Commerce Minister Simon Power ordered Aorangi Securities, and seven associated charitable trusts, into statutory management, with the Serious Fraud Office to investigate "potential breaches of the Crimes Act".
Mr Hubbard's troubled South Canterbury Finance remains under the control of its board and management, and its 30,000 investors, owed about $1.3 billion, protected by the Crown Retail Deposit Guarantee.
South Canterbury Finance's new management is distancing itself from the development, leaving Mr Hubbard (82), the founder, recent former chairman and president for life, to face subsequent investigations, which cover investments of more than $130 million held by many southern investors.
The firm's chief executive, Sandy Maier, said yesterday he was "not directly" aware of recent talks between Mr Hubbard and the Companies Office and the "outcome and subject" came as "quite a surprise to us".
"The planning in recent months for succession [of Mr Hubbard] and [companies'] separation has been to insulate ourselves. This company [South Canterbury Finance] is no longer about Allan. Allan left the board several weeks ago and we are ring-fenced off. These are Allan's own [companies'] affairs."
At a hastily convened media briefing late yesterday afternoon, Mr Power said Mr Hubbard, reportedly the South Island's richest man, his wife Margaret, their company Aorangi Securities, and seven associated charitable trusts - Te Tua Charitable Trust, Otipua Charitable Trust, Oxford Charitable Trust, Regent Charitable Trust, Morgan Charitable Trust, Benmore Charitable Trust and the Wai-iti Charitable Trust - had been placed under statutory management.
"Loans to related parties have not been properly secured and documented, [and] it was felt statutory management was the only option," Mr Power said.
"The Registrar of Companies has referred a number of matters relating to Aorangi Securities Ltd to the Serious Fraud Office to investigate potential breaches of the Crimes Act."
Mr Hubbard put $152 million into the company in February, but Mr Maier was confident neither Mr Hubbard's Aorangi Securities nor any of the trusts had any involvement with that contribution.
"We've had complete separation. I'd be totally surprised if any [of those] companies were involved," Mr Maier said.
The firm has about $2 billion in loans and investments and is under an urgent recapitalisation and restructuring, having booked massive losses because of more than $200 million in toxic debt, mainly from property lending gone sour.
The company confirmed to the Otago Daily Times late last week Mr Hubbard had entered negotiations and formal due diligence with more than two parties seeking to take a lifeline stake in the debt-ridden company, potentially injecting $300 million to $400 million as equity partners. It is Mr Hubbard's final decision on any new equity partner.
The Government appointed accountancy firm Grant Thornton statutory manager.
