South Canterbury Finance Limited

[Enumerate]

"Securities commission spokesperson Roger Marwick said chairwoman Jane Diplock was made aware of the connection yesterday, five days after the recommendation was made to the minister to put Hubbard's business interests into statutory management, but did not believe there was a conflict of interest.

"There is no conflict of interest in this issue BECAUSE THE STATUTORY MANAGEMENT DOES NOT AFFECT SOUTH CANTERBURY FINANCE." (my capital letters.)

I am incredulous that such a ridiculously naive statement could be made, on behalf of the body that is supposed to be overseeing the conduct of the securities market in this country. The Statutory Management notices might not have included South Canterbury Finance in word, but they certainly have in effect, as borne out by Standard and Poor's immediate downgrading of their credit rating. And, if SCF is not part of "Hubbard's business interests" then I'm a Martian.

1) Diplock was advised AFTER the decision was taken ... she should have noted that the conflict of interest should have been declared before the decision.

2) Stat Management of Aorangi is a singular step to take. You are right that the impression that this would have no commercial implications for SCF beggars belief.

3) The reason cited is specious, anyway. The conflict can be construed between Hubbard and Botherway - it should have been declared BECAUSE Hubbard, Aorangi (owned by Hubbard) etc were the subjects of the Stat Mgmnt decision. Disclaiming harm on SCF is irrelevant and in no way a justification of a lack of conflict of interest.

4) If Botherway felt no conflict of interest existed between him deciding to put Hubbard into Stat Management because SCF put his brother in to recievership - then no conflict of interest should have been declared to Diplock.

What a complete shambles.

Diplock - just resign.

Botherway - just resign.

You are playing the NZ public for FOOLS!

[westerly]

"just wish I could remember the article and author who made these points - to cite properly. "

Colin

There is an article from the Listner May 27 by Rebecca Macfie still available on the Listner website which is the best I have read on SCF and Allan Hubbard

Westerly

[Alex]

Complex question.

Effectively, the RDGS applies to organisations that have met the RDGS terms, been approved, payed the costs ... and continue to meet the terms of their lending trust deed.

The powers of Statutory Management are detailed in the Corporations (Investigation and Management) Act 1989 ("CIMA"). Statutory Management is a measure of last resort to be used if:

* The affairs of the corporation cannot adequately be dealt with by any other formal and collective insolvency regime; or
* The public interest requires it to be used.

Could you envisage a situation in which SCF maintains the integrity of it's Trust Deed - but is put into Stat Mgment .... why yes!

Could you envisage a situation in which SCF violates the integrity of it's Trust Deed - and is put into Stat Mgment .... why yes!

In the first situation, the guarantee is applied to the retail depositors. In the second situation, it is not.

test, pls ignore

[Alex]

Complex question.

Effectively, the RDGS applies to organisations that have met the RDGS terms, been approved, payed the costs ... and continue to meet the terms of their lending trust deed.

The powers of Statutory Management are detailed in the Corporations (Investigation and Management) Act 1989 ("CIMA"). Statutory Management is a measure of last resort to be used if:

* The affairs of the corporation cannot adequately be dealt with by any other formal and collective insolvency regime; or
* The public interest requires it to be used.

Could you envisage a situation in which SCF maintains the integrity of it's Trust Deed - but is put into Stat Mgment .... why yes!

Could you envisage a situation in which SCF violates the integrity of it's Trust Deed - and is put into Stat Mgment .... why yes!

In the first situation, the guarantee is applied to the retail depositors. In the second situation, it is not.

Have to disagree with the last statement. The appointment of a statutory manager is deemed to be a default event and will trigger the Guarantee, regardless of the reasons for the appointment.

[Enumerate]

Have to disagree with the last statement. The appointment of a statutory manager is deemed to be a default event and will trigger the Guarantee, regardless of the reasons for the appointment.

It is possible to establish a company is in breach of the Trust Deed at a point before the default event. At this point they have violated the RDGS and the guarantee no longer applies.

Directors elect to offer guaranteed deposits and the company pays for this. They have to supply the terms upon which the lending is conducted (the Trust Deed) and they have to prove to be viable financially (the credit rating). If Directors cannot keep their promises (the only statement of this is the Trust Deed) then the government can hardly be expected to pay a guarantee for fraudulent conduct.

[temuk]

Wonder who the whistleblower was?.

Word on the street - "someone from WAIMATE"

[Alex]

It is possible to establish a company is in breach of the Trust Deed at a point before the default event. At this point they have violated the RDGS and the guarantee no longer applies.

Directors elect to offer guaranteed deposits and the company pays for this. They have to supply the terms upon which the lending is conducted (the Trust Deed) and they have to prove to be viable financially (the credit rating). If Directors cannot keep their promises (the only statement of this is the Trust Deed) then the government can hardly be expected to pay a guarantee for fraudulent conduct.

If the Trust Deed is breached or in any of the other relevant events listed in the SCF's Guarantee Deed, the Crown may withdraw the Guarantee, in which case existing (i.e., prior to the withdrawal) eligible debenture holders continue to be covered by the Guarantee. The Guarantee remains valid until officially withdrawn.

[GTM 3442]

Word on the street - "someone from WAIMATE"

Where ? And why the CAPITALS?

[Enumerate]

If the Trust Deed is breached or in any of the other relevant events listed in the SCF's Guarantee Deed, the Crown may withdraw the Guarantee, in which case existing (i.e., prior to the withdrawal) eligible debenture holders continue to be covered by the Guarantee. The Guarantee remains valid until officially withdrawn.

On review ... I think you are right. In fact, it would appear that the guarantee continues on after the withdrawal. Amazing!

3.10 Can the Crown guarantee be taken away from me or from the institution that I have deposited money with?

Updated 23 December 2009

Under the current scheme and the extended scheme, the Crown can withdraw the guarantee if a participating financial institution engages in “inappropriate conduct” such that:

* the benefit of the extended guarantee may be available to persons not intended to receive that benefit;
* such conduct is inconsistent with the Crown's intentions in entering into the extended Crown guarantee;
* the financial institution fails to comply with its relevant obligations under the guarantee deed.

Under the extended scheme, the Crown can also withdraw the guarantee if:

* (in the case of non banks only) the financial institution has come under the control of another person, that the Crown has not first approved;
* there has been a material reduction in the financial institution’s net tangible assets and the Crown's net liability under that guarantee will or may be materially greater as a result of that reduction.

3.11 Are my deposits still covered if the Crown guarantee is changed or withdrawn?

Updated 23 December 2009

Deposits or investments made before withdrawal of the guarantee continue to be covered until expiry of the current retail deposit guarantee scheme on 12 October 2010, unless those deposits become due and payable earlier. New deposits made after withdrawal are not covered. Roll-overs of deposits or investments that have matured are deemed to be new deposits.

Relevant section bolded.

[Dr_Who]

Interesting article by Brian Gaynor.

When the going is good people tend to turn a blind eye, but when things turns to custard, people go head hunting.

http://www.nzherald.co.nz/business/n...ectid=10654475