.

So good on you, matey!

Re SCFHA - better for those who have no confidence to get out at 15c in the dollar than zero. Heck, someone sold out at 10.5c the other week? If you look at ALF, Hanover investors are now looking at recovering less than 15c in the $. If they sold day one, they would have recovered close to 50c.

Enumerate

14-07-2010, 10:34 AM

However these rights can be overtaken by rights and obligations contained in other statutes.

Clearly, you do not understand the concept of natural rights. These rights are in some sense primary - they cannot be overtaken. Rights cannot be contradictory.

As far as I can tell AH is being the afforded the rights available to him. Furthermore the Stat Man report tells us he has been given independent legal and financial advice.

Say what?!? The policeman tells you Allan is being treated fairly - you don't actually hear from Allan - no one represents his side of the story. He has no right of reply. THERE ARE NO CHARGES LAID. You are ok with this ?!?!

But what about the rights of investors, be they expert investors or Moms and Pops. These people have rights to. Many of these rights are also enshrined in law. As far as I can tell these investors may not have had the protection of these rights.

These people have rights and they are not diminished. It is possible to lay a charge under the securities act - this has not been done. Statutory Management has been invoked so the rights of the investors have been elevated above the extinguished rights of Allan Hubbard. Are you saying the investors have absolute rights and Allan Hubbard has none?

Since when does being an "old fullah", a "good bloke", a "kindly uncle type person" give an individual person the opportunity to override the rights of the many.

In this case - the answer is "All the time" - because we are dealing with extinguishing Allan Hubbards primary rights and the enforcement agency has not chosen to use normal commercial statue to "defend" the rights of the investors.

The State has effectively destroyed Allan Hubbard's investment business. No charges have been laiid - despite extraordinary powers of investigation being granted to the enforcement agency. They have had three weeks - they wouldn't give Allan Hubbard a week to answer their questions.

Rights are not contradictory. The principle you state could be seen as a foundation principle in the Communist manifesto. Are you suggesting we are a collectivist, communist state where individuals have no rights and collectives do?

It seems to me that AH is a bit like SCF - and there should be no surprise there. We have the AH who is the "good books" - a benefactor to the community, a philanthropist and coach and financial supporter of those in need etc etc. And then we have AH who is the "Bad books" - the person whose largesse only extended as far as members of the "inner circle"; a person who deliberately failed to move with the times; a person who would not keep proper records; a person who single handedly created what will possibly be one of the most complex webs of money movements in NZ recent history etc etc.

This is absurd. You have lost all credibility for rational debate. You twist the SCF structural divisions into some kind of dark plot ... absurd ... if not liableous.

But what we do seem to be getting a picture of is a financial world view according to AH. Is it possible to teach a dog new tricks? As the prominent Timaru lawyer has indicted, in this case, probably not. So we can take from the Statutory Managers report a glimpse into that world - and what do we see:
- an intricate and complex relationship between AH and separate entities and associated entities
- a standard of paper work not expected in relation to the size and complexity of the entities
- the creation of new trusts just prior to the Stat Man (and perhaps after the Regulators alerted AH to the potential of statutory intervention)
- the existence of an entity (hubbard Management Funds) previously unknown
- there are a large number of related party transactions associated with AH's interests
- in Aorangi investors have given AH $96 m which has gone into entities in which AH has a financial interest
- there appears to be a lack of security attached to some of the investment's and some of the money placed in entities contrary to the investors understanding or authority.

First point - there are no charges

Second point - because the Statutory Manager does not understand the business, this does not mean Allan Hubbard is guilty. Maybe the Statutory Manager is stupid?

Third point - there has been no right of reply. There has not even been the right to be accused of something. There has not even been the right to have your tormentors being free of conflicts of interest.

Fourth point - related party interests are not illegal. An investment company like Macquarie does most of its profitalble business as a related party.

Fifth point - the contractual terms between the parties are key. How can Allan Hubbard now be charged, fairly, with any wrong doing in this case when we clear have the Statutory Manager in a position to manufacture evidence against him?

And we've seen the rest of the report. But we should exercise some caution. The Stat man report is only the first of many - its really only going to throw a very broad brush over the canvass. Clearly we are going to have to wait for the detail.

I repeat - the first report of the Statutory Manager had an obligation to put the case for the "public interest" being defended by the Statutory Management of Allan Hubbard. This report completely fails to meet this obligation.

I think this report significantly strengthens Allan Hubbards case, in judicial review. I hope there is room for punitive damages against the crown.

However it is possibly fair to assume that the old Dog AH has applied the same tricks he applied to SCf to Aorangi and HMF.

"Fair" - you have lost all right to use this word.

Now SCF had a pretty good clean out when the old auditors were moved on and the new ones took some time, and revisions to come up with the last set of accounts. Unfortunately though since then AH still had a firm hand on the tiller of SCF and it was only very recently that it has been able to be prised off. I think we will find added layers of complexity in SCF accounts and again it will take a while before the final audited accounts are released. In a normal world this may not be a problem. But with the clock already ticking on SCF this latest news on AH does not bode well for SCF.

More mischievous nonsense.

Now that you have constructed a gallows and hung Allan Hubbard - why not now try to find some actual evidence of wrong doing. Then, in lynch mob fashion, you can go about "pressing charges" and ignoring any laws of evidence or rights of reply and you can justify the decision for execution, that you have already taken.

Contemptible.

Enumerate

14-07-2010, 10:40 AM

Every country and market need the Enumerates of the world - democracy and the rule of law must be defended and upheld.

Actually it is the duty of every citizen - not just left to one or two individuals.

Balance

14-07-2010, 10:45 AM

Beagle

14-07-2010, 10:53 AM

What have happened and continues to happen with SCF and AH are extra-ordinary events, worthy of robust debate and discussions.

Every country and market need the Enumerates of the world - democracy and the rule of law must be defended and upheld.

So good on you, matey!

Re SCFHA - better for those who have no confidence to get out at 15c in the dollar than zero. Heck, someone sold out at 10.5c the other week? If you look at ALF, Hanover investors are now looking at recovering less than 15c in the $. If they sold day one, they would have recovered close to 50c.

Cheers for that. I agree in terms of the corporate world this unfolding event is of unprecedented magnitude in New Zealand.

Fpr what its worth I was absolutly staggered when ALF shares started trading at around 11 cents or so, from memory, when they first came on to the market and predicted at the time they were only worth 2 cents. A bit like Geneva Finance really, the Directors and independent valuation said they were worth 35 cents and I managed to unload mine at an avergae price of just over 10 cents, thank God. That they are still bid at 5 cents is truly remarkable, they're completly worthless I can absolutly assure you of that.

A well placed contact told me just half an hour ago that the one remaining interested party in SCF is Asian based and unless the deal can be finalised SCF are history.

Enumerate

14-07-2010, 10:54 AM

Enumerate, the Stat Managers are professionals - even you would accord them that. For them to say that they are hampered by the poor state of the books in their investigations is very telling - often, the poor state of the books point towards mismanagement and/or fraud. That is a fact if you care to talk to any investigators.

This is an "appeal to authority" - one of the most fundamental logic fallacies.

Meanwhile, AH has gone to the ground - the media is on standby (that too is a fact) for him to have his say. He will get his day in court - not sure though whether it's the judicial review or something else.

If I was Allan Hubbard, I would not choose to be tried in the Court of Kangaroo. I would not be hiring publicists or media handlers to try and "turn" the lynch mob.

I would be preparing a case for judicial review of my statutory management. I would insist on the restoration of my rights.

I would also be preparing an action to pursue those responsible for damages for the destruction of my reputation and my business.

winner69

14-07-2010, 10:56 AM

For what its worth a well placed contact told me just half an hour ago that the one remaining interested party in SCF is Asian based and unless the deal can be finalised SCF are history.

Cheers for that

OMG ..... lets not start another debate about foreign ownership of NZ assets ... esp South Island ones

minimoke

14-07-2010, 11:18 AM

Clearly, you do not understand the concept of natural rights. These rights are in some sense primary - they cannot be overtaken. Rights cannot be contradictory.
Rather than quoting Wiki, perhaps you could give us the benifit of your understanding of what rights an individual has that are not already contained in the Bill of Rights and statute. We might then be able to advance this discussion on common ground.

Say what?!? The policeman tells you Allan is being treated fairly - you don't actually hear from Allan - no one represents his side of the story. He has no right of reply. THERE ARE NO CHARGES LAID. You are ok with this ?!?![\quote]
He does have a right of reply and I believe today he has engage Counsel to represent his interests. It was AH who had control over the timing of that decision so "yes" I am OK with that. I also recall he has partly exercised his right of reply, or certainly exercised his right to free speech on 21 June

[quote]
These people have rights and they are not diminished. It is possible to lay a charge under the securities act - this has not been done.
C'mon Enumerate, you know charges are not an automatic thing. The Authority (whichever it may be) has to firstly determine if an offence has likely been committed based on the information available or the information that comes to light. AH is being subjected to due process and isn't being unreasonably charged of any offence without the backing of some evidence - that is a good right he has been afforded

Statutory Management has been invoked so the rights of the investors have been elevated above the extinguished rights of Allan Hubbard. Are you saying the investors have absolute rights and Allan Hubbard has none? I think you'll find the rights of investors are being protected rather than elevated.

because we are dealing with extinguishing Allan Hubbards primary rights and the enforcement agency has not chosen to use normal commercial statue to "defend" the rights of the investors. Don't get me wrong - I'm not entirely comfortable with invoking Stat man on AH. I do see an inconsistent treatment of AH when compared with Hotchin, Watson et al. Perhaps naively I trust the State (on this occasion - but thats not a blanket trust) that they are truly doing the right thing by restricting the rights of one in the interests of the many.

The State has effectively destroyed Allan Hubbard's investment business. And therein lies the problem. It was not, or should not have been AH's investment business. It was the business of those who trusted SCF (and Aorangi) to place their hard earned cash in a manner that gave them a return which properly reflected the risk. You're not talking some corner money lender- your talking a multi billion dollar business, now propped up by the tax payer, which should never be run by one individual.
No charges have been laiid - despite extraordinary powers of investigation being granted to the enforcement agency. They have had three weeks - they wouldn't give Allan Hubbard a week to answer their questions. Give them time. Clearly the situation is much more complex than firstly imagined. They didn't even know about HMF prior to the Stat Man

Rights are not contradictory. The principle you state could be seen as a foundation principle in the Communist manifesto. Are you suggesting we are a collectivist, communist state where individuals have no rights and collectives do? Perhaps we could leave that discussion to another thread

This is absurd. You have lost all credibility for rational debate. You twist the SCF structural divisions into some kind of dark plot ... absurd ... if not liableous. Just trying to draw a picture. After all it is the Pro AH's that are keen for us to hear about his religious beliefs, his VW, his ethics on a handshake etc.

Second point - because the Statutory Manager does not understand the business, this does not mean Allan Hubbard is guilty. Maybe the Statutory Manager is stupid? Does anyone understand the business? No doubt the Stat man will have a better understanding once it is unraveled. And its probably better now 'cos there is probably no chance it would have been untraveled if AH had met his Maker.

Fourth point - related party interests are not illegal I understand that. But if you tell someone that their money is going somewhere, secured by something and you go and do something different, thats when the lines get blurred.

Fifth point - the contractual terms between the parties are key The contractual terms are going to be very hard to define when its done on a handshake.

I repeat - the first report of the Statutory Manager had an obligation to put the case for the "public interest" being defended by the Statutory Management of Allan Hubbard. This report completely fails to meet this obligation. sorry I've missed your citation which supports this view - would you mind reposting.

Now that you have constructed a gallows and hung Allan Hubbard i don't believe I have. But then I probably don't need to because he may of being doing this himself. Time will tell what the story is behind those newly established trusts.

Alan3285

14-07-2010, 11:18 AM

I have been trying to work out what makes this seem so unfair, and I think an analogy is, perhaps helpful (with all the dangers of analogy of course):

If someone is suspected of committing a 'serious' crime, they can be arrested.

Now, at that point in time, their freedom has been taken away, and yet they are 'innocent until proven guilty' - so how do we reconcile that?

In NZ, I believe (happy to be corrected, but it is the principle that I am thinking about), the state police have 48 hours (?) to either lay charges, or re-instate that persons right to freedom.

Allan Hubbard has been put into Stat Mgt (analogy = arrested) but no charges have been laid, and the state is holding him, without charge.

I think that the state should be required to either lay charges or release him from Stat Mgt within, say, 7 days.

The state police do not, in general, arrest someone without doing some investigation first. They investigate, build a prima-facie case (to be answered), then arrest the suspect.

The state followed that process initially with AH - they investigated from Feb 2010 (I think) until last month, then 'arrested' him, but have now failed to follow 'due process' by charging him or releasing with a reasonable timeframe.

Does that make sense?

Alan.

minimoke

14-07-2010, 11:19 AM

Actually it is the duty of every citizen - not just left to one or two individuals.
There you go - theres another thing we agree about

Dr_Who

14-07-2010, 11:30 AM

Fpr what its worth I was absolutly staggered when ALF shares started trading at around 11 cents or so, from memory, when they first came on to the market and predicted at the time they were only worth 2 cents. A bit like Geneva Finance really, the Directors and independent valuation said they were worth 35 cents and I managed to unload mine at an avergae price of just over 10 cents, thank God. That they are still bid at 5 cents is truly remarkable, they're completly worthless I can absolutly assure you of that.

Experienced investors and advisors got sucked into buying ALF shares at much higher prices during the Hangover/ALF merger. People will never learn from their mistakes.

Enumerate

14-07-2010, 11:32 AM

Does that make sense?

Your analogy is very good.

I would add that the report of the Statutory Manager had an obligation to defend the exceptional powers of "arrest". The fact that it does not do this, does not detail the "charge" and only comments, in vague terms, hearsay evidence ... is the full catalogue of omission and failure.

Balance

14-07-2010, 11:52 AM

Experienced investors and advisors got sucked into buying these at much higher prices during the Hangover/ALF merger. People will never learn from their mistakes.

Only idiots and donkeys got sucked into buying during the ALF/Hanover merger.

How about those who buy into companies blindly believing management when management's assertions in the past cannot be relied upon? I can name 3 of the top of my head immediately.

winner69

14-07-2010, 11:56 AM

Balance

14-07-2010, 11:56 AM

minimoke

14-07-2010, 12:00 PM

Does that make sense?

Alan.
Its not a bad analogy and certainly one we could work with. Perhaps rather than suggesting AH is under "Arrest" though we might perhaps consider him to be under "house arrest". You know, he still has some rights but its enough to prevent him from getting up to anything untoward.

But I'm not so sure a "charge or release" approach is helpful. Imagine the uproar if he was charged - there would be allegations of the State trumping up charges to make the case fit. Perhaps charges will come - and the States position is vindicated. Perhaps charges don't come - but in the meantime investors money is protected as best it can be. Especially since it appears that some investors will loose when all the Trust issues are ironed out.

Clearly extraordinary powers have been exercised - and certainly a precedent has been set. But these are extra ordinary circumstances. Its not too many individuals who have control or influence over several billion dollars nor the support of perhaps $900m in tax payer cash.

minimoke

14-07-2010, 12:04 PM

You will agree that we would all support detaining a serial murderer when there is sufficient concern and evidence from the police that the serial murderer is ready to strike again?
If we are going to draw out the analogy a kiddie fiddle might be better than a serial murderer. After all its the kiddie fiddlers who have access to loads of potential victims, twist their ways into a position of trust and then abuse that trust for their own personal gains.

Enumerate

14-07-2010, 12:11 PM

Rather than quoting Wiki, perhaps you could give us the benifit of your understanding of what rights an individual has that are not already contained in the Bill of Rights and statute. We might then be able to advance this discussion on common ground.
With respect, you don't even "get" my basic argument - it is about basic "procedure". Discussing the Bill of Rights is very unlikely to be productive.

Say what?!? The policeman tells you Allan is being treated fairly - you don't actually hear from Allan - no one represents his side of the story. He has no right of reply. THERE ARE NO CHARGES LAID. You are ok with this ?!?!
He does have a right of reply and I believe today he has engage Counsel to represent his interests. It was AH who had control over the timing of that decision so "yes" I am OK with that. I also recall he has partly exercised his right of reply, or certainly exercised his right to free speech on 21 June

He has no right of reply. There is nothing in the Statutory Manger's report that represents Allan Hubbard's position.

C'mon Enumerate, you know charges are not an automatic thing. The Authority (whichever it may be) has to firstly determine if an offence has likely been committed based on the information available or the information that comes to light. AH is being subjected to due process and isn't being unreasonably charged of any offence without the backing of some evidence - that is a good right he has been afforded

Statutory Management is a punative state. I expect charges AND a clear explanation why this extraordinary power was invoked in the "public interest". I have neither.

I think you'll find the rights of investors are being protected rather than elevated.

Actually, the rights of the investors are being partially extinguished - I am sure many of them would have appreciated the interest payment due. The extraordinary powers of investigation actually elevate their procedural rights to evidence under the Securities Act. However, there are no charges - so the investors have no rights - there are no advised breaches. It is a mess.

Don't get me wrong - I'm not entirely comfortable with invoking Stat man on AH. I do see an inconsistent treatment of AH when compared with Hotchin, Watson et al. Perhaps naively I trust the State (on this occasion - but thats not a blanket trust) that they are truly doing the right thing by restricting the rights of one in the interests of the many.

So you are a communist - the interest of the collective overrules the rights of the individual.

And therein lies the problem. It was not, or should not have been AH's investment business. It was the business of those who trusted SCF (and Aorangi) to place their hard earned cash in a manner that gave them a return which properly reflected the risk. You're not talking some corner money lender- your talking a multi billion dollar business, now propped up by the tax payer, which should never be run by one individual. Give them time. Clearly the situation is much more complex than firstly imagined. They didn't even know about HMF prior to the Stat Man

The case for the Statutory Manager being incredibly stupid is growing, it seems. So is the case for the regulatory authorities being highly over sensitive and highly repressive.

Just trying to draw a picture. After all it is the Pro AH's that are keen for us to hear about his religious beliefs, his VW, his ethics on a handshake etc.

So you want to do a bit of besmirching of reputation to balance the praise?

Does anyone understand the business? No doubt the Stat man will have a better understanding once it is unraveled. And its probably better now 'cos there is probably no chance it would have been untraveled if AH had met his Maker.

It is not his business to understand the business. He is there to seek compliance with the securities laws.

I understand that. But if you tell someone that their money is going somewhere, secured by something and you go and do something different, thats when the lines get blurred.

All we have is hearsay. Paraded as evidence, in public, to ruin a reputation and business. This is not the way our system of justice works.

The contractual terms are going to be very hard to define when its done on a handshake.

Maybe the Statutory Manager could fabricate some evidence? Like the police did to convict Arthur Alan Thomas.

I repeat - the first report of the Statutory Manager had an obligation to put the case for the "public interest" being defended by the Statutory Management of Allan Hubbard. This report completely fails to meet this obligation.

sorry I've missed your citation which supports this view - would you mind reposting.

I'll reference the date and edit

i don't believe I have. But then I probably don't need to because he may of being doing this himself. Time will tell what the story is behind those newly established trusts.

There are plenty of legitimate reasons to allow the formation and transfer of assets into a trust. In the absence of evidence to the contrary it would be fairer to assume Allan Hubbard is acting with integrity. There seems a tendency to not let the facts get in the way of a good story ...

minimoke

14-07-2010, 12:26 PM

So you are a communist - the interest of the collective overrules the rights of the individual.

Thanks - we needed a bit of light hearted relief on this thread. First time its been suggested I'm a communist so I'm having a good old chuckle.

But I think you'll find I'm a pretty consistent advocate on the rights of individuals. In this matter I also believe that individual investors have a right. They have property rights because its there cash which is being invested. I believe individuals also have a right to be treated professionally by a person presenting themselves in such a manner. If a qualified Accountant thinks doing business on a handshake is a professional way of doing business (and the accounting profession supports that view) then we are all stuffed. I also believe tax payers have rights - and thats the right to not have their hard earned wage subjected to deductions to simply prop up the follies of others.

If placing those rights on a scale, and the scale tips away from AH and by your definition I'm a communist so be it.

Enumerate

14-07-2010, 01:07 PM

If placing those rights on a scale, and the scale tips away from AH and by your definition I'm a communist so be it.

You clearly believe that rights are contradictory - they need to be balanced on a scale - the greatest good to the greatest number being the arbiter of truth.

I would hazard a guess that in your world of contradictory rights - someone needs to judge, to apply the scale. If you believe this to be the state - you can join arms with Stalin. If you believe this to be the people - Trotsky is your man.

If you do not believe that rights are contradictory - there is no need for the scale.

To me, the "scales of justice" are a measure of the weight of evidence. Justice is an objective process of establishing moral right - based on the weight of fact.

minimoke

14-07-2010, 01:32 PM

You clearly believe that rights are contradictory - they need to be balanced on a scale - the greatest good to the greatest number being the arbiter of truth.
I guess I used the "scale " analogy as this is what you appeared to be doing - by placing your view on AH's rights and having those rights outweigh alternative rights.

I would hazard a guess that in your world of contradictory rights - someone needs to judge, to apply the scale. If you believe this to be the state - you can join arms with Stalin. no, not contradictory rights but complimentary rights. One's rights cannot stand in isolation of others. Or are you suggesting there is a "goodness" scale and because AH has exhibited more good deeds the scales of justice favour him over others. As we both know the State isn't the judge - if there is a case to answer then it will be the courts that make the decision on guilt or otherwise.

To me, the "scales of justice" are a measure of the weight of evidence. Justice is an objective process of establishing moral right - based on the weight of fact.
There is a difference between moral right and legal right. AH will no doubt meet his Maker clear in conscience believing what ever it is he does. Moral rights tend to be decided in the court of public opinion. Ideally that opinion will be well informed - but since the Investigators are coming across new information and can't for the lack of paper be fully inform, its unlikely a fair verdict can be made, either way, at this point in time.

But you are right, justice is an objective process. It should be transparent and all should be treated equally under it - that is my biggest concern about these current investigations.

Enumerate

14-07-2010, 01:47 PM

no, not contradictory rights but complimentary rights. One's rights cannot stand in isolation of others. Or are you suggesting there is a "goodness" scale and because AH has exhibited more good deeds the scales of justice favour him over others. As we both know the State isn't the judge - if there is a case to answer then it will be the courts that make the decision on guilt or otherwise.

I have never made the argument that because Mr Hubbard is a philanthropist and highly regarded that he is above the securities laws.

I am primarily arguing from the viewpoint of Mr Hubbard's property rights - which are an extension of his right to life.

Mr Hubbard has responsibilities to those investors who have lent him money. If an investor property right has been compromised by Mr Hubbard - he should make a remedy. This is something he has already offered to do. If an investor complains, under the Securities Act - an investigation should occur with either a settlement or further action in the courts.

In this case - the investigation was terminated and resumed under statutory management. The only justification for this extraordinary approach is the defense of the "public good" where standard commercial mechanisms have been exhausted. My first objection is that we have no such justification and hence this process of statutory management is illegal.

I would argue that Aorangi investors are being given the power of extraordinary investigative ability to protect their property rights at the expense Mr Hubbards property rights. This is even more shocking when there is no demonstrable harm.

I would even extend that argument to suggest that both Aorangi investors and Mr Hubbard have had their property rights trampled upon by state bureaucratic procedure.

... investor Hilary Muir, said this week she was "incensed" that government officials now ran her investment.

minimoke

14-07-2010, 02:10 PM

I am primarily arguing from the viewpoint of Mr Hubbard's property rights - which are an extension of his right to life.

We seem to be straying from AH's rights to natural justice to his moral rights and now to his property rights.

You should know by now we have very limited property rights. The right to our housing property is overridden by the right of the State to take it over, the right to our vehicle it by a tenuous piece of paper, the rights to money we have earnt are undermined by the right of the government to take a cut. We don't have the right to sell our property to whomsoever we like - thats controlled by laws. We can't use our property or even get rid of our property without some law or other coming into play.

Enumerate

14-07-2010, 02:27 PM

We seem to be straying from AH's rights to natural justice to his moral rights and now to his property rights.

Do you know what Jurisprudence is?

You should know by now we have very limited property rights. The right to our housing property is overridden by the right of the State to take it over, the right to our vehicle it by a tenuous piece of paper, the rights to money we have earnt are undermined by the right of the government to take a cut. We don't have the right to sell our property to whomsoever we like - thats controlled by laws. We can't use our property or even get rid of our property without some law or other coming into play.

You have an inexact understanding of what rights are. Do you believe that because you have a right to freedom of expression - that someone needs to buy you a television station and a newspaper in satisfaction of this right.

minimoke

14-07-2010, 02:44 PM

Do you know what Jurisprudence is? enough to know this isn't the thread for such a weighty discussion

You have an inexact understanding of what rights are. I'd have to admit you're moving the "rights" goalposts faster than I can keep up. It might help if you could succinctly define jut what it is that you believe AH has lost - but again further discussion on that might be better off on an alternative thread since this is the SCF one.

Do you believe that because you have a right to freedom of expression - that someone needs to buy you a television station I think you'll find it is on that basis that Maori TV was established - but again perhaps time for another thread.

Enumerate

14-07-2010, 03:08 PM

I'd have to admit you're moving the "rights" goalposts faster than I can keep up. It might help if you could succinctly define jut what it is that you believe AH has lost - but again further discussion on that might be better off on an alternative thread since this is the SCF one.

I'm happy to help out, here:

A 'right' is a moral principle defining and sanctioning a man’s freedom of action in a social context

I think it is your lack of clarity as to what the term "right" means that is the cause of your apparent confusion. If you keep the definition, above, in mind - this will help you with understanding my viewpoint.

Further, these rights should be viewed as a right to "action". I have a right to express my ideas. I have a right to design a skyscraper. I have a right make my own investment choices.

There are no collective rights. The rights of "investors" are no greater than the sum of the individual investor rights across all investors.

There are no rights to objects. I have no right to a house, for example. I have the right to contract to own a house (if I have the means). I have the right to contract to rent a house (if I meet the owners terms). The fact that I need a house gives me no right to demand that someone else provides it.

Governments have a monopoly on the use of force to protect individual rights.

The police protect individuals from the violation of their rights by criminals. The armed forces protect individuals from the violation of their rights by foreign attack.

The law courts enforce individual rights through a judgement process of enforceable law. The principles of natural justice moderate the application of government force in a legal context.

There ... I hope this adds some clarity to the issues.

In terms of what Allan Hubbard has lost ... it should be obvious, now - given the definition, above. Allan Hubbard has lost all his freedom of action. He has, throughout his life, exercised his judgment and skill to obtain the moral right to the exercise of control over his financial empire. His fundamental right to action has been suspended by the government with an illegal application of their monopoly on force. This, extraordinarily, is even outside the scope of the civil justice system - these rights were suspended, on a whim, by the Minister of Commerce.

minimoke

14-07-2010, 03:42 PM

I'm happy to help out, here:
"A 'right' is a moral principle defining and sanctioning a man’s freedom of action in a social context"
If you are going to start quoting Ayn Rand at me best we definitely move the conversation elsewhere we could try SOLO.

But lets continue for a moment for the benifit of those poseters tahat aren't now catatomic

Further, these rights should be viewed as a right to "action". I have a right to express my ideas. I have a right to design a skyscraper. I have a right make my own investment choices. while arguably you have the moral right to these actions you do not necessarily have the legal right. Your right to express your ideas is restrained by the Human Rights Act - an act passed by a majority in the House of duly elected representatives of individuals.. Your right to design a skyscraper is confined by your ability to secure as your property the materials on which you will create your design - and if your ideas behind the design belong to someone else you may come unstuck. You certainly have the right to make your own investment - but with that right goes the responsibility of recognizing its your money to loose so don't expect the taxpayer or regulatory authorities to stand by you when things go wrong. We know of course thats not the case with the Govt Deposit guarantee.

There are no rights to objects. I have no right to a house, for example. I have the right to contract to own a house (if I have the means). Your confusing two rights - the right to negotiate and the right to own. Even in a Libertarain world they preciously defend the right to own objects as property. You seem to be expresing a bit of a socialist view there.

Governments have a monopoly on the use of force to protect individual rights. Well individuals have this right as well - try stopping an Anton Pillar order!

The police protect individuals from the violation of their rights by criminals.No they don't - society does that. The police are there to catch the crims once a crime has been committed - their powers in prevention are limited.

The armed forces protect individuals from the violation of their rights by foreign attack. That is a limited view - as evidenced by our troops in Afganistan

The law courts enforce individual rights through a judgement process of enforceable law. Arguably thats the role of the civil law courts.

There ... I hope this adds some clarity to the issues.
Thanks for the distraction

Balance

14-07-2010, 03:45 PM

Heavens above! AH will be so pleased he has sparked a constitutional debate by indulging in old-fashioned befuddled accounting!

Beagle

14-07-2010, 03:46 PM

Please your honour may I interject, how many retired lawyers do we have here ?

minimoke

14-07-2010, 03:53 PM

How many lawyers does it take to change a light bulb?

As many as you can afford!

Whereas how many Accountants does it take to run a multi billion dollar range of businesses. Clearly the answer is "one!

Alan3285

14-07-2010, 03:58 PM

Please your honour may I interject, how many retired lawyers do we have here ?

http://www.comedycentral.com/videos/index.jhtml?videoId=12085&title=everyones-a-lawyer

Alan.

Enumerate

14-07-2010, 04:06 PM

Heavens above! AH will be so pleased he has sparked a constitutional debate by indulging in old-fashioned befuddled accounting!

What type of accounting would you rather have ... accounting of the Macquarie kind ... in which dividends are paid on revenues that haven't even been banked yet.

The Macquarie boys use all sorts of computers to conjure profits out of thin air. I would rather trust Hubbard with my savings ... his old fashioned accounting ... his old fashioned ideas of proft.

Beagle

14-07-2010, 04:08 PM

http://www.comedycentral.com/videos/index.jhtml?videoId=12085&title=everyones-a-lawyer

Alan.

lol Alan, very, very funny. Minimoke, you've hit the nail squarely on the head.

Beagle

14-07-2010, 04:23 PM

They're certainly a fiesty bunch that's for sure.

You've been busy Enumerate, where do you find the time, or is that one of your brothers....

http://tvnz.co.nz/national-news/lawyer-lodges-complaint-over-court-security-searches-3644103

Enumerate

14-07-2010, 04:56 PM

Beagle

14-07-2010, 05:20 PM

While we are on the topic of idle speculation as to one anothers professional origin ...

I have Balance picked for someone in PGC sphere of influence ...

You, Roger, I would wildly speculate as being more Viaduct ...

What I cannot figure out is why the animosity to Hubbard and SCF. Is it vulture? The desire to pick over SCF assets on the cheap? Is it tribal? Some Forsyth Barr pi$$ing competition?

We will never know ... for sure.

Dont worry Enumerate, now we have Hone to protect our national interest we can all sleep well tonight lol

http://www.nbr.co.nz/node/126134

Seriously, I've been badly burned in a so called side company that was promoted to me with promises of we'll look after you e.t.c. and assurances that there will be a prospectus and investment statement in due course. I trusted people I thought were worthy of same, but alas self interest greed and manipulation were the name of the game, so you'll have to excuse me if I'm now highly interested in similar situations.

It cost me $35,000 in legal fees and more besides in losses and if it wasn't for costs running over $250,000 to take the case to the High Court and an eighteen month delay to get a hearing, we would have litigated the matter.

So when I see cases where investors have been, shall we agree, less than fully informed, you'll excuse me if I get a little warm under the collar.

Enumerate

14-07-2010, 05:52 PM

Beagle

14-07-2010, 06:06 PM

Roger, pardon me for speculating again, but I get the sense that you and Balance know one another - you both must be Aucklanders.

What I can't reconcile is the fact that Balance seems to have so many South Island connections?

You must have guessed by occupation, by now. I am, in fact, a psychic reader of tea leaves.

No I don't know balance but I think he's chosen his user name well. Dinner is calling and we are safe tonight in Hone's caring hands...

minimoke

14-07-2010, 06:54 PM

Probably not even related to SCF but this in the paper today -

So things not getting better in the finance world
Your post at 1206 was pa bit of a premonition - Mutual Finance gone today so thats around $9m of tax payer support down the tubes.

Balance

14-07-2010, 07:19 PM

mouse

14-07-2010, 07:34 PM

There are those who spoke up against finance companies in the past in very public forums and for their troubles, were threatened with court action and even, damage to their bodily persons.

What is happening here is nothing, trust me.
I recall a TV programme on Madeoff. They were talking to an investment analysis woman who was asked what she thought of Madeoff. She replied he was maybe a bit dodgy. The reply surprised her, "How Dare You., Madeoff is a Good Jewish Man and a Benefactor." So next time the investment woman was asked she made a non-commital answer. The swindled defending the swindler. Maybe we just wait for things to become clearer. Meanwhile, think of those poor folks who now have no interest income. And maybe reduced capital.

winner69

14-07-2010, 07:36 PM

Spose if SCF collapsed it would be on the list on the largest comapny collapses in NZ

But if taxpayers bail out most investors would it count.

Enumerate

14-07-2010, 08:28 PM

Meanwhile, think of those poor folks who now have no interest income. And maybe reduced capital.

They do have interest income ... the statutory manager just won't pay it.

Simple fact on finance ... EVERY loan portfolio can expect impairments ... the probability of impairments is never zero, if you are talking commercial business loans.

When has Aorangi been declared insolvent? Why does this Statutory Manager behave as if he is an Administrator of an insolvent company. If he does not manage Aorangi - I hope his professional indemnity insurance is fully paid. He could be sued for professional negligence.

This builds on the position that the Statutory Manager does not correctly understand his brief - or he is not up to the task.

minimoke

15-07-2010, 08:24 AM

Your post at 1206 was pa bit of a premonition - Mutual Finance gone today so thats around $9m of tax payer support down the tubes.
And further confirmation that if depositors in SCF think they will get their money back in 14 days are in LaLa Land. Mutual Finance can expect a 3 - 4 month delay: and thats for a company with just $8 - $9m in eligible deposits.

minimoke

15-07-2010, 09:49 AM

I would be preparing a case for judicial review of my statutory management. I would insist on the restoration of my rights.

I would also be preparing an action to pursue those responsible for damages for the destruction of my reputation and my business.
Looks like you and AH think along the same lines. In todays new it appears he is about to retain Tim Clarke from Russel Mcveagh. That should be a worthy opponent for the draconian state blackboots.

Also interesting to see Hubbard is getting $1,000 cash a week from the Stat man - more cash than he's seen in his life apparently. So not being hard done by from a personal financial perspective. The Cat will be looked after!

Beagle

15-07-2010, 09:50 AM

And further confirmation that if depositors in SCF think they will get their money back in 14 days are in LaLa Land. Mutual Finance can expect a 3 - 4 month delay: and thats for a company with just $8 - $9m in eligible deposits.

I concurr, at best it looks like the reference should be 14 weeks, not days. With 30,000 investors I seriously doubt it could be done within even 14 weeks, but probably one would say you'd be reasonably safe assuming 14 months.

That said, I've thought quite a bit about the SM thing after Enumerate emphatic posts and I'm not entirely comfortable with Simon Power using his power in this manner either. There does seem to be a gross inconsistency with other finance company collapses, why excercise the power of SM now other than in the National interest so that a realistic deal can be done, (i.e. AH may hold unrealistic expectations regarding his perceived value of SCF which is hampering a new equity injection) ?

But then we have the conundrum if my source from yesterday is correct, which is better, (or should that read, the lesser of two evils), a Govt owned SCF or Chineese / Asian owned SCF ?

Maybe the Govt should just bail them out like the U.S. Govt bailed out some of their too big to fail financial institutions, put in place proper controls decent directors and managers, (Wait this has allready been done !!!), and provide them with sufficient liquidity to continue to trade ? After all they did it with Air New Zealand as that was deemed to be in the national interest, so what's the difference ?

peat

15-07-2010, 10:19 AM

After all they did it with Air New Zealand as that was deemed to be in the national interest, so what's the difference ?
Air NZ is the flag carrier airline for this country which isnt completely symbolic. No country wants their flag carrier down the gurgler. JAL is also currently being supported
Your example would be better served mentioning the Bank of New Zealand which was of course also bailed out - and later sold - perhaps SCF should have New Zealand in their name and that would help ;+)

So yes I'm following this thread with (detached) interest - enjoying the debate. Who will pay the corporate lawyer to defend AH if AH has no access to his means?

minimoke

15-07-2010, 10:21 AM

[QUOTE=Roger;311627]I concurr, at best it looks like the reference should be 14 weeks, not days. With 30,000 investors I seriously doubt it could be done within even 14 weeks, but probably one would say you'd be reasonably safe assuming 14 months.[\quote]
Mutual Finance had 340 investors so that will give SCF depositors some kind of measure to help balance their risk return scales. The other thing we shouldn't loose sight of is the "wall of debt" other finance companies have coming up to 12 October. I wonder if, as we get closer to that date companies will be looking more closely at their accounts and perhaps deciding its really in the best interests of depositors to throw in the towel. If this occurs there will be more depositors heading into the repayment pipeline - at some point there is a risk this pipeline will get clogged making repayments likely sometime way in the future.

And it looks like we are all pretty much in agreement that we have difficulty with AH's Stat Man in isolation from other finance companies and individuals in those companies. You mention Govt ownership of SCF - could we see Kiwibank in a holding pattern just waiting to swoop. Govt intervention in Air NZ certainly added heaps to my bottom line so perhaps - I'm not sure I see the same opportunity with SCF but I keep an open mind.

Jaa

15-07-2010, 10:30 AM

Roger, the difference with other finance companies is one of scale.

A collapse of the SCF/Hubbard empire would be a Lehman like event for NZ. Perhaps not that much money would end up being lost but due to the byzantine structures, sheer number of parties involved and poor record keeping, thousands of businesses and investors would not know where they stand for months or even years. Those businesses and investors would thus become very conservative very quickly and you would have a systemic event for the NZ economy leading to a recession.

Alex

15-07-2010, 10:33 AM

While 8% (or 8.25%) guaranteed return offered by SCF will be attractive to many potential investors, the uncertain and long repayment time period in case the Guarantee is triggered is putting many people off. If the Government wants SCF to turn around and survive, they should come up with a certain and palatable time frame promise for the repayments to SCF investors. In return, SCF would be obliged to supply to the Government (and maintain) a verified, accurate investor information database so that if it does come to a repayment situation, it can be executed promptly.

Enumerate

15-07-2010, 10:36 AM

It looks like the continual SCF dirge of doom is continuing on the thread.

Have any of you actually done any work trying to estimate the feasibility of SCF overcoming the "wall of debt"? Can you estimate how much it is? What are the monthly cash inflows required to meet this refinancing obligation?

No, I suppose it is much easier to imagine that SCF has failed and to debate the equivalent of "how many angles can fit on the head of a pin"?

Do you guys actually invest in anything? Or, are you simply happy to follow the herd?

Phaedrus

15-07-2010, 10:40 AM

"How many angles can fit on the head of a pin"?

Three hundred and sixty.

minimoke

15-07-2010, 10:49 AM

I "how many angles can fit on the head of a pin"?

No angles, 12 angels and one cat.

Enumerate

15-07-2010, 10:54 AM

Three hundred and sixty.

Lol - fair enough

Beagle

15-07-2010, 11:01 AM

Beagle

15-07-2010, 11:05 AM

Enumerate

15-07-2010, 11:30 AM

Your never happy are you Enumerate. Here I am suggesting it may be in the national interest for the Govt to bail out SCF with a significant cash injection, only if necessary, and you're still grumpy.

SCF does not need an equity injection. It simply needs to extend the maturity profile of its debt reflecting the short term "wall of debt" bump later this year and the medium term downsizing of the loan book.

This can all be achieved using existing levels of equity.

A secondary factor is the restructuring of equity from equity assets to tier-1 capital.

It strikes me that the government has already demonstrated their use of standover tactics. First, they force registration under the retail deposit guarantee scheme (read the Standard & Poors credit reports if you object to this asssessment). Second, they cause significant harm to the SCF ability to raise domestic debenture funds and they cause direct harm to the credit rating through the statutory management of Allan Hubbard.

Now you are suggesting they become an equity partner in SCF, based on some risk weighted discount I presume. Given the risks and problems have been caused by the government, to a large degree, this would strike me as standover tactics.

Perhaps that is how some players work, in the Viaduct. It is not a good look for a government.

minimoke

15-07-2010, 11:37 AM

Second, they cause significant harm to the SCF ability to raise domestic debenture funds .
Perhasp thsi is being overstated. In todays news Sandy Maier says "Allan's statutory management has hurt but there are so many other variables involved," he said when questioned about the effects of the statutory manager's report which criticised Hubbard, the financier's largest shareholder.

"There's been nothing catastrophic but it has gotten more difficult," Maier said, referring to general economic conditions and difficulties raising money and getting investors to renew.

Balance

15-07-2010, 11:38 AM

SCF does not need an equity injection. It simply needs to extend the maturity profile of its debt reflecting the short term "wall of debt" bump later this year and the medium term downsizing of the loan book.

This can all be achieved using existing levels of equity.

A secondary factor is the restructuring of equity from equity assets to tier-1 capital.

It strikes me that the government has already demonstrated their use of standover tactics. First, they force registration under the retail deposit guarantee scheme (read the Standard & Poors credit reports if you object to this asssessment). Second, they cause significant harm to the SCF ability to raise domestic debenture funds and they cause direct harm to the credit rating through the statutory management of Allan Hubbard.

Now you are suggesting they become an equity partner in SCF, based on some risk weighted discount I presume. Given the risks and problems have been caused by the government, to a large degree, this would strike me as standover tactics.

Perhaps that is how some players work, in the Viaduct. It is not a good look for a government.

Any number of people have done proper balance sheet and risk-adjusted capital requirement calculations on SCF. Where is yours?

Enumerate

15-07-2010, 12:06 PM

Any number of people have done proper balance sheet and risk-adjusted capital requirement calculations on SCF. Where is yours?

From a balance sheet perspective, even a "retail novice" can be satisfied that the basic levels of equity are already in place (mainly as equity assets - not as tier 1, but this will sort itself out over time).

Reading SCF accounts is actually straight forward. If you compare this to Macquarie, for example, it is childs play. Macquarie accounts, with the twists and turns - it is surprising anyone believes they understand them.

Back to SCF. It is also fascinating and rewarding to understand the impairment mechanisms. Would you impair a solid loan receivable at 9% because market rates should be higher? The nervous schoolgirls over at interest.co.nz seem to believe this is a cash impairment! Various Lost Souls believe this loan should probably carry a weighted risk rating of 350% for capital adequacy rules.

Back on this SCF thread no one else posts anything quantitative at even a balance sheet level - so you expect me to?!?

The real interesting bit is the Income Statement analysis. What hope is there of intelligent, informed discussion here - when we can't even get past a pro forma balance sheet?

I have detailed my conclusions and posed a number of questions that I was hoping would lead to informed discussion on SCF financials. No one has responded. Further, I have no intention to "file a report" when the full year accounts will set a new datum (these are due in about one month).

There are other basic questions to ask. Why is it that so many Aucklanders, with no financial exposure to SCF are so terribly interested that every aspect of this company be portrayed in the worst possible light? Why are there so few people willing to declare their interest? I am just a humble psychic tea leaf reader ... with a few SCFHA ... I don't have significant financial connection in the South Island ... I am not a Viaduct "player" ... I find these things difficult to understand.

Beagle

15-07-2010, 12:11 PM

"SCF does not need an equity injection. It simply needs to extend the maturity profile of its debt reflecting the short term "wall of debt" bump later this year and the medium term downsizing of the loan book". Enumerate

YEAH RIGHT. As mentioned by many commentators they're carrying many dubious items on their balance sheet, the worst of which is the aforementioned tax losses which they're stating has a net present value of over $100 million dollars, when I think its clear to almost everyone on "this planet" that there's no credibility whatsoever to this balance sheet assertion as there's no chance whatsoever of the company being profitable in the forseeable future.

You are in "denial", and that's putting it as kindly as possible, I believe there's a widespread understanding within the professional financial community that SCF needs a significant capital injection, but what would all those professional commentators and professionals know right ?

There no way there's a further single cent to write-down on the deliquent loan book of $500m since 1 January 2010 right ? and there's no possibility that there's any further new loan deliquencies and provisioning required since 1 January 2010 ?

I worked out you can't be a lawyer, I think that's abundently clear, they have professional training and an understanding of realistic outcomes.

That you have a financial interest in SCF and are a big supporter of AH is abundently clear but its clearly clouding your judgement. BTW I have no idea what your statements regarding the Viaduct refer too, perhaps that's south island slang for a central Auckland JAFA ?

Balance

15-07-2010, 12:13 PM

From a balance sheet perspective, even a "retail novice" can be satisfied that the basic levels of equity are already in place (mainly as equity assets - not as tier 1, but this will sort itself out over time).

Reading SCF accounts is actually straight forward. If you compare this to Macquarie, for example, it is childs play. Macquarie accounts, with the twists and turns - it is surprising anyone believes they understand them.

Back to SCF. It is also fascinating and rewarding to understand the impairment mechanisms. Would you impair a solid loan receivable at 9% because market rates should be higher? The nervous schoolgirls over at interest.co.nz seem to believe this is a cash impairment! Various Lost Souls believe this loan should probably carry a weighted risk rating of 350% for capital adequacy rules.

Back on this SCF thread no one else posts anything quantitative at even a balance sheet level - so you expect me to?!?

The real interesting bit is the Income Statement analysis. What hope is there of intelligent, informed discussion here - when we can't even get past a pro forma balance sheet?

I have detailed my conclusions and posed a number of questions that I was hoping would lead to informed discussion on SCF financials. No one has responded. Further, I have no intention to "file a report" when the full year accounts will set a new datum (these are due in about one month).

There are other basic questions to ask. Why is it that so many Aucklanders, with no financial exposure to SCF are so terribly interested that every aspect of this company be portrayed in the worst possible light? Why are there so few people willing to declare their interest? I am just a humble psychic tea leaf reader ... with a few SCFHA ... I don't have significant financial connection in the South Island ... I am not a Viaduct "player" ... I find these things difficult to understand.

Disclosure of interest - taxpayer who is cheesed off that we are going to have to pay for AH's mess.

Enumerate

15-07-2010, 12:24 PM

YEAH RIGHT. As mentioned by many commentators they're carrying many dubious items on their balance sheet, the worst of which is the aforementioned tax losses which they're stating has a net present value of over $100 million dollars, when I think its clear to almost everyone on "this planet" that there's no credibility whatsoever to this balance sheet assertion as there's no chance whatsoever of the company being profitable in the forseeable future.

Lets talk about the tax losses.

These are declared in the half year accounts - largely following the impairment loss also declared in these accounts. I think that the tax loss declaration is fair - for two reasons. First, the impairments advised were not all cash impairments - we have already been told that a significant proportion of the $250m recovered in the non strategic loan book is on impaired loans. We do not know the quantum - but anything recovered here will offset the tax loss. Secondly, the net present value of cashflow impairments will naturally work it way out of the books as time progresses and as commercial interest rates restore to non-GFC premiums - these time recoveries will also offset the tax loss.

See, Roger, it doesn't look so bad when you sit down analyse rationally and not take your opinion from an hysterical school girl.

You are in "denial", and that's putting it as kindly as possible, I believe there's a widespread understanding within the professional financial community that SCF needs a significant capital injection, but what would all thos eprofessional commentators and professionals know right ?

Roger, I deny that I am in denial. I am a simple psychic tea leaf reader - I know these things.

There no way there's a further single cent to write-down on the deliquent loan book of $500m since 1 January 2010 right ? and there's no possibility that there's any further new loan deliquencies and provisioning required since 1 January 2010 ?

There will be further impairment - but minor compared with the major hit taken in the half year accounts.

There will also be write backs. If you want to see this "in action" - you should study the NZF accounts - there is much there than can inform. Maybe the NZF funding model may also offer some interesting insights into a path for SCF.

I worked out you can't be a lawyer, I think that's abundently clear, they have professional training and an understanding of realistic outcomes.

I am thankful we have cleared that up - being accused of lawyerly tendencies is a slight on the tea leaf reading profession.

Beagle

15-07-2010, 12:24 PM

Disclosure of interest - taxpayer who is cheesed off that we are going to have to pay for AH's mess.

Ditto, and a little bit tired of people who blow their own trumpet about how much great work they've done throughout the N.Z. community but don't follow required Securities Act laws. It could be that Aorangi investors get back less than 50 cents in the dollar after many many months because AH appears to have used it as his personal piggy-bank. How's Uncle Alan going to make good on that ?

I'm sick to the back teeth of company directors not following the laws in this country and the courts treating white collar crime in a manner as if they're telling off school girls for being a bit naughty. Its pathetic and the judicial system in this country is even more pathetic in the penalties handed out to white collar CRIMINALS.

Enumerate

15-07-2010, 12:38 PM

Ditto, and a little bit tired of people who blow their own trumpet about how much great work they've done throughout the N.Z. community but don't follow required Securities Act laws. It could be that Aorangi investors get back less than 50 cents in the dollar after many many months because AH appears to have used it as his personal piggy-bank. How's Uncle Alan going to make good on that ?

I'm sick to the back teeth of company directors not following the laws in this country and the courts treating white collar crime in a manner as if they're telling off school girls for being a bit naughty. Its pathetic and the judicial system in this country is even more pathetic in the penalties handed out to white collar CRIMINALS.

I am not surprised that you and Balance concur on this ... and probably much more ...

However, your notion that Aorangi investors will get only a 50% recovery needs some examination. Are you saying that the Statutory Manager is so inept and so incompetent that he will not only destroy a solvent company but he will proceed to lose a good proportion of the assets?

I fear you have been spending too much time reading the tabloid financial commentators.

Jaa

15-07-2010, 12:39 PM

Do you guys actually invest in anything? Or, are you simply happy to follow the herd?

You are letting your political bias cloud your investing judgement again Enumerate.

I'm not a Viaduct type either nor am I a fair weather friend of SCF who bought in only for the government guarantee. I purchased some SCF020 on listing as along with Marac saw SCF as the strongest of the finance companies and preferred SCF over Marac due to Hubbard's reputation. At the time Marac was explained to me as a corporate/tie wearing type of company (ie Viaduct) and SCF as an integrity/relationship/no games type of company.

I sold in May this year, before the statutory management was announced. Made a 4% capital gain over the 2 years and received 10.5% interest during that period so in the context of the GFC turned out to be a reasonable investment.

Sold out as I could only see future downside risk and saw better things to do with the cash. Lastly it hardly behaved like the boring steady bond it was supposed to be even when government guaranteed!

Beagle

15-07-2010, 12:51 PM

Enumerate,

Please read SCF's prospectus and note the Auditors fundamental going concern and other fundamental concerns.
S & P have downgraded SCF several times for very good reasons.
SCF are claining as an asset pre-paid tax of $26.7 million and deferred tax of $82.8 million, total of $109.5 million as at 31 December 2009.
To realise any value from this so called asset SCF has to actually make a real profit, do realise this ? That's a real profit of over $300 million at current tax rates.

Hands up all those who think SCF will make a real taxable profit after adjustments of $300 million in the forseeable future ?

I hope you're not suggesting I or David Hillary are emotional school girls Enumerate, I've been called worse but I think its not really that hard for the blog to see who's the one getting carried away with emotion on the SCF matter.

There's a limit to how much dellusional denial I can tolerate so I'll go and have some lunch and see if that helps.....what's that old saying...oh yes that's right, "there's none so blind as those that don't want to see"

SCF Auditors are idiiots right ? The SM's of Aorangi are completly incompetent right, more school girls ? and should ahve allready done a full analysis on Aorangi in three weeks right ? e.t.c. e.t.c. Oh I give up, what's the point.....

minimoke

15-07-2010, 12:57 PM

Disclosure of interest - taxpayer who is cheesed off that we are going to have to pay for AH's mess.
In the spirit of openness and transparency (and to help appease Emunerate)
- also a taxpayer who is more than a tad cross that I'm supporting punters who get a free ride with finance companies especially in respect of SCF
- Also a very pissed off tax payer who can't comprehend why it is that Finance Companies seem to be able walk in a world other business simply can't. And I'm referring to Kiwisaver where the tax payer, again. is shelling out billions to finance companies who have done not one thing to earn that largesse.
- a disgruntled voter who saw a labour govt (especially Dalziel) fiddle while Rome burned. (and now I have the prospect of the olds trooper Jim Anderton being my Mayor god forbid!)
- A friend, Colleagues and relation of many people who inexplicably are lured into deals offered by finance companies such as Hanover, SCF, Blue Chip on the basis of the kindly "front man" and bugger all else. They have been like rats following the Pied Piper and even today are rolling their cash into SCF purely for no other reason than support of AH.
- a local resident who has seen the rivers ruined by the greed of the dairy industry in their conversions and the exploitation of natural resources whose benefts are tied up in a Co-op.
- We don't even get to vote for our own Regional Council in Christchurch due to water issues which came from the dairy industry which is being funded by the likes of SCF. So if Emunerate is cross about AH loosing some rights what about our right to elect our representatives!
- and last (I think) but by far not least a Non-holder of SCF but potential holder if i see the risks balanced by the returns. It took me a while to push the "Buy" button on Air NZ back in 2001 (and that paid off handsomely) and my finger remains poised today.

Balance

15-07-2010, 01:09 PM

I am not surprised that you and Balance concur on this ... and probably much more ...

However, your notion that Aorangi investors will get only a 50% recovery needs some examination. Are you saying that the Statutory Manager is so inept and so incompetent that he will not only destroy a solvent company but he will proceed to lose a good proportion of the assets?

I fear you have been spending too much time reading the tabloid financial commentators.

No, Enumerate.

Roger is saying that Aorangi was already buggered before the SM was appointed.

Let's rehash :

- All $96m of investors' money invested in AH's entities,
- Most of that money has gone to farm businesses with prior ranking bank security,
- 170 interest-free loans have been made by charitable trust with money borrowed from Aorangi.

That's why there has to be SM to protect what's left for those poor delusional buggers who think AH walks on water and can 'guarantee' them returns - with his paper ledgers and hand-shake documentation.

Enumerate

15-07-2010, 01:15 PM

You are letting your political bias cloud your investing judgement again Enumerate.

I am not sure I completely understand your criticism.

If you think I defend Allan Hubbard from the perspective of a political point of view - this is not the case. I think that within our current justice system - which reflects, largely, a conservative view of the NZ political environment - the Statutory Management of Allan Hubbard cannot be supported. There are, of course, wider perspectives on this ... political perspective influences the detailed view ... but, my objection is based on fundamental principles of the existing justice system.

In terms of investment - my judgment is not related, at all, to the Allan Hubbard injustice. From an investment perspective, recent events add significant risk. These events have also created opportunity.
- Earlier in the year my view was that the SCFHAs were a bad investment independent of price. This was based on the view that SCF management were in complete denial of their predicament.
- It became clear to me that the leadership of Sandy Maier was a significant factor in the turn around of SCF. I revised my view on SCF and suggested that SCF010s were a reasonable entry point to participate in any recovery. I did not like the SCFHAs, then at about 30cents - because of the terms of the trust deed.
- I posted, a while back, that I thought the value of the SCFHAs was about 15cents, SCF trading, 10cents recovery value. There has been good news and bad news, since this assessment - on balance I maintain this view on value.

I would resist the assessment that my investment view is coloured or clouded by my views on Allan Hubbard's statutory management.

Enumerate

15-07-2010, 01:33 PM

Hands up all those who think SCF will make a real taxable profit after adjustments of $300 million in the forseeable future ?

I think the treatment of the tax "asset", in the full year accounts will be different from the reported "half year". As I stated before - there will be a number of factors that crystalise at full year that will allow a reasonable determination of the appropriate treatment.

I do believe we will have write backs over the existing half year impairments - yes, I believe this will be material to the statement of the tax position.

SCF Auditors are idiiots right ?

SCF audiitors are thinking of their professional indemnity insurance. E&Y, I am betting, on talking over the audit account have taken as many skeletons out of the cupboard as they can find. I would expect that Sandy Maier has been encouraging this, as new CEO.

You will, in fact, find that old man Hubbard's cupboards are bare!

The auditors tagging the accounts comes as no surprise.

The SM's of Aorangi are completly incompetent right, more school girls ? and should ahve allready done a full analysis on Aorangi in three weeks right ? e.t.c. e.t.c.

You were the one suggesting incompetence based on less than 50% recoveries on Aorangi debt receivables.

The Statutory Managers have effectively destoryed Allan Hubbard's business. There has been no attempt to continue as a going concern. They froze interest payments and have published disparaging comments on the business systems.

So, if anyone expected a full analysis in 3 weeks - It actually looks like the Statutory Managers made the decision to effect de facto insolvency in less than this time!!

My expectations, in this matter, were for a simple explanation of the reason for statutory management - the defense of the "public interest" - I would have thought this would have been a trivial task.

Balance

15-07-2010, 01:37 PM

Enumerate, please know that Stat Managers are indemnified by the Government before you carry on any further.

Enumerate

15-07-2010, 01:49 PM

Enumerate, please know that Stat Managers are indemnified by the Government before you carry on any further.

That's great news for Mr Hubbard - infinite indemnity.

So you are party to the Terms of Reference between Her Majesty the Queen, in RIght of New Zealand and Grant Thornton?

Balance

15-07-2010, 01:53 PM

That's great news for Mr Hubbard - infinite indemnity.

So you are party to the Terms of Reference between Her Majesty the Queen, in RIght of New Zealand and Grant Thornton?

No - have had experience working with SM before. I think you will find that's the case with most receiverships anyway - the receivers are indemnified by the appointing entity, usually a bank or a financier.

Balance

15-07-2010, 02:06 PM

Also, please note it is the Government who put AH into SM - then, appoint the Statutory managers.

The Statutory managers are carrying out the government's mandate, not the other way round.

But think about this for a minute - charitable trust borrows money from Aorangi. Aorangi has to pay interest to investors - but charitable trust does not have any income as loans are interest free.

Issues - How can any business survive on a business model like that? Presumably, AH is making up the difference. If so, did he disclose to Aorangi investors? Remember Huljich fund and the top up controversy?

Enumerate

15-07-2010, 02:17 PM

But think about this for a minute - charitable trust borrows money from Aorangi. Aorangi has to pay interest to investors - but charitable trust does not have any income as loans are interest free.

Issues - How can any business survive on a business model like that?

Maybe the interest was capitalised in the loan amount. The charitable trust was an investment vehicle to perform some property development. These structures were actually not uncommon - though, these days, very unfashionable.

In fact, I have some Macquarie unit trust investments that are structured along these lines.

I just hope that the Statutory Managers haven't been bamboozled by mini-Macquarie machinations.

Balance

15-07-2010, 02:20 PM

Maybe the interest was capitalised in the loan amount. The charitable trust was an investment vehicle to perform some property development. These structures were actually not uncommon - though, these days, very unfashionable.

In fact, I have some Macquarie unit trust investments that are structured along these lines.

I just hope that the Statutory Managers haven't been bamboozled by mini-Macquarie machinations.

No, Enumerate. The loans are INTEREST FREE.

Enumerate

15-07-2010, 02:31 PM

The SCFHAs seem to holding up despite all the SCF knocking.

A tiny parcel traded at 15cents, today. There seems to be a big gap between the bid and the ask.

I felt sure that we would see sub-10cents following the release of the Statutory Manager's report.

Perhaps they are all held by canny South Island Scotsmen? Maybe the only ones doing the selling are the Aucklanders? I hope they haven't gone short :(

Beagle

15-07-2010, 02:32 PM

The last financial statements were realeased in early April so it took over three months for auditied interim accounts. Assuming a similar time fram for the end of year accounts that puts the expected audited result at early October, well past the soft deadline of end of August for the resoration of Trust deed covenants.

Thank you Balance for bringing exactly that to the blog. Yes Aorangi was in a most unsatisfactory state in many more ways than one prior to the appointment of SM, that's spot-on.

Enumerate

15-07-2010, 02:36 PM

Assuming a similar time fram for the end of year accounts.

Check your assumptions ...

minimoke

15-07-2010, 02:37 PM

The Statutory Managers have effectively destoryed Allan Hubbard's business.
I'm not so sure about that - perhaps its a bit too early to be so dramatic. But let look at Allans view of his Aorangi business compared with the Stat Mans view - bearing in mind the Stat Man only has three weeks experience in it.

Alan reckons assets are $128m. The Stat Man reckon its $132m
Alan reckons he has $88m of clients cash. The Stat Man reckons its $96m
Alan reckons hes got $40m of his own skin in the game. The Sta Man reckons its $36m.
Alan reckons its a Mortgage Company. The Stat Man thinks its morphed into a finance company
Alan says it has loans and mortgages. The Stat Man reckons the money has gone, in part, to AH's own financial interests and trusts. Some loans appear not to be secured by land and some loans appear to have no registered security.
Alan is silent on Aorangi money going into Trusts (Otipua Charitable Trust, Oxford Charitable Trust, Regent Charitable Trust, Morgan Charitable Trust, Benmore Charitable Trust, and
Wai-iti Charitable Trust.) formed in March 2010 into which he was transferring his personal assets.
Alan is silent on Aorangi money going to Te Tua Trust. The Stat Man says this Trust was giving interest free loans and it seems some of those loans are in arrears.
Alan says he is NZ's most honorable man. The Stat Man is silent on that.

I think that Alan has been a little conservative with the information he has shared. It appears there are loan impairments and arrears (as one would expect) but I'm not so sure it is reasonable to suggest the Stat Man has destroyed AH's business. Perhaps the train was already heading along that particular track pre June 20

minimoke

15-07-2010, 02:43 PM

Beagle

15-07-2010, 03:06 PM

Or the really smart money its sitting quietly in KIPGC where investors therein sleep extremly well at night while the GFC rages on around them and they pick up a solid 8.95% return and wait for everything to get cheaper.

Enumerate, why would the end of year financial statements be any quicker than the interim ones, perhaps there could be some speed increase because the Auditors are slightly more familiar with AH's incredible corporate web, but any significant increase in timeliness would appear to be unrealistic....but then again, oh i'd better not go there again.

Disclosure of Interest, I have quite a few of the abovementioned security.

Enumerate

15-07-2010, 03:25 PM

Alan reckons assets are $128m. The Stat Man reckon its $132m
Alan reckons he has $88m of clients cash. The Stat Man reckons its $96m
Alan reckons hes got $40m of his own skin in the game. The Sta Man reckons its $36m.

If you cite your references you will read that the Stat Manager is referring to investors in Aorangi that could include some Hubbard interests. Hubbard is referring to non-Hubbard interests. Apples and oranges - if you care to cite the proper details. Also, Allan says "approximately" - maybe he is recounting from memory as at that time he was in Statutory Management.

Alan reckons its a Mortgage Company. The Stat Man thinks its morphed into a finance company
Alan says it has loans and mortgages. The Stat Man reckons the money has gone, in part, to AH's own financial interests and trusts. Some loans appear not to be secured by land and some loans appear to have no registered security.
Alan is silent on Aorangi money going into Trusts (Otipua Charitable Trust, Oxford Charitable Trust, Regent Charitable Trust, Morgan Charitable Trust, Benmore Charitable Trust, and
Wai-iti Charitable Trust.) formed in March 2010 into which he was transferring his personal assets.
Alan is silent on Aorangi money going to Te Tua Trust. The Stat Man says this Trust was giving interest free loans and it seems some of those loans are in arrears.

No here you are being more mischievous. As far as I can tell, Allan has not expressed any view on any of this - it is you putting words into his mouth. You are also representing the Statutory Managers position with a great deal more definition than even the Statutory Manager, himself.

So ... are you laying a trap for those with weak minds and a nervous disposition?

I am reminded of my Kipling:

IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
' Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!

There, much better now ... words should be used to express the truth about things ... not "twisted by knaves to make a trap for fools",

Nothing beats a bit of Kipling ...

winner69

15-07-2010, 03:38 PM

You guys finally seem to be agreeing that Alan's money go round stopped functional a little while ago ..... once his access to SCF cash dried up Alan, Aorangi etc etc was broke .... the cupboard was bare ..... probably couldn't pay any interest (in cash) or repay investors anyway

Somebody needed to sort the mess out .... both for investors and SCF sake

Enumerate

15-07-2010, 03:40 PM

Where's Balance when you need him ... maybe he is feeling the squeeze?

I am aware that there are at least three of you guys against just me ... I currently have you all totally outnumbered ... maybe Balance can join to restore the ... Balance.

minimoke

15-07-2010, 03:57 PM

If you cite your references
The references are:
- First Statutory managers report available here: http://www.interest.co.nz/sites/default/files/First%20Statutory%20Managers%20Report%20-%2012%20July%20(2).pdf
- Press release issued by AH on 21 june and available here. http://www.scoop.co.nz/stories/BU1006/S00574.htm

I accept that AH says his figures are approximate. However I do not accept that a man who does business on a handshake and note book does not have a closer recollection of the fund details - especially when he was aware that people were looking at his books. It is he that is quoting figures to support his position in his press release - it is for him to be as accurate as possible or in the alternative remain silent. It is he that chose to leverage his integrity in the press release - a man of integrity might also have mentioned the other issues being looked into (like the other trusts) to provide a fuller picture. You'll note I chose not to even raise the issue of Hubbard Financial Management in that post - having done so at this time could well have been mischievous since we don't know much about that and AH sure hasn't let on anything

This is sure an enlightening thread. You've bought us Ayn Rand and Kipling in just two days. Hopefully we are in for more treats as the SCF safge moes on.

winner69

15-07-2010, 04:01 PM

peat

15-07-2010, 04:16 PM

Enumerate

15-07-2010, 04:25 PM

Alan and Percy seem to have gone to ground .... they were your allies mate

As I said, I already have you guys outnumbered ... any more on my side would be terribly unfair.

minimoke

15-07-2010, 04:31 PM

Nothing beats a bit of Kipling ...
So how would Kipling interpret this chain of events.

Someone quotes Alan Hubbard as being an incredibly generous man (the citation will be on the Facebook site somewhere)

Now Farmer Brown has a spare $500k and decides to invest it in a mortgage company called Aorangi.

Its an investment so he expects a return on that investment.

Being a mortgage company he probably figures the money is going into a mortgage. He may even presume that where that mortgage sits in priority ranking will be reflected in the interest earn on his investment. Being a Farmer he'll probably understand a mortgage is for something to do with land and or buildings. Also being a farmer he's probably had his own mortgage at some time and will recollect signing documents with the lender. The guy behind the Mortgage company is an Accountant - all be it a tad old fashioned - but even in the good old days ledgers were kept and the quill was never far from a pot of ink. And as a religious man (hear goes my turn now) he might refer to Deuteronomy 23-20 "Unto a stranger thou mayest lend upon usury..."

So he slips the old accountant $500k to be invested in a mortgage.

But what does he discover a bit further down the track. A Stat Man report which suggests:
- his money which he though went out as a mortgage may not have had land as a security
- if it did go to land it may not have had the land as security and the security of that land was held by a superior lender
- the money did not go to a "foreigner" but to a "Brother"
- that Deuteronomy (23-19) has been taken literally and money lent to the Brother has been on lent and not been charged interest.

So it seems it wasn't Alan who was being generous - but his "Brother"

Morpheus

15-07-2010, 04:39 PM

Allan Hubbard quote from a september 2008 article in The Independent ...

"There wouldn't be many people like me, but that's just the way I am. I don't regard the money I've got as being mine, so I don't have any trouble giving it away.

"We were born with nothing and we leave with nothing - I think it belongs to God."

Enumerate

15-07-2010, 05:00 PM

"Mr Hubbard has used his weekly allowance from the statutory manager to support those investors who are in financial distress."

Alan3285

15-07-2010, 05:13 PM

Alan and Percy seem to have gone to ground .... they were your allies mate

Still here, just been rather busy in the last couple of days.

Its hard work catching up on the posts in this thread!

However, I still have a huge issue with the lack of transparency in the process of putting AH into Stat Mgt.

In a democracy, we should be far more careful of infringement of other's rights by the state, lest we are next.

I think some of you are showing a very naive trust in authority - authority that should be challenged and made to demonstrate that it is being handled properly, irrespective of whether you like the 'victim' or not.

I might disagree with you, but I would defend your right to speak freely, as I am defending everyone's rights, not just yours.

The partiallity which some of you seem to be backing is quite disappointing.

Alan.

minimoke

15-07-2010, 05:14 PM

"Mr Hubbard has used his weekly allowance from the statutory manager to support those investors who are in financial distress."
Why not quote a line higher:
"There are a number of elderly people who rely on this interest in order to purchase food and pay living costs and power etc." This was a travesty in Mr Funnell's view."

Here we have more elderly people just like the Hanover investors prepared to put their all their money somewhere other than the bank. How long has the GFC been around; how long as SCF been under pressure - are these people living down Hobbitt holes? Do I have any sympathy for them. No I don't. They entered into a No Doc (jeez - it wasn't even a Low Doc) environment and again I'm expected to bring out the hanky. Not this time!. And if they think its bad now the kneelers in the Timaru churches are going to get worm out hoping SCF doesn't go under. They'll really know financial distress then.

And give me a break - they probably can't put cream on the scones this week.

minimoke

15-07-2010, 05:22 PM

... irrespective of whether you like the 'victim' or not.

Ah - but now we are begining to learn who the victims are. Its not AH who still gets his $1k a week. Its the old grannies that got suckered into putting all their savings into some "old boys" club. Where was the impartial professional advice to diversify your investments into portfolios conducive to your risk profiles. Wheres the integrity if you are shoehorning people into your own investment vehicles. Even Forsyth Barr has the decency to distribute cash amongst a range of dodgy finance companies and not just into one place.There was none of that - it was just "trust Uncle Alan"

Enumerate

15-07-2010, 05:24 PM

Mini, you think SCF is a finance company. I think it is a community of hardworking, backbone New Zealanders.

If we lose this ... we lose much more than money.

Balance

15-07-2010, 05:29 PM

where is Balance ?
well I'm just a Business student in the first week of 2nd semester and I cant keep up with this thread on top of my necessary reading so I wouldnt be surprised if actual working people cant keep up!!

Matey - here and nice to be distracted with some of the rantings here whilst I try and make sense of some numbers I am working on!

Not SCF or AH, dare I add - they are beyond human comprehension as only AH has got them all - in his head!

"Now did I lend that loan interest free and was it secured or did I take a few eggs as interest?

Shudder!

Beagle

15-07-2010, 05:36 PM

Ah - but now we are begining to learn who the victims are. Its not AH who still gets his $1k a week. Its the old grannies that got suckered into putting all their savings into some "old boys" club. Where was the impartial professional advice to diversify your investments into portfolios conducive to your risk profiles. Wheres the integrity if you are shoehorning people into your own investment vehicles. Even Forsyth Barr has the decency to distribute cash amongst a range of dodgy finance companies and not just into one place.There was none of that - it was just "trust Uncle Alan"

lol, classic post, well said.

minimoke

15-07-2010, 05:42 PM

Mini, you think SCF is a finance company. I think it is a community of hardworking, backbone New Zealanders.

If we lose this ... we lose much more than money.
Your forgetting many of those hard working people in SCF will get their money back. It's the community of hard working tax payers who are the backbone of NZ and its these "victims" who will be supporting SCF depositors in their folly if it goes belly up.

Balance

15-07-2010, 05:59 PM

Your forgetting many of those hard working people in SCF will get their money back. It's the community of hard working tax payers who are the backbone of NZ and its these "victims" who will be supporting SCF depositors in their folly if it goes belly up.

I cannot for one second understand how lending hundreds of millions to speculative property developers by SCF constitute hard-working, backbone NZers!

SCF has $1.8b in deposits - other NZers have got $96 billion with the banks?

Enumerate

15-07-2010, 06:02 PM

Here is a little story.

It is summer time ... Mini, Balance and Roger are all out for a stroll in the sun.

They spot an orange juice stand ... run by Allan Hubbard. Mr Hubbard has a solid reputation for the best orange juice and his prices are fair. Business seems to be slow, at the moment. Mini, Balance and Roger think for a moment ... If we can sell some of Mr Hubbards orange juice to the punters over by the beach and then buy it buy it at a cheap price from Mr Hubbard ... "We can have free orange juice", they say.

They go off and sell multiple orders to the bathers - because Mr Hubbard's orange juice has a good reputation.

However, when they come back to bargain with Mr Hubbard - he refuses to sell at a discount. He stands by his price as well as the quality of his product. Mr Hubbard has integrity, at the highest level.

Mini, Balance and Roger attempt to reduce the price of the juice by telling Mr Hubbard that his reputation, as an orange squeezer, is in tatters and the bathers will only deal with them.

They have significantly underestimated Mr Hubbard. He knows his integrity is of the highest standard. He refuses to sell the trio orange juice at any price. He packs his stall and heads off home.

In an attempt to make some money at the expense of Mr Hubbard - the trio now have to go and purchase Hubbard orange juice from the beachside cafe - to cover the orders the bathers on the beach have made.

The big problem is that the cafe has a dress standard. You have to have long pants. One of the trio suggests that they could remove their shirts and cover up their legs with the shirts. However, one points out that the dress standard also demands a shirt be worn.

Slowly, they realise the situation they are in:

The price has not collapsed, Mr Hubbards reputation has not collapsed; the problem is: "How to cover those shorts without losing your shirt"?

A classical orange juice squeeze ...

Arthur

15-07-2010, 06:55 PM

Obviously you have been busy on this.

For what it is worth I think that Hubbard will be hanged for minor infringements - I doubt anyone of us is clean if the Jackboots search through our financial transactions, they will always find something. In this case the affairs are so complex there will be many reasons to string him up.

There will be a quick firesale of assets. With such a limited timeframe the "market price" will be below "fair value" I can remember the banks did it with Chase corporation and took a big hit. The canny buyers sold some assets a few months later at juicy profits. If memory serves me well in one case a profit of 300% was made in less than 6 months.

The Jackboots will use the "market" losses to justify their original actions. If you have one day to sell your house you will usually get less than if you have 6 months. There is a vested interest in the authorities losing money - it helps the public understand that the intrusive intervention was "needed"

macduffy

15-07-2010, 07:11 PM

Hi Arthur. Just about the best post on this thread for a long time!

I've long had the funny feeling that the authorities needed to make an example of someone or something after years of ineffective oversight of the finance company sector. An unorthodox operation such as Hubbard's offered the obvious opportunity.

winner69

15-07-2010, 07:40 PM

Balance

15-07-2010, 08:54 PM

Fairy tales - always love those.

Yawn - bed time.

Halebop

15-07-2010, 10:40 PM

I can't help thinking that the simple concepts already provided in the media are something close to what happened and there isn't a lot of mystery involved;

Mr Hubbard is a canny businessman with a loyal following
Mr Hubbard is not so hot on paperwork
Mr Hubbard's habitual work practices which have not at all harmed his success or business acumen have been overtaken by environment and legislation
The people who police this stuff perceive that Mr Hubbard may have been operating a contributory mortgage company as a defacto finance company, which is illegal notwithstanding intent
The people who police this stuff are culpable if they don't take some sort of action and sensitive to the consequences of letting things slide

Alan3285

15-07-2010, 10:54 PM

COLIN

15-07-2010, 11:58 PM

As I said, I already have you guys outnumbered ... any more on my side would be terribly unfair.

You can continue to count me in your gang, Enumerate. Like many others, no doubt, I find it hard to spare the time to follow all the cuts and thrusts of the arguments that are raging, but I am quite apalled at the viciousness being displayed by a number here. Surely it is possible for them to engage in rational debate without descending into plain nastiness, one of the last resorts. It would be interesting to see what they would get up to if you were no longer providing them with a punch bag - perhaps they would then turn on each other.

Nothing I have seen so far has shaken my view that Allan Hubbard would be prepared to give up his very last cent - perhaps found in the cuffs of his old gardening trousers - to meet the claims of creditors, of whatever category, within his whole business empire. Who, among the packs of wolves attacking on this thread, genuinely believes that Allan Hubbard's net worth (previously estimated at arounf $550 mill) would have been totally wiped out if the "jackbooted gang" hadn't intervened as they have? Obviously he has been most unwise to allow this extensive network to grow so large and complex without adequate documentation, etc., and also without setting in place a proper succession plan, but that is another matter.

One point I would like to make: Roger, I think it was, poured some chilly water on the worth of the $150m of assets that AH pumped into SCF. Those assets (Scales and Helicopter Lines) were all independently valued at the time, to the satisfaction of the Trustees and Treasury. Scales latest NPAT was something like $15 mill; if it was an independent company trading on the NZX it would be well within the NZX50. I agree with some other poster who referred to the likelihood of fire sale prices on a break-up of SCF, and that of course would be a further unpardonable consequence of this whole tragic saga arising from what I am still utterly convinced was a gross over-reaction by a Government which was ill-advised by its its various agencies.

And, lest I be accused of naivety/ignorance in commercial and financial matters, I would like to record that I have had nearly 40 years experience in the financial services industry, retiring at a senior level. Oh, and I also have a commerce degree and am a qualified accountant.

Now I await the vitriol.

minimoke

16-07-2010, 09:07 AM

Did you actually have the decency to ready what I wrote?

If you don't think it worth reading, then at least be honest enough not to post a 'reply' - just start a new line.

Alan.
Your posts I do read Alan.

If we go back to Enumerates post #1229 he defines for us an “eligible” person being essentially a wealthy or sophisticated investor. Such people seem not to need the benefit of a prospectus. Its Enumerates view, in essence, that such sophisticated investors have other remedies (including the word of an honest man) available to them if things went bad – and that Stat Man is not a requirement.

My point is, that as information comes out some of Alan H’s investors are not sophisticated. They are in fact elderly and do not have the wherewithal to buy food or electricity if their investment went wrong. In my mind that makes them vulnerable investors – and the vulnerable get exploited. It appears these people may have had a “right” to a prospectus – where are the people championing the cause of the vulnerable.

It s the hypocrisy of it all that gets me going. On one hand you have a frugal, religious, wealthy, ill old man who has for many done good deeds. He gets all the support and bleating on about “rights”. But when you drill down objectively the picture isn’t so rosy. With frugality came an apparent inability to move with current and developing standards of professional business practice. Sure he loaned many people money – but it appears you had to be a member of the Inner Circle. Sure he was philanthropic – but it appears it wasn’t necessarily all his own money he was giving away. OK he was a man of faith – do we have any idea if his philanthropy extended as far as, say homosexual law reform or women’s right to choose. On the other hand you have thousands of people who appear not to have rights. And don’t get started on Enumerates – “well they have other redress......”, these old grannies can’t even put food on the table now – how would they ever pursue the rights they have in law.

And please spare me the “I’ll defend to the death your right to free speech......” That is such an overused platitude my eyes glaze over when ever I start reading the first few words. The tone of your post is a prime example – you’ll defend my right – only for so long as it meets your own criteria.

While we are at it will you be out on the streets protesting the governments plans to allow employers to fire anyone without just cause. What about a Unions right to access an employers workplace to communicate with workers – will you been on the streets over this issue. Did you defend cell phones users right to use their property as they saw fit – including in their cars. Do you support all property and individual rights or are you a bit selective? (and thats a rehetorical question – we probably ought to stay on track and perhaps focus on the better news that has come out of SCF today.

minimoke

16-07-2010, 09:22 AM

...Obviously he has been most unwise to allow this extensive network to grow so large and complex without adequate documentation, etc., and also without setting in place a proper succession plan, but that is another matter.
....

Now I await the vitriol.Theres no need for the vitriol. But I think the first part of your quote sums things up quite nicely. This thread, in parts has descended into a pro/anti AH. That in some ways is a shame as he has undoubtedly been a pillar of the local community.

However, in using AH in the context of this thread we have lost sight of the magnitude of the issues. It is perhaps "unwise" for a small person to grow their business without an eye to law and currently recognized business practice. I think we might all agree on that. But for a person to become a Director (which has plenty of well established governance responsibilities) of numerous companies; a shareholder in many more and a controlling director and shareholder in one of the countries largest companies without any apparent succession plan "unwise" is a gross understatement.

If we put the personality of AH aside what would we call the actions of another person who did this. I would call it reckless, unprofessional, egotistical, exploitative, unethical. How would you call it?

Enumerate

16-07-2010, 09:31 AM

Allan Hubbard uses the $1,000, per week, the Statutory Manager gives him out of Allan's own money, to help those investors in Aorangi who are in distress due to the Statutory Manager freezing all scheduled payouts.

The money is there, as Allan has always said. It was a viable business, until the government agent started running it.

Such is the measure of the man.

Compare this with Petricevic, Bryers, Watson and Hotchkin ... the point has been made, before, that their extravagant lifestyles are in stark contrast to the way Mr Hubbard conducts himself. Have any of these men acted like men? It would be well within their means to compensate and redress - when, it is certainly true, they have much to compensate and redress.

Mr Hubbard, on the other hand, has no reason to check his conscience - he has behaved impeccably before and during this crisis. Yet he is the one, even with limited means, to redress and overcome harm caused by others.

SCF, according to the Trust Deed, maintains sufficient assets as security for the various debenture holders.

In my view, the most valuable form of security that can apply to any SCF investment is the knowledge that you have the backing of Allan Hubbard's integrity.

This, in my view, is much more valuable that an government guarantee.

minimoke

16-07-2010, 09:40 AM

OK, for the financial analysts amongst us. In today’s news SCF has gathered $280m in reinvestments from approx 8,500 out of 20,000 investors. $256m has also been gathered from non core or problematic loans. The loan book is around $2b

Beagle

16-07-2010, 10:36 AM

"One point I would like to make: Roger, I think it was, poured some chilly water on the worth of the $150m of assets that AH pumped into SCF. Those assets (Scales and Helicopter Lines) were all independently valued at the time, to the satisfaction of the Trustees and Treasury". Colin

Forsyth Barr, as previously mentioned tried for months to sell these assets on the open market or float them on the stockmarket. I understand there were more free flights on Helicopters dished out to the stockbroking community than I've had hot dinners this year. The point is they tried as hard as they could and couldn't sell them for cash after many months of effort. Of course Forsyth Barr still charged millions of dollars for their "expertise".

Here's the other point, all Hanover assets were subject to independent valuation at the time of transfer to ALF and we all know what they're now worth !! Geneva Finance assets were independently valued when they went into their moratorium, shares were valued at 35 cents and despite being bid lightly on the stockmarket at 5 cents today, are completly worthless.

In today's market an asset is only worth what someone will pay for it so the theoretical valuations of Helicopters N.Z. (itself an extremly highly leveraged company) are open to very significant variation if you change a few financial assumptions supporting the paper valuation.

Come on Colin, with all your experience you know very well, valuing a company is far from an exact science. Why is it that we have heard nothing from SCF regarding the operational performance of these companies since acquisition, it couldn't be that's becuase they're struggling in the on-going GFC environment, surely not ?

Enumerate, the backing of no man is worth more than a Government guarantee, what you've displayed for all to see is your clear bias which simply doesn't stand up to objective intelligent analysis, so it's just emotional B.S. Sorry, but I call it as I see it, that's how I am.

As I've said before, no one is exempt or above the law. The mighty Goldman Sachs has just had to settle regarding the SEC investigation of their practices and it cost them $550 million.

Beagle

16-07-2010, 10:48 AM

http://www.stuff.co.nz/business/industries/banking-finance/3924240/South-Canterbury-Finance-investors-put-back-280m

Read between the lines, debenture inflows and roll-overs are being seriously hurt by recent events.

winner69

16-07-2010, 01:42 PM

What a joke that facebook page Leave Alan Hubbard Alone is .... and enumerate seems to be lacking as a friend unless he is the guy after Allans phone nunber

Enumerate

16-07-2010, 01:51 PM

So, this is what we have from the "nervous nellies":

OK, for the financial analysts amongst us. In today’s news SCF has gathered $280m in reinvestments from approx 8,500 out of 20,000 investors. $256m has also been gathered from non core or problematic loans. The loan book is around $2b

Read between the lines, debenture inflows and roll-overs are being seriously hurt by recent events.

This is what Sandy Maier is reported to have said:

South Canterbury Finance (SCF) has gathered around $280 million of debenture reinvestments as it seeks funds to keep a business based on public confidence on an even keel.

SCF has in recent months targeted about 20,000 of its investors to roll over debentures well into the future under an offer that ended on June 18, just before its president for life Allan Hubbard was put in statutory management.

Chief executive Sandy Maier said $280m worth of debt due to mature by October 11 had been rescheduled out further. SCF had 13,000 responses and about two-thirds of those had agreed to redeposit.

... and, these are the facts:

1) As noted in the half year - the total maturities to the end of the 2011 retail deposit guarantee - was about $1billion

2) There were maturities to the 30th June of about $300million - these have been paid back with new debenture debt.

3) Sandy is now telling us that $280m due by 31 October has been rolled over.

Lets say that out of the $1billion - we have accounted for $580million. This leaves $420million maturing within the extended government guarantee period. Over 15 months, this is $28million per month.

Now, if the maturities were equally spread ... I'd say SCF has an easy job to find this level of capital inflow. However, we know that maturities are "bunched" - let us estimate this "wall of debt":

Sandy does not, directly, tell us the size of the "wall of debt" due late October.

If we assume that as SCF had 13,000 responses out of 20,000 and about two-thirds of those had agreed to redeposit this means that we can estimate that 2/3 x 13,000/20,000 x wall_of_debt = $280million

This means that the "wall of debt" can be estimated at no more than $650million - less the $280million already pledged, this implies it is no more than $370million. This is out of a total debt maturity of $420million to the end of 2011 - does seem a bit high, but we will run with it.

We don't know anything about new capital, we don't know anything about loan maturities except they did about $250m in 6 months on the impaired loans "with the rate of recovery accelerating" - lets say $250million more on total loan maturities, by October. This could include some sales of loans from the "good bank" - but there is no extreme pressure to sell at heavy discounts.

This means they need about $120million in terms of debenture issue from new sources.

This is about $40million per month.

Tight - but not impossible. They may need more bridging finance if the subscription rate drops away.

This does not account for any cash generated from the equity assets or the performing loans.

I note that the "bunching" of the maturities is the key problem - not equity - not even debenture subscription rates - just the "bunching".

Focus and good management, will see SCF survive. If you do the calculations you can see through the intellectual dishonestly on this thread.

Beagle

16-07-2010, 02:09 PM

Good Lord, you have at least tried to do some rational thinking Enumerate, but of course you were selective with what parts you extracted from that release.

He also said "SCF had also in the period from January to June 30 gathered $256m from targeted larger maturing loans related to non-core or problem business. This money was being used to pay off debentures.

"That for the last two weeks has been the primary source of cashflows, not the [debenture] offers."

Translation, they've got very little from new or roll-over debentures in the last two weeks, and then he goes on later to say he's not sure why and tries to present one reason as its the school holidays. I mean come-on is this just plain corporate spin or what ?

I would have thought the reason SCF has got little in the way of new debenture or roll-over debentures in the last few weeks is very obvious.

For what its worth, and I do mean that, Chris Lee has calculated the remaining wall at $380 million and these are people who have allready declined offers to extend their debenture investment early. That suggests a lower liklyhood of those investors rolling their debentures in the ordinary course of maturity.

So if we assume Chris Lee has based this analysis on something tangible then it would appear say that if the remaining roll-over rate was reduced by say half from the normal level that SM alludes too of 40-60% then that's a roll-over rate of 20-30 %for that $380 million say about 100 million and there's new funds required of about $280 million in the next three months.

As posted recently, unless there's new capital coming in there would appear to be little chance of them climbing a wall of that magnitude.

Enumerate

16-07-2010, 02:29 PM

He also said "SCF had also in the period from January to June 30 gathered $256m from targeted larger maturing loans related to non-core or problem business. This money was being used to pay off debentures.

"That for the last two weeks has been the primary source of cashflows, not the [debenture] offers."

Translation, they've got very little from new or roll-over debentures in the last two weeks, and then he goes on later to say he's not sure why and tries to present one reason as its the school holidays. I mean come-on is this just plain corporate spin or what ?

What an idiotic conclusion. The $256m in recoveries should about equal the total inflows of rollover and new capital - this is $40million per month in recoveries from the non-core loan book. If they were getting much over $40million in new capital, per month, I would be extremely surprised. Remember, on average they only need $28million per month - it is only the "bunching" of maturities that is causing the problem.

I would have thought the reason SCF has got little in the way of new debenture or roll-over debentures in the last few weeks is very obvious.

The tide is turning on this. Fairminded people can see what a sham this Statutory Management is ... there is no "smoking gun".

For what its worth, and I do mean that, Chris Lee has calculated the remaining wall at $380 million and these are people who have allready declined offers to extend their debenture investment early. That suggests a lower liklyhood of those investors rolling their debentures in the ordinary course of maturity.

My method puts this estimate at $370million. If Chris Lee says $380m, I would conceded it is likely that he has better sources of information.

So if we assume Chris Lee has based this analysis on something tangible then it would appear say that if the remaining roll-over rate was reduced by say half from the normal level that SM alludes too of 40-60% then that's a roll-over rate of 20-30 %for that $380 million say about 100 million and there's new funds required of about $280 million in the next three months.

This is gibberish.

As posted recently, unless there's new capital coming in there would appear to be little chance of them climbing a wall of that magnitude.

No, no .... another invalid conclusion. Capital is present and is likely to be adequate for the downsized loan book. According to Basel, we need less equity assets and more Tier-1 ... so there is a shifting ... but there is no case for new capital.

Again, we do not need to "float" the loan book, this is done - we need to finance a "bump" in the maturities - this is cash management.

If the subscription rate on the SCF debentures picked up ... the steady state size of SCF could be bigger. However, according to Maier - the target is $1billion in loan receivables. The issue of capital adequacy and the risk weighted assessment is a matter we can leave until another day.

SCF may need bridging finance to spread out the debt maturities. That is it ... that is the only supportable conclusion from the numbers.

minimoke

16-07-2010, 03:12 PM

This means they need about $120million in terms of debenture issue from new sources.

This is about $40million per month.

Sandy tells us today ""That {maturing loans} for the last two weeks has been the primary source of cashflows, not the [debenture] offers.". So isn't it every week without new cash puts extra pressure on your $40m a month.

I suspect he's probably been successful in bringing in cash from the "low hanging fruit" the further out you look the harder it is to get cash in. I'd imagine the vast majority of "pro AHer's have probably already committed to rolling their cash over pre Stat Man. And the Stat Man could well have secured a bit more in sympathy. But if SM hasn't been bringing in the cash over the past few weeks off the back of that news, and the lure of an extra 0.5%, he'll need to get more creative

Enumerate

16-07-2010, 03:31 PM

So isn't it every week without new cash puts extra pressure on your $40m a month.

Yes, of course.

NZF, as an example, packaged up a collection of their prime first mortgages and raised $100m of insured AAA rated RMBS. SCF could easily do the same over some first mortgages on their farm loans.

The key point to keep in mind is that SCF simply needs to spread out loan maturities - averaged out until the end of 2011, SCF could easily raise the debenture money needed. The challenge is not capital; it is not margin; the challenge is cash flow.

In the final analysis - Torchlight could possibly be a source for the bridging loan.

minimoke

16-07-2010, 03:50 PM

The challenge is not capital; it is not margin; the challenge is cash flow.

while not loosing sight of the 31 August requirement for new equity to remedy the beach of the Trust Deed.
Theres also S&P who reckon if investor support weakens (which it appears to have done over the past few weeks) then the credit rating is likely to fall again though that may be tempered by the cash balance

Beagle

16-07-2010, 04:06 PM

"So if we assume Chris Lee has based this analysis on something tangible then it would appear say that if the remaining roll-over rate was reduced by say half from the normal level that SM alludes too of 40-60% then that's a roll-over rate of 20-30 %for that $380 million say about 100 million and there's new funds required of about $280 million in the next three months". Roger

"This is gibberish". Enumerate

How so ? The remaining investors through to 12 October have allready declined an enhanced interest rate offer to extend their investment with the extended Govt guarantee, so I think its reasonable to assume that at many of them want their money back for one reason or another.
By simple extrapolation is reasonable to conclude that the actual roll-over rate to be experienced with this "stubborn bunch" is likely to be materially lower than historical normal roll-over rates 40--60%.

Enumerate

16-07-2010, 04:07 PM

while not loosing sight of the 31 August requirement for new equity to remedy the beach of the Trust Deed.

While new equity could remedy the Trust Deed breach - it is a sufficient, but not a necessary requirement. The primary remedies are a restructure involving the equity assets.

You clearly do not understand the current state of the Trust Deed, nor do you understand the initiatives underway to heal the breaches. This is basic stuff - if you want to understand the goals of the restructure.

Theres also S&P who reckon if investor support weakens (which it appears to have done over the past few weeks) then the credit rating is likely to fall again though that may be tempered by the cash balance

Have you actually read the credit report? Do you know what the primary reason was for the credit downgrade?

Beagle

16-07-2010, 04:09 PM

while not loosing sight of the 31 August requirement for new equity to remedy the beach of the Trust Deed.
Theres also S&P who reckon if investor support weakens (which it appears to have done over the past few weeks) then the credit rating is likely to fall again though that may be tempered by the cash balance

I can't help wonder what the current cash balance is and notice Sandy has been very quiet about that !!

"We can repay maturing investors for now" Sandy Maier

Enumerate

16-07-2010, 04:24 PM

How so ?

Your assumption is that the gap between the total amount due and October and the amount that has been pledged to rollover needs to be met from new cash inflows from debenture debt.

This is clearly not the case when SCF have demonstrated very significant recoveries from the non-strategic loan book. Furthermore, there are likely to be significant cash flow from a number of non-stated areas. They have not revealed any information about maturities in the strategic loan book - have not revealed any information on cash freed from the restructure activities concerning related parties - have not detailed cashflow from ongoing operational activities - have not detailed potential cashflow from restructuring activities on the strategic loan book - have not noted any potential bridging loan finance like an extension to the existing Torchlight facility.

Keep in mind - SCF is about a high quality loan book - downsizing. The dubious property loans were only 15.8% of the total receivables. This is not even remotely a Hanover situation.

It would ideal if SCF could overcome the "wall of debt" with the inflow of public debenture money. The surprising fact is that if SCF could actually get over the "hump", solely with public debenture money - they would not have to downsize the business. They could actually grow!

Actually, it would seem they are surprisingly close to achieving this. However, they are not starved of significant cashflows available from existing operational restructure.

That is why, I suppose, they appointed a new manager with this responsibility.

I assume he will be doing more than opening the envelopes coming in from public subscribers and totaling the amounts.

Beagle

16-07-2010, 04:31 PM

Okay I'll give you that point to a degree but suspect the low hanging fruit in terms of recoveries averaging $40m per month has allready been picked. Whether they can maintain that over the next few months will be interesting as will Torchlight's potential further involvement.

10 cents maybe, but 15, no thanks.

Enumerate

16-07-2010, 04:37 PM

I can't help wonder what the current cash balance is and notice Sandy has been very quiet about that !!

1) For now, he is managing his business to be in compliance with the covenants of the Trust Deed.

2) When he gets over the "wall of debt", he will be managing his business to meet the capital adequacy statutory requirements.

3) When he has has completed this phase of the restructure he will move to boost margin.

4) Margin increase will follow with a credit rating increase.

5) Credit rating increase will allow organic growth of the loan receivables.

6) The combination of margin increase and asset growth will lead to profit growth.

This is a 2 -3 year process. At the end of this process the SCFHA holders will be toasting Sandy Maier.

There is no point, in this process, that Sandy Maier is managing this business to increase his cash balance. Given this, why would he report it?

Enumerate

16-07-2010, 04:51 PM

10 cents maybe, but 15, no thanks.

Once the "wall of debt" is behind them ... 15cents for an SCFHA will look damned cheap.

He will only have about $50million to raise during the an entire year! Clearly, he will need to focus on beyond 2011 debt maturities - but his focus will be on restoring the basic SCF business to an acceptable level of profitability.

He will face the post 2011 maturities with a better Credit Rating, a better profit story, a sound and easily demonstrated capital adequacy story, much more favourable market dynamics (given the number of competitor failures) ...

SCFHA's post October ... much higher than 15cents.

Beagle

16-07-2010, 04:52 PM

"There is no point, in this process, that Sandy Maier is managing this business to increase his cash balance. Given this, why would he report it"? Enumerate

I will certainly conceed he appears to be holding up well under pressure and has no legal obligation to disclose the current cash position to the public at this point but with the SM and investors apparent reaction, how long before we hear from S & P again ?

Beagle

16-07-2010, 04:56 PM

He will face the post 2011 maturities with a better Credit Rating, a better profit story, a sound and easily demonstrated capital adequacy story, much more favourable market dynamics (given the number of competitor failures) ... Enumerate

Much depends on the state of the economy and how it affets on-going levels of loan deliquencies. I'm in the double dip camp and think there will be plenty of new deliquencies this current financial year as well as further provisioning required on existing doubtful receiveables. I think the liklihood of SCF making a profit for the year ended 30 June 2011 is extremly slim, assuming they last that long.

Enumerate

16-07-2010, 05:09 PM

Much depends on the state of the economy and how it affets on-going levels of loan deliquencies. I'm in the double dip camp and think there will be plenty of new deliquencies this current financial year as well as further provisioning required on existing doubtful receiveables. I think the liklihood of SCF making a profit for the year ended 30 June 2011 is extremly slim, assuming they last that long.

There are two aspects to this ...

Either:

If the economy improves, interest rates will rise ... there will be pressure on SCF margins.

Or:

If the economy dips, interest rates will not rise, but defaults in the receivables will rise.

If I were Sandy Maier, out of the two, I'd actually prefer to face the second issue, rather than the first. The basic reason is that I will not be seeking to grow my loan book until the very end of the restructure process. He is not looking to chase new business and he has already had a good hard look at the business he already has. If he can stay static, in business size, during a "dip" - this buys him time to complete the capital adequacy restructure. An interest rate rise takes time away from him.

Enumerate

16-07-2010, 05:15 PM

I will certainly conceed he appears to be holding up well under pressure and has no legal obligation to disclose the current cash position to the public at this point but with the SM and investors apparent reaction, how long before we hear from S & P again ?

I think he is doing brilliantly. He is obviously a master of the psychological aspects of this process and is probably a formidable negotiator. He hasn't put a foot wrong in terms of expectation setting, he carefully controls the "information asymmetry". He has been dealt a number of setbacks - but he is rock solid no matter how heavy the punch.

Very impressive.

I could go on to say that he is every bit a CEO that Allan Hubbard deserves ... but I won't spoil the mood :-)

Beagle

16-07-2010, 05:32 PM

I think he is doing brilliantly. He is obviously a master of the psychological aspects of this process and is probably a formidable negotiator. He hasn't put a foot wrong in terms of expectation setting, he carefully controls the "information asymmetry". He has been dealt a number of setbacks - but he is rock solid no matter how heavy the punch.

Very impressive.

I could go on to say that he is every bit a CEO that Allan Hubbard deserves ... but I won't spoil the mood :-)

Yeah, there's little doubt Lachie left quite an impression on SCF books. Look, lets see where we find common ground.

1. There's no question about the skills and credibility of the Directors that have been appointed and the new management also appear to be quite a "win" for SCF.

2. Sandy is doing the best job in extremly difficult circumstances, I have little doubt any on here would disagree with that.

Where we digress in the main is this. The creative accounting practices are the main area of concern I have. $109m being held as a tax asset requires future earnings of $389.28 million at the new forthcoming 28 cent corporate tax rate to vindicate its existence. There's little doubt in my mind that this is the single most creative accounting entry I've ever seen in 30 years of accountancy.

3. There's no question that AH has done a world of good in the wider N.Z. community over a lifetimes work.

But no one is above the law and there's no question at least some of the 408 investors deserved to see a prospectus and investment statement and have the protection of a trustee, so from my experience of being on the receiving end of one of those situations, real serious harm is being done and probably will be done to some investors in Aorangi when recoveries, especially those poorly or not secured ar'nt realised at face value.

I think that pretty much sums up the area's of agreement and otherwise.

Enumerate

16-07-2010, 05:51 PM

Where we digress in the main is this. The creative accounting practices are the main area of concern I have. $109m being held as a tax asset requires future earnings of $389.28 million at the new forthcoming 28 cent corporate tax rate to vindicate its existence. There's little doubt in my mind that this is the single most creative accounting entry I've ever seen in 30 years of accountancy.

I have made the point before, but I will repeat ...

The $109m tax "assets" are $27m pre paid tax and $83m deferred tax. (Remember that the prepaid amount is a tax overpayment following the corrections to the 2009 full year accounts).

This is ugly, I agree - but it is in the half year accounts and I believe, with some optimism required to fully justify my position, that this reflects some uncertainty about the impairment provisions. I reckon we will see something of the order of $83m written back, at fully year, as recoveries above the impairments detailed at half year are demonstrated to be ~$250m.

Bottom line is I think we will seem a much sounder view on this once we have the full year accounts.

Enumerate

16-07-2010, 05:56 PM

But no one is above the law and there's no question at least some of the 408 investors deserved to see a prospectus and investment statement and have the protection of a trustee, so from my experience of being on the receiving end of one of those situations, real serious harm is being done and probably will be done to some investors in Aorangi when recoveries, especially those poorly or not secured ar'nt realised at face value.

This is a matter between Allan Hubbard and his investors. Maybe a little bit of Companies Office prodding was ignored by AH - but the reaction of Statutory Management is a significant over reaction.

Beagle

16-07-2010, 06:09 PM

"This is ugly, I agree - but it is in the half year accounts and I believe, with some optimism required to fully justify my position, that this reflects some uncertainty about the impairment provisions. I reckon we will see something of the order of $83m written back, at fully year, as recoveries above the impairments detailed at half year are demonstrated to be ~$250m". Enumerate

Sorry, I can't recall anything Sandy's said that would support your viewpoint. To the best of my knowledge he's only said that recoveries actually received are in line with the written down values, or words to that effect. To suggest that there's going to be a positive revlauation of previously provisioned doubtful receiveables yet to be recovered is more that a little optimistic, so we'll have to agree to disagree on that.

From where I see the economy, there's plenty of pain being felt out there, most especially by entities in a position where they're highly leveraged.
In my oipinion what tepid theoretical recovery might be stuttering along is based primarily on the potential for an improved outlook in the rural sector and frankly I can't see any of that filtering through into the bigger cities for quite some time to come.

We are such a small blip on the world economic radar we're almost entirely at the mercy of overseas events so what may happen in Europe with their banking system or any other major economic influence such as China or Amercia probably dictates to a large extent the double dip scenario or otherwise.

In my opinion one of the primary drivers behind extremly conservative comsumer consumption going forward is the extremly high levels of embedded debt all around the globe. Consumers arn't going to come back and start spending because either they can't, they don't have access to credit lines due to reluctant lending by the banks, or worse, those like us with a bit of discretionary capital are too scared to deploy it in non-productive area's.

I'd quite like to spend some money on a new release boat that looks quite good, see www.greenline33.com but frankly I'm too scared and at this point would rather leave the money in KIPGC earning a tidy 8.95% almost risk free.

Why did I go on this late afternoon Friday rant, oh yes, double dip, strap yourselves in, this GFC aint going to be over anytime soon in my opinion.

winner69

16-07-2010, 07:40 PM

Enumerate

16-07-2010, 08:40 PM

So, the Hubbards are calling for a Royal Commission of Inquiry, not a Judicial Review

http://tvnz.co.nz/business-news/allan-hubbard-calls-inquiry-3648920/video

In law, a Royal Commission is appointed by and responsible to the Crown and not the Governor-General in Council, and it can investigate anything (except for the purpose of determining whether or not a person has committed a crime).

From the Cabinet Manual: "Judicial review" is the review by a judge of the High Court of any exercise of, or non-exercise of, a decision-making power in order to determine whether or not the decision was lawful or valid.

The Royal Commission of Inquiry is a better choice ... it can have a wider terms of reference and would not simply focus on the "process" of the decision making. Also, the report goes to the Crown - not to the Governor-General in Council - it is a step up from the Cabinet and, I presume, would allow inspection of the Cabinet decision making process.

Good on ya Allan.

Time for everyone to write their MP. I think it is important to stir up a bit of noise - at the grass roots electorate level - that New Zealanders will not stand for this issue to be swept under the carpet. This is important - it is a practical step everyone can take to help Allan Hubbard.

Balance

16-07-2010, 08:59 PM

So, the Hubbards are calling for a Royal Commission of Inquiry, not a Judicial Review

http://tvnz.co.nz/business-news/allan-hubbard-calls-inquiry-3648920/video

In law, a Royal Commission is appointed by and responsible to the Crown and not the Governor-General in Council, and it can investigate anything (except for the purpose of determining whether or not a person has committed a crime).

From the Cabinet Manual: "Judicial review" is the review by a judge of the High Court of any exercise of, or non-exercise of, a decision-making power in order to determine whether or not the decision was lawful or valid.

The Royal Commission of Inquiry is a better choice ... it can have a wider terms of reference and would not simply focus on the "process" of the decision making. Also, the report goes to the Crown - not to the Governor-General in Council - it is a step up from the Cabinet and, I presume, would allow inspection of the Cabinet decision making process.

Good on ya Allan.

Time for everyone to write their MP. I think it is important to still up a bit of noise - at the grass roots electorate level - that New Zealanders will not stand for this issue to be swept under the carpet. This is important - it is a practical step everyone can take to help Allan Hubbard.

For putting hundreds of millions of taxpayers money at risk, YEAH RIGHT.

temuk

16-07-2010, 09:02 PM

One News had Allan and Jean on tonight .... at home doing what they do best .... keeping the journals and cash books up to date .... and yep Jean was using a pen but the books looked immaculate

But i thought the Stat Man had all the books .... or has Jean a funds management business on the side as well that the Stat Man hasn't caught on yo

Didn't see the cat ... hope he's coping

From what I have been told, I would find it hard to believe they would have all the books for Aorangi and all 7 trusts in the office
in George st.
This is propably the book the Stat Mgr is looking for!

winner69

16-07-2010, 09:06 PM

From what I have been told, I would find it hard to believe they would have all the books for Aorangi and all 7 trusts in the office
in George st.
This is propably the book the Stat Mgr is looking for!

I think you are to something there mate

THERE ARE TWO SETS OF BOOKS !!!!

and holy **** ... the Stat Man has got the wrong set ...... and the murkier all this becomes prob a Swiss bank account as well

winner69

16-07-2010, 09:13 PM

From what I have been told, I would find it hard to believe they would have all the books for Aorangi and all 7 trusts in the office
in George st.
This is propably the book the Stat Mgr is looking for!

Prob why they had to put Jean into Stat Man as well .... she isn't the innocent mother of the house .... she knows as much as Allan

Balance

16-07-2010, 09:17 PM

Prob why they had to put Jean into Stat Man as well .... she isn't the innocent mother of the house .... she knows as much as Allan

And the Cat?

Enumerate

16-07-2010, 09:29 PM

To all those interested ... here is a copy of the letter I intend to address to my MP. I'd appreciate any comments for improvement.

Dear Member of Parliament,

I am writing you with deep concern over the Order in Council to place Allan Hubbard and his wife Jean into Statutory Management as defined by the Corporations (Investigation and Management) Act 1989.

I have deep concerns that the advice, by the Securities Commission, to Minister Power to enact these singular and exceptional powers has failed on a number of levels. This is against a background of concern that any issue held by the Officials could have been prosecuted through the standard machinery of the Securities Act or the Companies Act.

I believe there is a duty to investigate and explain the full extent of the protection of the public interest as a basis for the Statutory Management recommendation. It has been over three weeks since the initiation of this singular and extreme power. I have read the first report of the Statutory Manager and it would appear the nature of the defense of the public interest has not been addressed. There are no specific charges recommended under the Securities Act or any other statue. I believe that both the Securities Commission and Minister Power have failed to demonstrate any compelling case. I believe that the Statutory Manager, after three weeks, with unprecedented rights of investigation, still cannot make a case for Mr. Hubbard and his wife to answer.

I believe the Securities Commission did not act fairly in the manner it arrived at the decision to recommend Statutory Management. Further, I believe that Securities Commission may have misled Minister Power in not having a Director, Simon Botherway, declare a significant conflict of interest before the the decision was taken.

I would like you to note that there is significant public anxiety over the exercise of the power of Statutory Management, without any justification of the defense of the public interest. The topic is actively and hotly debated in investment circles.

I believe that some investigation is required, of wide ranging scope to review the application of the Corporations (Investigation and Management) Act 1989 powers of Statutory Management.

Given the limited precedent of putting individuals into Statutory Management and the exceptional denial of basic rights this entails, I believe there are matters of law that require further investigation.

I believe that the actions and process of decision making within the Securities Commission requires review.

I believe the manner in which the Securities Commission handles conflicts of interest requires review.

As a constituent of your electorate, I ask that you support a Royal Commission of Inquiry into these events. The highly controversial nature of events and the questions of governance that may extend to Minister Powers lack of justification of the measure, mandate investigation by a Royal Commission of Inquiry. Further, I ask that the terms of reference for this review be wide enough to consider all the points of concern detailed above.

I look forward to your confirmation that these issues and this request will be a matter of your urgent attention.

Yours sincerely,

COLIN

16-07-2010, 11:10 PM

"One point I would like to make: Roger, I think it was, poured some chilly water on the worth of the $150m of assets that AH pumped into SCF. Those assets (Scales and Helicopter Lines) were all independently valued at the time, to the satisfaction of the Trustees and Treasury". Colin

Forsyth Barr, as previously mentioned tried for months to sell these assets on the open market or float them on the stockmarket. I understand there were more free flights on Helicopters dished out to the stockbroking community than I've had hot dinners this year. The point is they tried as hard as they could and couldn't sell them for cash after many months of effort. Of course Forsyth Barr still charged millions of dollars for their "expertise".

So what is surprising about that, in today's climate, Roger? How many IPO's have you seen on the NZX lately? I haven't noticed any. M & A activity? Same story (apart from the sale of Shell assets, which is a unique situation). Subsequent postings of yours would seem to indicate that you have a good understanding of the general economic malaise that has gripped the world and is proving quite stubborn to shake off. I don't see any sale of these major assets happening any time soon, and I would be surprised if the recent senior appointee to SCF, who has specific responsibility for managing the equity investments, sees his appointment as a short-term one. Forced sales of these assets would be a diabolical outcome of the Government's blunderbuss actions.

I agree with Enumerate's observations that Sandy Maier has been "cool, calm and collected" in his responses to the exceptionally challenging tasks now imposed by the Statutory Management intrusion. Other posters have quoted from the relative article in today's Press, in regard to debenture rollovers, etc., but I also think that the following excerpts should be highlighted:

"While the statutory management of Hubbard had hurt the finance company, Maier says a report from the statutory managers doesn't point to dishonesty or lack of integrity by Hubbard. 'I was heartened to see there was an absence of any comment like that,' Maier said." ..............."we don't really have anyone stepping up publicly and saying Allan's been naughty about this, that and the other." ........."there was nothing in the report to change my mind about Hubbard."

I have little doubt that the eager hit squad at the SFO will be doing their darnedest to try and construct a case against the Hubbards, no matter how trivial the matters that they might be able to eventually raise. The stakes are mighty high for them, and they are at real risk of getting ovine deposits all over their fresh young faces. Allan H, in tonight's interview on TVNZ, said something along the lines that the Head Sherang of the SFO personally headed up the hit squad and gave the clear impression that he thought he had finally landed the biggest crook in the game!

THREE OF THE SHORTEST BOOKS EVER TO BE WRITTEN:

1. Snakes of Antarctica.

2. The Australian Book of Etiquette.

3. Allan Hubbard: The Century's Greatest Fraudster.

peat

16-07-2010, 11:45 PM

I am starting to think that by now the Statutory Manager should have some sort of case together and that as Enumerate says the gravity of the action demands an explanation pretty quickly. Otherwise the business is too tainted even if they do eventually pack up and say 'Oh sorry, carry on then..."
Or if they need time to investigate they should give him his business back and work alongside so as to prevent more damage to his legitimate business (innocent until proven guilty.)
I tend to think there should be more of an indication given of what they are looking for as well. If they suspect fraud they should say so and lay a charge. If they're not confident enough of finding the information to carry that charge through into a successful conviction then they shouldnt have him in SM anymore

Alan3285

17-07-2010, 12:29 AM

Balance

17-07-2010, 12:43 AM

You have nailed the issue Peat.

AH is being treated as guilty until proven innocent.

It doesn't matter what the outcome is - that is just fundamentally wrong to any fair-minded person.

Alan.

You miss an important point - putting AH into SM means that he is already deemed a risk and 'guilty' in that sense. The case is being built against him - read the SM Report carefully.

Like it or not, that's how SM works and has worked in the past. No point you guys having a go at the SMs - they are appointed by the government. They are moving as fast as they can with the poor state of paper work by AH.

Even Sandy Maier (an ex-Statutory Manager) acknowledged that.

Excerpt : "Yesterday, Maier praised Grant Thornton for its timing and said people would be anxious for the next report due mid-August.

"It's good the report came out fairly soon. At least it's a start," Maier said."

Finally, let's remember who is putting at risk hundreds of millions of taxpayers' money through the mismanagement of SCF?

Alan3285

17-07-2010, 01:23 AM

You have nailed the issue Peat.

AH is being treated as guilty until proven innocent.

It doesn't matter what the outcome is - that is just fundamentally wrong to any fair-minded person.

Alan.

You miss an important point - putting AH into SM means that he is already deemed a risk and 'guilty' in that sense. The case is being built against him - read the SM Report carefully.

That's EXACTLY my point - he is being treated as guilty until proven innocent.

You might find that an acceptable form of justice, but I don't.

Like it or not, that's how SM works and has worked in the past. No point you guys having a go at the SMs - they are appointed by the government. They are moving as fast as they can with the poor state of paper work by AH.

Even Sandy Maier (an ex-Statutory Manager) acknowledged that.

Excerpt : "Yesterday, Maier praised Grant Thornton for its timing and said people would be anxious for the next report due mid-August.

"It's good the report came out fairly soon. At least it's a start," Maier said."

Finally, let's remember who is putting at risk hundreds of millions of taxpayers' money through the mismanagement of SCF?

Where did I have a go at the Statutory Managers?

Alan.

Enumerate

17-07-2010, 09:22 AM

Balance basically has one idea ... and it is wrong.

... let's remember who is putting at risk hundreds of millions of taxpayers' money through the mismanagement of SCF?

The government instituted the scheme, the government sets the standards for entry, the government demands payment.

SCF are staging a near miraculous recovery. They are focused, they are hard working, they have effective leadership and an appropriate plan.

The single greatest threat to SCF is the government's "own goal" in terms of the Hubbard statutory management.

All these points have be raised, discussed ... Balance is not really paying any attention.

He is happy with his one idea ... and it is wrong.

Balance

17-07-2010, 10:16 AM

Balance basically has one idea ... and it is wrong.

The government instituted the scheme, the government sets the standards for entry, the government demands payment.

SCF are staging a near miraculous recovery. They are focused, they are hard working, they have effective leadership and an appropriate plan.

The single greatest threat to SCF is the government's "own goal" in terms of the Hubbard statutory management.

All these points have be raised, discussed ... Balance is not really paying any attention.

He is happy with his one idea ... and it is wrong.

On the contrary - it is AH's very reckless and arrogant behavior of hugely upping the levels of related-party transactions (post the demise of most of the other finance companies) which brought to the market's attention how sick SCF really was.

Miraculous recovery? YEAH RIGHT!

Balance

17-07-2010, 10:21 AM

SM Report clearly states that Aorangi has advanced funds to AH's other entities - 12 July 2010.

Not so, says AH - 28 June 2010.

http://www.radionz.co.nz/news/stories/2010/06/28/12480acbc2c5

Who do I choose to believe?

Enumerate

17-07-2010, 10:29 AM

Not really a "smoking gun", Balance.

More like a damp water pistol.

winner69

17-07-2010, 10:31 AM

That report says ..... He told Radio New Zealand's business editor he "never borrowed" and it was "always kosher

Seems a rather odd statement .... if he never 'borrowed' why was it 'always kosher' ...... maybe he did things like transfer money or something that was 'always kosher'

Sadly in spite of the rights and wrongs of Stat Man I get the feeling that affairs just got too much for Allan and Jean to handle and when the money go round stopped a few months ago (when he was effectivelly fired by Sandy) a bit of desperation kicked in and his long held principles started to waver just slightly

winner69

17-07-2010, 10:36 AM

Bit mean of Gaynor to describe the workings of Aorangi, Allan, Jean etc like this .... but then again I did see a box on Jeans table on TV last night

Gaynor in NZ Herald

One of the best ways to think of Hubbard's business activities is in terms of all his assets are held in different boxes. One box contains South Canterbury Finance, another Aorangi Securities, one holds Hubbard Management Funds and the remainder holds all his other activities.

Assets and liabilities are switched from one box to another without proper accounting records and appropriate security.

Assets in the last box, in the form of 64 per cent of Scales Corporation and 100 per cent Helicopter (NZ), were transferred to South Canterbury Finance earlier this year and there are indications additional assets may have been transferred between the boxes.

Investors in the South Canterbury region are convinced that there are sufficient assets in all the boxes to meet Hubbard's commitments and liabilities. Financial institutions are less convinced, with George Kerr's Torchlight Fund obtaining additional security over its $100 million loan to South Canterbury Finance and a number of major banks seeking more collateral on loans to Hubbard and his related parties.

Statutory management has blown the whistle on Hubbard's asset- swapping activities and Grant Thornton is now trying to count all the assets and liabilities in Aorangi Securities, Hubbard Management Funds, Mr and Mrs Hubbard and associated trust entities. Investors will be hoping that there are sufficient net assets in these entities to meet all commitments. The next statutory managers' report, which is due in mid-August, should answer this question.

Balance

17-07-2010, 10:37 AM

Not really a "smoking gun", Balance.

More like a damp water pistol.

LOL - AH just shot himself - double barrel.

Points to how he sees himself - above everyone else and normal rules do not apply to him.

Damp water pistol. YEAH RIGHT.

winner69

17-07-2010, 10:42 AM

Roger .... seems to echo your sentiments. No doubt some will say that the Govt appointing a Stat Man to SCF is to blame for hard times down south.

Another story in the paper this morning was saying that farms are prob overvalued by 10% or more .... not good news for lenders to the primary industries is it

South Island's economy off the boil
http://www.stuff.co.nz/business/industries/3928349/South-Islands-economy-off-the-boil

Enumerate

17-07-2010, 10:57 AM

Balance

17-07-2010, 11:01 AM

And here we have Winner on another "fishing expedition".

You guys are getting more shrill as you become more desperate to nail something on Allan Hubbard.

You have long departed from the path of rational discussion based on evidence and fact.

Might I respectfully suggest that the commentatory dialogue on one of Bernard's tabloid articles, over on interest.co.nz, is the best place for you contributions.

YEAH RIGHT.

AH never borrowed from Aorangi. If he did, it's all kosher.

Try explaining his statement, Enumerate and we will continue the discussion. No point you stooping down to personal insults - you should be better than that if you want to be AH's champion.

Enumerate

17-07-2010, 11:20 AM

Try explaining his statement, Enumerate and we will continue the discussion.

Where are the facts?

Clearly, the SFO has a position on all of this. However, why is this basic "fact collecting" occurring under an order of Statutory Management? The Statutory Manager has presented little more than hearsay - heavily qualified with "mays" or " appears".

It is also interesting to note that no formal charges have been laid.

I don't have a copy of Allan Hubbard's journals. How can I respond to statements you make when you yourself have no evidence.

You are, at best, amusing yourself with idle speculation.

The matters that we can comment on - such as questions as to "why this process is being conducted under statutory management?" and "surely these matters could be dealt with under the Securities Act or the Companies Act?" - your contributions are, frankly, less than insightful.

Balance

17-07-2010, 11:26 AM

Where are the facts?

Clearly, the SFO has a position on all of this. However, why is this basic "fact collecting" occurring under an order of Statutory Management? The Statutory Manager has presented little more than hearsay - heavily qualified with "mays" or " appears".

It is also interesting to note that no formal charges have been laid.

I don't have a copy of Allan Hubbard's journals. How can I respond to statements you make when you yourself have no evidence.

You are, at best, amusing yourself with idle speculation.

The matters that we can comment on - such as questions as to "why this process is being conducted under statutory management?" and "surely these matters could be dealt with under the Securities Act or the Companies Act?" - your contributions are, frankly, less than insightful.

Don't try the old trick and stunt of deflecting attention of what AH has done (as now verified - clear evidence is the operative word - by the SM) - borrowing money from the public and then, lending the money to himself via related entities. He DENIES it. Then, tries to defend it as kosher.

Look at the huge increase in related party transactions in 2008/2009 in SCF - AH would have you believe it never happened as well.

SM may be right, it may be wrong - that's a separate argument.

Enumerate

17-07-2010, 11:37 AM

He DENIES it. Then, tries to defend it as kosher.

I think, here, you are struggling with the English language.

The use of the word "kosher" does not, in this case, apply to the verb - lending money - it applies to the noun - the accounts.

You are building castles in the air - complete with moat and dungeon - in which you cast Allan Hubbard - and throw away the key.

An unusual form of idle amusement - but idle amusement none the less. I for one entertain the hope that it will become private idle amusement.

Balance

17-07-2010, 11:41 AM

I think, here, you are struggling with the English language.

The use of the word "kosher" does not, in this case, apply to the verb - lending money - it applies to the noun - the accounts.

You are building castles in the air - complete with moat and dungeon - in which you cast Allan Hubbard - and throw away the key.

An unusual form of idle amusement - but idle amusement none the less. I for one entertain the hope that it will become private idle amusement.

Please do not try the old Bill Clinton trick of arguing the word - it's the substance behind the word. It's demeaning to yourself.

AH denies borrowing money from Aorangi. The SM Report points to clear evidence. Question to answer which you try to avoid - who would you believe?

Come on, Enumerate - it's a very simple question.

It only becomes hard when you are busy trying to avoid answering it.

Enumerate

17-07-2010, 11:54 AM

The SM Report points to clear evidence.

Cite your evidence.

If all you can produce is hearsay ... then I am afraid that your credibility will suffer. [HINT: the fact no charges have been laid says more about the state of the "evidence" than you are willing to acknowledge]

Balance

17-07-2010, 12:11 PM

Cite your evidence.

If all you can produce is hearsay ... then I am afraid that your credibility will suffer. [HINT: the fact no charges have been laid says more about the state of the "evidence" than you are willing to acknowledge]

Ducking and diving - you are proving to be a real clone of Bill Clinton, aren't you?

SM Report states : ""To date we have seen clear evidence that there is an intricate and complex relationship between the affairs of Aorangi, Te Tua Trust and the affairs of Mr and Mrs Hubbard and other associated entities." ""The level of investments in (including loans to) businesses associated with Mr and Mrs Hubbard without registered security is of concern. Most of these investments are in or to farm businesses that have loans from banks secured by a mortgage over the assets of the farm. This could mean, in the case of direct investments in those farm businesses, that Aorangi would only be paid after the creditors of those businesses were fully paid."

Now, are you ready, my slippery friend, to answer the question?

peat

17-07-2010, 12:19 PM

Balance

17-07-2010, 12:27 PM

Balance I acknowledge your previous posts point
So why are there no charges laid yet?
They only need one 'illegal event ' or one 'piece of evidence' to lay a charge so why the delay. They dont need to collect ALL the evidence before putting the line in the legal sand showing the public that their concerns are justified.

That's like asking the Police during a complex investigation why they have not laid charges when they issue initial findings to the public. They are building up the case.

That's how SM works. Like I have written, I have seen it in action and in some cases, it took a while for the charges to be laid - remember Equiticorp?

I am sympathetic to AH situation - SM is a crude instrument to use and it should entail judicial over-view before it is applied. On that, we are all agreed.

But SM is what we are dealing with - it is tiresome to read the use of SM being used as a reason to excuse AH from his actions.

The truth will out.

Enumerate

17-07-2010, 12:35 PM

Sounds bad, but what does it all mean?

"To date we have seen clear evidence that there is an intricate and complex relationship between the affairs of Aorangi, Te Tua Trust and the affairs of Mr and Mrs Hubbard and other associated entities."

Intricate and complex is NOT fraudulent. It is, actually ... an opinion; an admission that the party is not coping well in understanding the situation.

Hence this statement, using loaded language like "we have seen clear evidence", is actually evidence of ... nothing, nothing at all.

"The level of investments in (including loans to) businesses associated with Mr and Mrs Hubbard without registered security is of concern."

Here we have a ... concern. No fraud ... a concern.

Most of these investments are in or to farm businesses that have loans from banks secured by a mortgage over the assets of the farm. This could mean, in the case of direct investments in those farm businesses, that Aorangi would only be paid after the creditors of those businesses were fully paid."

Here we have a statement on security qualified by a "could mean". This is NOT evidence of fraud. This is a conjecture ... a hypothetical. This is evidence of nothing at all, really.

You state that I am "Clintonesque" that I am "slippery". In fact I am nothing more than purely logical. It is you who is evading the truth. Indeed, you pay so little heed to the truth of the matter and to basic justice for Mr Hubbard that your conduct should be condemned as deceptive (or perhaps, more kindly, delusional).

I would also reserve some censure for the Statutory Manager. Use of loaded language, in a critical public report, is unprofessional. Perhaps the Statutory Manager feels the need to please his new masters? Whatever the case, his professionalism has been demonstrated to be less than the acceptable mark.

There are wider issues - like why the report did not cover off the statement of the defense of the public interest.

All this will be grist for the mill at the Royal Commission of Inquiry.

Enumerate

17-07-2010, 12:50 PM

That's like asking the Police during a complex investigation why they have not laid charges when they issue initial findings to the public. They are building up the case.

So, Statutory Management is a form of detention and suspension of rights in an investigation.

You claim the police can detain a suspect and obtain a warrant for any investigative power they care to imagine; all the while having an indeterminate amount of time (in excess of three weeks, at least) to investigate and come to their conclusions - before any charges are laid.

Balance ... you are simply a complete idiot.

You know nothing about our system of justice. Frankly, I have no more time to waste on you.

Balance

17-07-2010, 12:53 PM

Enumerate, Bill Clinton will be proud of you but you are not getting off that easy. It's a very simple question.

Who do you believe? AH or the Statutory Manager?

State your position and be judged accordingly.

Here's what AH stated (and recoded for posterity by Radio NZ) :

Excerpt : "Mr Hubbard said that's not the case, as the funds were his in the first place. He says he then had them transferred to the trusts ahead of Aorangi issuing a prospectus.
He told Radio New Zealand's business editor he "never borrowed" and it was "always kosher".

Hubbard denies using Aorangi funds
Updated at 11:51pm on 28 June 2010
Businessman Allan Hubbard is adamant he did not borrow from Aorangi Securities to invest other entities.
The Government has placed Mr Hubbard and his wife, Margaret, under statutory management, along with Aorangi Securities and seven trusts.
Aorangi Securities is also under investigation by the Serious Fraud Office, following a Companies Office report that found irregularities among Aorangi's $134 million in loans.
Some of these relate to the alleged use of Aorangi funds to invest in the trusts.
Mr Hubbard said that's not the case, as the funds were his in the first place. He says he then had them transferred to the trusts ahead of Aorangi issuing a prospectus.
He told Radio New Zealand's business editor he "never borrowed" and it was "always kosher".
Copyright © 2010 Radio New Zealand

Balance

17-07-2010, 12:57 PM

So, Statutory Management is a form of detention and suspension of rights in an investigation.

You claim the police can detain a suspect and obtain a warrant for any investigative power they care to imagine; all the while having an indeterminate amount of time (in excess of three weeks, at least) to investigate and come to their conclusions - before any charges are laid.

Balance ... you are simply a complete idiot.

You know nothing about our system of justice. Frankly, I have no more time to waste on you.

LOL - ask him to answer a simple question and he throws a tantrum, picks up a kindergarten ball and sulks.

Read my reply carefully - I said that's how SM works. Did not say I like it or that it is the same as how the Police operate, can and should operate?

You have lost, Enumerate - and you know it.

What kind of a person refuses to answer an simple question?

Answer - When the truth stares him in the face, is inconvenient and contradictory to what he wants to believe.

Amen.

Beagle

17-07-2010, 01:30 PM

"
So what is surprising about that, in today's climate, Roger? How many IPO's have you seen on the NZX lately? I haven't noticed any. M & A activity? Same story (apart from the sale of Shell assets, which is a unique situation). Subsequent postings of yours would seem to indicate that you have a good understanding of the general economic malaise that has gripped the world and is proving quite stubborn to shake off. I don't see any sale of these major assets happening any time soon, and I would be surprised if the recent senior appointee to SCF, who has specific responsibility for managing the equity investments, sees his appointment as a short-term one. Forced sales of these assets would be a diabolical outcome of the Government's blunderbuss actions". COLIN

Fair enough, however my point remains that those assets were introduced at theoretical paper valuations, they are not real cash equity as seems to have been widely misunderstood in the market. S & P understand this and have made specific mention of such in one of their credit reports, the rest of the market seems content to think it was just the same as introducing $150 million in cash, which clearly its not as has been so vividly demonstrated by ALF revaluing down the so called assets introduced through the Hanover Con.

I continue to be concerned by the fact that we have heard absolutly nothing from SCF regarding the current operational performance of either Scales or Helicopers N.Z. - surely they're not hiding something ? Hello, have they ever heard of continous disclosure rules ?

Balance, your doing a fine job again today of maintaining same, whilst those around you seems ready to fall off their hobby horses. There's just no question whatsoever in my mind that at the very least AH through Aorangi is guilty of very serioius breeches of the Securities Act. Of course some on here would say that all 408 investors were habitual or professional investors and as such Aorangi is exempt.
Here's what I would say to those Ostrich's with their heads in the sand.

Clearly because there was a formal complaint at the very least one person genuinely believes that they should have seen all the docummentation provided by an investment statement and prospectus and it only takes one party to have a valid claim under the Securities Act for Aorangi as a whole to be trading in breech of the Act and be compelled to repay ALL investors forthwith.....Enumerate I can quote you the relevant section of the Act if you would like me to look it up, I have a copy here and spent $35,000 on legal fees a couple of years ago with Securities Lawyers so lets assume I'm correct on this one shall we ?

So AH has a prima facie case to answer. If it turns out that there's a whole pile of related party transactions and the "business model" if you can call it that, doesn't work resulting in significant losses to Aorangi Investors, The Securities Act says the directors of Aorangi are personally liable, so how's AH going to meet any shortfall, which could be quite significant by the sound of the interim SM report ?

Balance

17-07-2010, 01:41 PM

And to reinforce your point, Roger, about related party transactions - here's how SCF has been used in the last 2 years as regards related party transactions (rpt) :

On 30 June 2007, rpt were $69.5m, and shf was $209.8m.
By 30 December 2008 as the GFC bit hard, rpt was $170.2m vs shf of $250.5m.
By 30 December 2009, rpt was $295.7m vs shf of $48m (yes, $48m).

It's so blatant and arrogant - defies explanation how the independent directors and management of SCF could have approved and endorsed such transactions.

Who is kidding who?

This is my beef - that SCF was using the govt guarantee to raise money and an increasing amount of the money was being funneled to related parties.

Some of the posters here might like it and endorse it - I do not and it was what set off the alarm bells for me.

Alan3285

17-07-2010, 01:42 PM

I am sympathetic to AH situation - SM is a crude instrument to use and it should entail judicial over-view before it is applied. On that, we are all agreed.

I am relieved to hear it.

That is the crux of the issue for me - that no one shoud be subject to the arbitary seizure of their assets without oversight of the courts, or charges being laid in line with legislation (Securities Act in this case probably).

Alan.

Beagle

17-07-2010, 01:48 PM

And to reinforce your point, Roger, about related party transactions - here's how SCF has been used in the last 2 years as regards related party transactions (rpt) :

On 30 June 2007, rpt were $69.5m, and shf was $209.8m.
By 30 December 2008 as the GFC bit hard, rpt was $170.2m vs shf of $250.5m.
By 30 December 2009, rpt was $295.7m vs shf of $48m (yes, $48m).

It's so blatant and arrogance - defies explanation how the independent directors and management of SCF could have approved and endorsed such transactions.

Who is kidding how?

I couldn't agree more. Its clear that AH has been scrambling to maintain his extremly high level's of leverage since the GFC hit and has become increasing desperate to hold his collection of assets together.

A real Magpie.

Regarding the Cat....My favourite Dog, Skippy, a Sidney Silky, (similar to an Australian Terrier in looks), got out of the front door the other day when the storm blew it open. He was missing for several hours and when we eventually found him he had a huge grin of satisfaction on his face. I wonder if that could have something to do with a certain cat ?

winner69

17-07-2010, 03:15 PM

If I was an Aorangi investor I'd be miighty pleased they have the Stat Man on their side .... if not for him I fear all their money might have disappeared into thin air ..... they should be grateful .... might miss a few interest payments but might get most of their money back

Gaynor overlooked the 'cash box' in his little story this morning .... I think the cash box is empty

winner69

17-07-2010, 03:36 PM

7
Might I respectfully suggest that the commentatory dialogue on one of Bernard's tabloid articles, over on interest.co.nz, is the best place for you contributions.

Thanks for pointing me in that direction Emunerate

Really enjoyed his latest article .... and reading some of the comments .... the anti-Bernard ones and the pro omes as well .... quite balanced really

One of readers comments prob sums up what really is happening ... this from a guy called Richard

Great article Bernard,

I have some personal experience from my parents investing intially with SCF, then with Aorangi Securities.

My parents invested in excess of seven figures in Aorangi. After returning from my OE in the UK I asked them what Aorangi was and what it invested in. The answer was they didn't know. I asked where the investment prospectus or statement was. Again they didn't know.

They invested in Aorangi due to Hubbard suggesting they do so. They invested more than $1million into a company they did not understand what it invested in other than "Hubbard had been investing for a long time and has a lot of money, he obviously knows what he is doing".

I believe there were no ongoing statements of balance and fund performance other than the regular payments. As the payments were returning a good percentage return no questions were asked (a la the Madoff scenario).

Like you I believe Hubbard thrives on the VW image. "He is obviously not a crook, look at the old beat up car he drives". If Hubbard had been a flashy suit how succesful would he have been in Timaru?

Luckily I convinced my parents to ditch Hubbard earlier this year. No doubt they are sleeping easier because of that.

Richard

For those interested

http://www.interest.co.nz/opinion/opinion-when-our-fear-corporate-way-and-our-love-small-business-man-dangerous-thing

But shoeboxes and #8 fencing wire getting a bit depressing

Arthur

17-07-2010, 07:30 PM

Are there related party loans - you bet. Thats why most investors put their money in - to invest alongside somebody who was a successful investor. Not only that he had skin in the game (real skin, unlike most of the failed Finance Companies the Securities Commission approved the reams of paperwork for). Even our Stat mates "shock horror expose" suggests equity of over $30million before the investors loose any money. A few overly quick sales of assets should help erode that. It will be interesting to see if Landcorp is as keen to bid as it was for the Crafer farms. I suspect that the no interest loans were made from the equity, not the investors funds.

Enumerate

17-07-2010, 08:16 PM

Are there related party loans - you bet. Thats why most investors put their money in - to invest alongside somebody who was a successful investor. Not only that he had skin in the game (real skin, unlike most of the failed Finance Companies the Securities Commission approved the reams of paperwork for).

Very good point.

Thinking along these lines, what does all this say about the government administration of the Retail Deposit Guarantee scheme - after all, these companies needed a credit rating and inspection of their accounts by Treasury. They seem to be falling over at a high rate. So, they swoop on a company that is actually solvent; seemingly doing what investors want.

Enumerate

17-07-2010, 08:41 PM

I have to fill this up with at least 10 letters

Alan3285

18-07-2010, 10:47 PM

I have to fill this up with at least 10 letters

Have they driven you over the edge??

Yours in mild concern,

Alan.

Enumerate

19-07-2010, 09:48 AM

Yours in mild concern,

I discovered that you cannot delete messages ... in fact, you must submit a message with at least 10 characters. So, I was fresh out of inspiration ...

Beagle

19-07-2010, 09:49 AM

Have they driven you over the edge??

Yours in mild concern,

Alan.

Good morning Gents,

Perhaps we should take it easy on Enumerate this week, maybe the pressure is starting to tell.

Okay I just spotted your explanation of sorts Enumerate, all the same I better do some real work for a day or two.

minimoke

19-07-2010, 10:02 AM

A question I’ve been pondering is “why would AH put $40m of his “own” money into Aorangi?”. Since we don’t have the details, and at the risk of be flamed off these boards I’m going to hypothesise for a moment.

Say for a moment you have access to a group of “trusted” people – or more specifically these people trust you. It might be they trust you because of your religious affiliations, your “social” standing; or your perceived profile in the wider community.

Now lets say you have “won over” influencers in these groups. These people might be people who have benefitted from you in one way or another or perhaps seen how you have benefited others. And these people now go out and speak good things about you.

Say you reckon you can help people make good money from their investment with you. In fact you’re pretty well ready to guarantee no-one will loose a thing if they put their money with you.

And as a bit of icing on top – how about if you say a bit of your profits go off to charities or trusts who do good things.

Who could meet such criteria?

Well, there’s Steven Pokere, clean living ex All Black, gifted rugby player and devout church leader. He took peoples money and promised to put it into overseas investments, principle guaranteed – but the money actually went into high risk investments. $3.9m fraud equals 2 ½ years in jail.

Or Donald Allen. Minister, preacher and motivational speaker. $8.5m in false promises and 6 ½ years in jail.

Or do we see any similarity between Tauranga and Timaru. There’s a certain population density – but more importantly there is wealth. There’s also loads of small business. That’s why the Bay was targeted by Affinity scammers.

How about an investment banker. Graeme Rutherford was even known by Don Brash and he took $7m from friends and associates.

And what about going into Statutory Management. Well - there’s Donald Rea. His operations and himself personally were put into Stat Man after an urgent meeting with the Prime Minister – and he sought a Judicial review of that decision. He ran private placement schemes and relied on word of mouth. He ran a tax consultancy business. He promised investors the money would go into educational, health and humanitarian projects. He lured wealthy farmers and people who were close to retirement and people who wanted their money invested in charities. He managed to pick up $29m over 3 – 4 years. New money helped fund the early investors. One investor gave him $800k. He maintained, till his death that his investment fund was solvent. Investor returns went on continuously – until the SFO raided the business under Stat Man. Rea took the line that people should continue to support him because he was being persecuted by IRD and the SFO – he reckoned sit tight and the money would come. . The Statutory Managers managed to get some money back – but their work was hampered by many investors who had continued faith in Rea and held public meetings saying “hold tight. And where did the money go. Some of it went to pay investors their interest (so their principle was being eroded) and investigators found that $18m went into Trusts related to the Rea family. His wife, was involved in keeping the paper work. Punters got $0.31 back.

So back to my original question – why would AH put his own money into Aorangi?. (and I accept that we don’t have an assurance that the $40m actually was his own money since we know that AH is an expert in Related Party Transactions – but perhaps we should put that thought aside for a moment). Perhaps it was to give the Trust added credibility, perhaps it was there to fund investors. Perhaps it was there to maintain trust.

Beagle

19-07-2010, 10:10 AM

OMG Minimoke, what a post !! You just lobbed a massive hand grenade into Enumerate's bunker, crikey, I hope he remembered to put his flak jacket on this morning.

Enumerate

19-07-2010, 10:23 AM

Balance

19-07-2010, 10:27 AM

OMG Minimoke, what a post !! You just lobbed a massive hand grenade into Enumerate's bunker, crikey, I hope he remembered to put his flak jacket on this morning.

Agreed.

But Enumerate will just come up with his usual bs of questioning the SM and interpretation of words and phrases. Cannot and will not answer a simple question - what does that tell us? Head in the sand comes to mind?

Meanwhile, I see that NBR carries an opinion piece from David Hillary which pretty much says that a reading between the lines of the SM Report says that AH is guilty of serious breaches of the Securities legislation? David is risking serious defamation if he is proven wrong - but on the evidence to date, he is prepared to make that call.

BTW - remember what AH said when SM was invoked? If John Key was in NZ, he would not have endorsed it? John Key came out next day and refuted that immediately.

Now we have AH stating that he did not borrow from Aorangi and the SM Report says he does. Who would you believe?

Beagle

19-07-2010, 11:10 AM

Now we have AH stating that he did not borrow from Aorangi and the SM Report says he does. Who would you believe?
Balance

You know which side of the ledger I come down on. I've got a lot of time for David Hillary's analysis as he spends not inconsiderable amounts of his own running detailed analysis of the situation, and he's certainly not without a good degree of professional skill.
Was his article in Friday's print copy or the online NBR ?

minimoke

19-07-2010, 11:48 AM

Minimoke's argument fails due to the most basic of flaws of logic.

You can setup an infinite number of "staw men" - and knock them all down. In fact, this has the formal name - "the fallacy of the straw man".

This does not prove anything about Allan Hubbard and Aorangi. It is another trap for those of weak mind and nervous disposition.
Probably the kind of response we might have expected back in Donald Rea's day. And it doesn't help my thoughts on what AH is doing investing his own money in Aorangi especially when he no doubt had many other investment vehicles which could have met his personal aspirations.

winner69

19-07-2010, 11:52 AM

Probably the kind of response we might have expected back in Donald Rea's day. And it doesn't help my thoughts on what AH is doing investing his own money in Aorangi especially when he no doubt had many other investment vehicles which could have met his personal aspirations.

Does make you wonder eh .... just as the transfer of assets into recently formed 'charitable' trusts isn't a good look either

If I was an Aorangi investor I would be pleased I have the Stat Man on my side

Enumerate

19-07-2010, 12:06 PM

I've got a lot of time for David Hillary's analysis as he spends not inconsiderable amounts of his own running detailed analysis of the situation, and he's certainly not without a good degree of professional skill.

I see you like you hypocrisy served heavily sweetened with delusion.

Roger, you have the mentality of a policeman. However, you cling to his conclusions because they support your position. This is why policemen make terrible lawyers - they think the law is all "procedure" and they do not have the mental agility to argue from first principles. You often find them as property lawyers - where procedure counts and there is nothing new under the sun. Putting this aside ...

Hillary, has been completely discredited, by me, on this thread. His assessment of the SCF accounts, in particular, I have dealt with suggesting that he does not understand the dynamics of the SCF reorganisation and how this is effecting the balance sheet. His discussion on capital adequacy is seriously flawed - again, no understanding of the restructuring and how it will reshape the business. His view on further asset impairments is simply naive.

I am sure that Hillary will perform to his usual low standard in his "analysis" of the Statutory Manager's report. (Given that the parts Balance produced are easily dismissed as "evidence").

The final objection is his basic hypocrisy. He is a self proclaimed defender of natural justice and yet apparently lacks the mental capacity to really understand what this means. Further, his article defending the Statutory Management of Allan Hubbard is a pure grotesque. The twistings and turnings of verbiage - to justify that "a" is not "a", it is in fact "b", in the right light and with a strong wind behind you - is something to behold.

To David Hillary's tortured words - I have just one: "hypocrite".

To you Roger, this is probably meaningless. You have your prima facie case (with exactly what you use as evidence, I am not sure). Like a policeman motivating by "winning", you will not let it go until charges are laid. David Hillary is a wonderful ally, for you - here is someone prepared to bear false witness in the court of public opinion.

My objection to all of this is pretty fundamental.

The King James says it best in Exodus 20:16, "Thou shalt not bear false witness against thy neighbor"

evilroyrule

19-07-2010, 12:10 PM

dude, we know each side of the argument. lets see what plays out. from where i kneel, some objectivity from both camps wld be welcomed.

minimoke

19-07-2010, 12:16 PM

Now we have AH stating that he did not borrow from Aorangi and the SM Report says he does.
We also now know that there are at least 60 people of modest means who are dependent on the income from Aorangi. So they probably aren't rich nor experienced investors - so probably due a prospectus

minimoke

19-07-2010, 12:37 PM

For a 22 minute interview heres the TV3 version. http://www.3news.co.nz/Allan-Hubbard-calls-for-inquiry-into-SFO---full-interview/tabid/369/articleID/166190/Default.aspx

Balance

19-07-2010, 12:59 PM

We also now know that there are at least 60 people of modest means who are dependent on the income from Aorangi. So they probably aren't rich nor experienced investors - so probably due a prospectus

Good point.

I am surprised that AH's lawyers are not advising him to stop shooting himself in the foot. Maybe they know that there is no case that can be successfully brought for a judicial review?

Meanwhile, our local Bill Clinton Enumerate continues to duck and dive - hugely amusing. Imagine him fronting up for AH? Credibility = zero.

Beagle

19-07-2010, 01:10 PM

Enumerate, For those of us with jobs to do, its pretty hard to keep up notwithstanding and with respect, I think those on here including myself have got the gist of your argument and for that matter mine.

The Securities Act is quite clear and there's no reasonable question Aorangi are in breech of it, hence we have a prima facie case against AH more than worthy of a full investigation. Even if you said there was a fifty fifty chance of each of the 408 investors being exempt under one of the provisions thereof, (habitual, professional, more than $2 million dollars of investments) the odds that all 408 investors would be exampt are 50% to the power of 408.

My calculator doesn't have enough decimal places to work out the almost infintly small odds that Aorangi are in compliance with the Act, and clearly at least one party, as mentioned before believes they have been wronged as why else would they complain to the Securities Commission ?

Clearly you believe that a person of AH's standing is above the law and if I'm keen on promoters of investment scheme's complying with the law and if that makes me some sort of policeman in your eye's then so be it.

I am not bearing false witness, I am merely outling the Securities Laws as I see them, and in case you've forgotten I've had intensive involvement with this area of the law as a victim of such a scheme before, and have had one of N.Z. finest Securities lawyers investigate my families case and extricate ourselves from such a scheme at an all up cost to our family of running close to $100,000, not to mention all my time and the extremly stressful process involved.

Some of those 408 people are victims in this process, of course in your mind its all the SM's fault, I think you've made that abundently clear.

Balance

19-07-2010, 01:18 PM

Enumerate

19-07-2010, 01:25 PM

My calculator doesn't have enough decimal places to work out the almost infintly small odds that Aorangi are in compliance with the Act, and clearly at least one party, as mentioned before believes they have been wronged as why else would they complain to the Securities Commission ?

Roger, maybe this highlights your main problem:

To work out if Aorangi is in compliance with the Securities Act ... you don't use a calculator.

We are also well aware of Simon Botherway's main problem:

To work out if Aorangi is in compliance with the Securities Act ... you don't use statutory management.

If Aorangi investors are your primary concern (though somehow, I really doubt this) - I am prepared to contribute assets to a fund that will pay these investors out at the amount they contributed + 3% per year they were in the fund - less any payments they received from the fund.

I wish I had significant funds in Aorangi - which explains why I consider my offer to underwrite the "security" of these investors to be less than altruistic.

Balance

19-07-2010, 01:40 PM

For the benefit of those who have taken their heads out of the sand.

Who do you believe? AH or the Statutory Manager?

State your position and be judged accordingly.

Here's what AH stated (and recorded for posterity by Radio NZ) :

Excerpt : "Mr Hubbard said that's not the case, as the funds were his in the first place. He says he then had them transferred to the trusts ahead of Aorangi issuing a prospectus.
He told Radio New Zealand's business editor he "never borrowed" and it was "always kosher".

Hubbard denies using Aorangi funds
Updated at 11:51pm on 28 June 2010
Businessman Allan Hubbard is adamant he did not borrow from Aorangi Securities to invest other entities.
The Government has placed Mr Hubbard and his wife, Margaret, under statutory management, along with Aorangi Securities and seven trusts.
Aorangi Securities is also under investigation by the Serious Fraud Office, following a Companies Office report that found irregularities among Aorangi's $134 million in loans.
Some of these relate to the alleged use of Aorangi funds to invest in the trusts.
Mr Hubbard said that's not the case, as the funds were his in the first place. He says he then had them transferred to the trusts ahead of Aorangi issuing a prospectus.
He told Radio New Zealand's business editor he "never borrowed" and it was "always kosher".
Copyright © 2010 Radio New Zealand

SM Report states : ""To date we have seen clear evidence that there is an intricate and complex relationship between the affairs of Aorangi, Te Tua Trust and the affairs of Mr and Mrs Hubbard and other associated entities." ""The level of investments in (including loans to) businesses associated with Mr and Mrs Hubbard without registered security is of concern. Most of these investments are in or to farm businesses that have loans from banks secured by a mortgage over the assets of the farm. This could mean, in the case of direct investments in those farm businesses, that Aorangi would only be paid after the creditors of those businesses were fully paid."

Enumerate

19-07-2010, 01:55 PM

Who do you believe? AH or the Statutory Manager?

State your position and be judged accordingly.

Balance, if we had moderation on this thread you would be banned.

We have discussed and dismissed each of the elements of your "argument". You either cannot or refuse to understand that by simply repeating things over and over - your argument does not improve.

On top of this ... you choose to "taunt" me with the phrase that I am "Clintonesque". (I am a bit confused about this - are you saying that I am "presidential". That can't be it. Maybe that I would make a wonderful Secretary of State. No, probably not. Anyway - I have a feeling that you will offer a much fuller explanation in due course).

Here is a novel suggestion. Why don't you go back to the postings that dealt with your assertions and put a counter argument that deals with the criticism. Remember, simply repeating your assertion is not an argument. Ignoring a complete rebuttal is not a proper tactic. Issuing endless "taunts" is not how grown ups debate.

Silverlight

19-07-2010, 01:57 PM

Questions:

If Aorangi or Hubbard Management Funds are found to be in breach of the Act the fines are up to $500,000 for Mr and Mrs Hubbard?

Then up $5m for Aorangi & HMF for each breach?

If you have just 10 investors of the 400 odd have invested have not received a prospectus, does this mean up to $50m in fines for Aorangi & HMF. Which in turn are owned by Mr and Mrs Hubbard, they will have to pay this amount.

Does this then impact on South Canterbury as a business if Mr and Mrs Hubbard no longer own it, as SCF is sold off as a going concern?

How does then impact the listed debt?

Opinion:

Pimie facie it looks if Aorangi has breached the Securities Act, however I think Mr Hubbard comes across very much like a modern day Jimmy Stewart (George Bailey), where the laws of the land have been updated and amended around him, and he now finds out that his non compliance may cost dearly.

I think overarching this is a push from the Securities Commission et al (Diplock), to make themselves look good at catching white collar criminals before they get repleced at the end of this year by the new Financial Markets Authority (FMA), as they have been too lazy for the last 15 years anyway, and all have to re-apply for their jobs.

We have never prosecuted anyone for Insider Trading though the courts or Market manipulation, 1 case, in 20 years, tranzrail was settled.

Enumerate

19-07-2010, 02:09 PM

If Aorangi or Hubbard Management Funds are found to be in breach of the Act the fines are up to $500,000 for Mr and Mrs Hubbard?

Then up $5m for Aorangi & HMF for each breach?

I wonder how the courts would deal with this?

To defend the Hubbards, clearly their position would be that Statutory Management gave the Securities Commission unprecedented powers of investigation outside the relevant Act. If there were fundamental questions of the legality of Statutory Management, as applied to the Hubbard's case - then any "evidence" gathered under these powers would be inadmissible.

The Crown, in bringing a section 2 case under the Securities Act, would end up defending its own actions - in a rather public arena.

I think there is much scope for debate on the SFO action. However, I will follow Winner69's lead on this.

Alan3285

19-07-2010, 02:15 PM

Questions:Does this then impact on South Canterbury as a business if Mr and Mrs Hubbard no longer own it, as SCF is sold off as a going concern?

How does then impact the listed debt?

In general, the affairs of the (ultimate) shareholder(s) of SCF wont have any direct impact on SCF itself.

However, to the extent that SCF owes or is owed any amounts to / from its shareholders or their other related parties, then there could be some impact.

Also, the abilty of the shareholder(s) to 'stand behind' SCF might be impaired.

Opinion:

Pimie facie it looks if Aorangi has breached the Securities Act, however I think Mr Hubbard comes across very much like a modern day Jimmy Stewart (George Bailey), where the laws of the land have been updated and amended around him, and he now finds out that his non compliance may cost dearly.

I think overarching this is a push from the Securities Commission et al (Diplock), to make themselves look good at catching white collar criminals before they get repleced at the end of this year by the new Financial Markets Authority (FMA), as they have been too lazy for the last 15 years anyway, and all have to re-apply for their jobs.

We have never prosecuted anyone for Insider Trading though the courts or Market manipulation, 1 case, in 20 years, tranzrail was settled.

I wasn't aware that there had never been an insider trading case that went through the courts. Interesting fact!

Alan.

Beagle

19-07-2010, 02:17 PM

Questions:

If Aorangi or Hubbard Management Funds are found to be in breach of the Act the fines are up to $500,000 for Mr and Mrs Hubbard?
Then up $5m for Aorangi & HMF for each breach?
If you have just 10 investors of the 400 odd have invested have not received a prospectus, does this mean up to $50m in fines for Aorangi & HMF. Which in turn are owned by Mr and Mrs Hubbard, they will have to pay this amount. Does this then impact on South Canterbury as a business if Mr and Mrs Hubbard no longer own it, as SCF is sold off as a going concern?

How does then impact the listed debt?

Maximum fine personally is $300,000 and five years in prison.

1 breech, i.e. one single investor is found to have been in a position where thay should have received a prospectus and the whole scheme is illegal and all funds are immediatly repayable to ALL investors with interest. Directors are personally liable for immediate repayment and any losses thereon.

Our family had the "immense stress" of waiting for two years whilst the side company we invested through worked its way through settling our family's investment. And of course we were stressed all the way through the process in case they went bung somewhere along the line. Unfortunatly the exact details of the confidential settlement are exactly that, confidential, but what I can say is that it really impacted us and our health. I'm now on blood pressure medication and am likely to be for some time.

As you can see such issues create real victim's Enumerate. Your offer of underwriting carries no legal weight and you know it. Words are cheap PAL. Suggest you put your proposal to the SM and come back evidincing same in writing.

Of course as AH is such a good bloke and has done such good work, a little bit of collateral damage is Okay I suppose......(this paragraph reeks of sarcasm in case its not obvious),....oh you are soooo right Balance, what's the bloody point.....

Balance

19-07-2010, 02:34 PM

Maximum fine personally is $300,000 and five years in prison.

1 breech, i.e. one single investor is found to have been in a position where thay should have received a prospectus and the whole scheme is illegal and all funds are immediatly repayable to ALL investors with interest. Directors are personally liable for immediate repayment and any losses thereon.

Our family had the "immense stress" of waiting for two years whilst the side company we invested through worked its way through settling our family's investment. And of course we were stressed all the way through the process in case they went bung somewhere along the line. Unfortunatly the exact details of the confidential settlement are exactly that, confidential, but what I can say is that it really impacted us and our health. I'm now on blood pressure medication and am likely to be for some time.

As you can see such issues create real victim's Enumerate. Your offer of underwriting carries no legal weight and you know it. Words are cheap PAL. Suggest you put your proposal to the SM and come back evidincing same in writing.

Of course as AH is such a good bloke and has done such good work, a little bit of collateral damage is Okay I suppose......(this paragraph reeks of sarcasm in case its not obvious),....oh you are soooo right Balance, what's the bloody point.....

Take heart, Roger. There are many of us who read your postings and find them very useful and enlightening.

I am sure those who are looking for perceptive and useful infor now know who to read, and who not to.

Old adage comes tro mind - "Don't suffer fools - because you will become a fool as well."

We have all had our fun with Enumerate and his rantings and ravings.

Enumerate

19-07-2010, 02:43 PM

As you can see such issues create real victim's Enumerate. Your offer of underwriting carries no legal weight and you know it. Words are cheap PAL. Suggest you put your proposal to the SM and come back evidincing same in writing.

My point was a bit subtle, so let me explain.

Since inception of Aorangi, the initial investments have yielded an 400% return (quoted in the TV3 video - cannot immediately find the reference - I am sure I will be corrected if I am wrong (was not 800% - was 400%)).

Hence my "offer" to cover the investors initial stake plus 3% pa, less distributions can hardly be described as generous.

However, here is the point. If you made 400% on an investment - by investing alongside a "master" and you had a choice of making a 100% loss but the paperwork was judged complete - which investment would you make?

If we are to take what you say at face value, Roger - here you are crusading against Hubbard because, in your view, the paperwork wasn't correct. Your own bitter experience of investing without "the paperwork", and suffering a loss is one thing.

From all appearance - Aorangi investors have made fabulous profits.

In your mind you have assigned emotional weight to "lack of paperwork" means "great harm done".

So, let us focus the debate. Ignoring the letter of regulation ... where, in the case of Aorangi, is the "great harm". Who has suffered? How have they been harmed?

minimoke

19-07-2010, 03:19 PM

I wish I had significant funds in Aorangi - which explains why I consider my offer to underwrite the "security" of these investors to be less than altruistic.
I wonder Enumerate.
Would you really want your personal details (and those of other investors) hand recorded in a little red book? Or would you prefer a bit more of a robust accounting system?

In 36 years would you be happy quadrupling your money in Aorangi? (we could take the average 6 month term deposit yield for the past 34 years which equals 8.19%. We could then use say the Rule of 72 and wonder why its taken so long to nearly quadruple your money)

If you didn’t get your money back would you want to be thought of as a charity case by AH – cos that’s what he thinks his depositors are.

Are you a modest person, living an ordinary life, (perhaps even a widow who had your money with other financial advisors) dependant on Aorangis monthly interest payment, like around 60 other Aorangi and Hubard managemtn Fund investors (some of Aorangis depositors are so modest AH reckons they should get a grant from the Social Welfare fund – don’t worry Alna SCF investors will get a grant fromhte Tresury fund!)

Would you invest your money with a man who says he’s given it all away (yet he seems to have a biit more stashed in plaes other than buried in the back yard) Interviewer: “All you’ve ever done is given your money away” AH “Yes........my ideal is to not accumulate wealth”
And you wouldn’t see any warning bells if you were offered access to the HMF, “possibly one of the best performing funds in NZ” when this fund wasn’t advertised and it was special for “clients” only. Say you were promised to “over quadruple your money in 7 years (rule of 72 would only have you doubling your money @average six month deposit rate of 6.38% in just over 11 years) you’d be happy with that wouldn’t you.

Yours is just like a Hotchin / Watson Promise of “and I’ll put $10m in the pot if things go wrong” – you know there ain’t no way you’re going to be called on it.

Capitalist

19-07-2010, 03:33 PM

You seem to be familiar with Ayn Rand Enumerate.

May I quote her -- "Emotions are not tools of cognition."

And another "A is A."

Hubbard is required to work within the regulations - A is A.

I am quite sure Rand would not support the taxpayer taking a bath for his oversights.

She also would not want Balance banned. Free speech is an inconvenient thing.

Sandy knows what he is doing. Hubbard would not be subject to Statutory Management if he didn't. Think about it.

minimoke

19-07-2010, 03:35 PM

From all appearance - Aorangi investors have made fabulous profits.

But not as well as Hubbard Management funds. AH agrees that he has over quadrupled the investment from $19m to $84m in the past 7 years. Do you wonder, for just a moment, how he managed to do that, yet he couldn't do the same for SCF over that same period?

Oh - and since Aorangi investors make their money on the basis of "Accumulating and reinvesting" how many investor do you think there are that have actually had their capital returned. As far as I can tell the only ones that have had cash are the ones that have had the regular interest payments due to their precarious financial positions.

But its one of these"its too good to be true" finance schemes that actually is true! So the 200 farmers who have had the interest free loans are in for a bit of a shock when they come to the "real world" where borrowing money attracts a cost. No wonder dairy farms aren't selling at the moment - theres no-one out there giving free money away.

Enumerate

19-07-2010, 03:35 PM

Now, despite the David Hillary's of this world offering harum-scarum interpretation, you will see that an investor with a 400% yield can hardly be said to have been "harmed".

Further, you might consider that any law that fails to act when investors are decimated (endless examples of this - Hanover springs to mind) but swings into action when investors make 400% - is an ass. (Or maybe the law is not an ass - but those enforcing it are ...).

It actually gets worse than this.

The Securities laws are not the laws of question. It is the investigative powers under the Corporations (Investigation and Management Act). Here the standard of "harm" should be much higher. In fact, there is an obligation for the use of these extreme powers to be in the defense of the public interest.

Where are we at now.

Does the public interest need defending from Allan and Jean Hubbards manual accounting system?

Is Allan Hubbard investing the money so recklessly that by showing an 400% yield those Aorangi investors are in perilous danger of getting too rich too fast?

Where is the public interest?

I would have thought there was greater prospect of defending the public interest by putting Simon Botherway and the SFO into Statutory Management.

The Statutory Management could have forced them to act on Bridgecorp to Hanover .... thereby securing over $6billion of NZ investors capital.

So Roger, pardon me if I think your crusade to save the investing public through higher standards of documentation really should be focusing on the integrity of the people filling out the documents.

winner69

19-07-2010, 03:44 PM

Sandy knows what he is doing. Hubbard would not be subject to Statutory Management if he didn't. Think about it.

Bingo ..... bingo

(had to do 2 bingos cause need 10 characters)

Enumerate

19-07-2010, 03:48 PM

Emotions are not tools of cognition."

And another "A is A."

Hubbard is required to work within the regulations - A is A.

I think you will actually find that Ayn Rands attitude to government regulation is that it doesn't make the world a better place to live in.

The notion of Hubbard as a Randian hero fails on many levels. However, so does the notion of Hubbard as a villain.

I am quite sure Rand would not support the taxpayer taking a bath for his oversights.

Probably true - but for reasons that I am not sure you understand.

She also would not want Balance banned. Free speech is an inconvenient thing.

If Ayn Rand were the champion of speaking gibberish - you might have a case. It may surprise you that I, again, agree with you. Balance is free to express his view - however irrational it may be. I note I stated "if this thread was moderated" which as the meaning that if a moderator was active - their usual modus operandi is to stop childish name calling and taunts as a substitute for rational debate. This is my meaning ... you have misinterpreted.

Sandy knows what he is doing. Hubbard would not be subject to Statutory Management if he didn't. Think about it.

You are a victim of the securities industry rumour mill. There are those on the thread more than willing to follow the opinion of someone allegedly "connected" to inside knowledge. I am not one of them.

You pretend to know what Sandy Maier is thinking.

Maybe you can tell us what Simon Botherway is thinking ... and who he is sharing his opinions with?

Enumerate

19-07-2010, 03:51 PM

Bingo ..... bingo

Ahh Winner is back.

He obviously shares the same rumour mill as Capitalist.

I wonder if he knows what Simon Botherway is thinking?

winner69

19-07-2010, 03:52 PM

In case you missed it earlier in the debate here's a comment posted on interest.co.nz .... would Richards parents be classed as sophisticated or whatever?

Great article Bernard,

I have some personal experience from my parents investing intially with SCF, then with Aorangi Securities.

My parents invested in excess of seven figures in Aorangi. After returning from my OE in the UK I asked them what Aorangi was and what it invested in. The answer was they didn't know. I asked where the investment prospectus or statement was. Again they didn't know.

They invested in Aorangi due to Hubbard suggesting they do so. They invested more than $1million into a company they did not understand what it invested in other than "Hubbard had been investing for a long time and has a lot of money, he obviously knows what he is doing".

I believe there were no ongoing statements of balance and fund performance other than the regular payments. As the payments were returning a good percentage return no questions were asked (a la the Madoff scenario).

Like you I believe Hubbard thrives on the VW image. "He is obviously not a crook, look at the old beat up car he drives". If Hubbard had been a flashy suit how succesful would he have been in Timaru?

Luckily I convinced my parents to ditch Hubbard earlier this year. No doubt they are sleeping easier because of that.

Richard

For those interested

http://www.interest.co.nz/opinion/op...angerous-thing

Beagle

19-07-2010, 03:56 PM

Take heart, Roger. There are many of us who read your postings and find them very useful and enlightening.

I am sure those who are looking for perceptive and useful infor now know who to read, and who not to.

Old adage comes tro mind - "Don't suffer fools - because you will become a fool as well."

We have all had our fun with Enumerate and his rantings and ravings.
Last edited by Balance; Today at 02:40 PM.

Thanks for that encouragement Balance.

I really enjoy a good debate with rational intelligent people....enough said.

Oh, before I go and do some real work........Enumerate, when the SM gets around to having to liquidate AH's little ponzi scheme, there will be real harm done you just wait and see. In the meantime Id bet my last dollar at least half the investors in Aorangi are absolutly sweating bullets and losing sleep, I know, I've been there and its a slow buring hell, a real Chineese water torture, now I've laid it all bare for all to see why I feel so strongly about proper legal proceedures and compliance with the Securities Act.

But when will the Judiciary wake up and realise that white collar crime is real crime ? Will that ever occur ? For example the directors of Five star finance only got 12 months home detention for raising money from the public without a Prospectus, (no this was not the side company I was involved with).

This sentance is completly contempable. Take a gun, rob a bank of $10,000 and injure no-one except the traumatic effect on the bank tellers and if you get caught you'll get about ten years in prison, on the other hand, defraud hundreds or even thousands of people, wreck their lives, undermine their entire financial future, many of them old people who have no capability to restore their finances, all by non-compliance wth the Securities Act and you get 12 months home detention, (probably in your multi-million dollar mansion sea-side paradise owned by your family trust of course), despite the enormous carnage you've caused, go figure ?
Settle down Enumerate, I'm not suggesting AH has one of these, but plenty of other finance company directors do !!
I
ts high time the Judiciary woke up and treated white collar crime AS REAL CRIME !!

minimoke

19-07-2010, 04:01 PM

Does the public interest need defending from Allan and Jean Hubbards manual accounting system?
Perhaps yes. The Stat Man has already come out and said the standard of record keeping is not what was expected from entities of that sizer and complexity.

is Allan Hubbard investing the money so recklessly that by showing an 800% yield those Aorangi investors are in perilous danger of getting too rich too fast?
Not much fear of that if he quadrupled their money over 34 years. So the public interest question might be, given their money could have been quadrupled by sticking it in the bank on six month terms in under 18 years, what was AH doing with the cash for the remaining 16 years?

minimoke

19-07-2010, 04:07 PM

In case you missed it earlier in the debate here's a comment posted on interest.co.nz .... would Richards parents be classed as sophisticated or whatever?
Winner 69 we also know (from AH's own lips) that there are at least 60 investors in precarious situations and at least one widow who was inexperienced as she allowed other financial managers to loose her money. Out of ~400 investors this is a pretty high percentage. It is not just one aggrieved investor!!.

Enumerate

19-07-2010, 04:13 PM

Perhaps yes. The Stat Man has already come out and said the standard of record keeping is not what was expected from entities of that sizer and complexity.

Here the Statutory Manager exceeds his brief. Manual systems are not against the law or regulation.

Can you defend a Statutory Manager who effectively undermines confidence in a business, under their direct management? Their powers are of an investigative nature. If they mismanage or compromise a business under their management I would suggest there is a case to answer for damages.

Not much fear of that if he quadrupled their money over 34 years. So the public interest question might be, given their money could have been quadrupled by sticking it in the bank on six month terms in under 18 years, what was AH doing with the cash for the remaining 16 years?

You assert the returns were poor - but you assume there were no draw downs or payments. It is widely reported that there were investors (maybe the majority) that relied on the income from the fund. So, again, you are treating Allan Hubbards case with the most unfair and unwarranted of assumptions.

Fact of the matter is if you benchmark Aorangi against Hanover ... the choice is obvious where most people would prefer to invest.

winner69

19-07-2010, 04:17 PM

Like your sign off Emunerate ..... best to treat all comments as speculation eh

Beagle

19-07-2010, 04:23 PM

I simply cannot resist a little objective analysis on the power of compounding inflation and interest, contained therein is a none to subtle dig at New Zealand Oil and Gas.

Way back in 1980 when I started my first job in my accounting career, I'll never forget it, I dropped a file on one of the partners desk's and couldn't help but notice a note written from a conversation he'd had with his stockbroker. It read BUY New Zealand Oil and Gas, current price $1.40.

Now for those who may not know, I believe NZOG have paid only about 3 dividends in all that time since 1980 and then only recently so ignoring those minor dividends for a minute, lets have a look at how that 1980 $1.40 stacks up against 2010 money.

From the Reserve Bank Inflation calculator we can see that all else being equal that $1.40 should now be $6.26 and inflation has averaged 5.1% per annum over that time.
http://www.rbnz.govt.nz/statistics/0135595.html

Now suppose it is reasonable for this relativly high risk capital to expect say a 5% real return over and above the inflation rate, thus we expect a return of 10.1% per annum over that 30 year period. Using Microsoft money savings programme I calculate that the $1.40 should now be worth $25.10 today or about 18 times your money.

Of course N.Z.O.G. on striking another dry hole today are around $1.22....I think those numbers say it all about what I think of Aorangi's returns to investors and about NZOG's long term track record.