South Island multimillionaire Allan Hubbard says government officials are "misguided" in placing seven of his companies under statutory management.
Mr Hubbard's company, Aorangi Securities, his wife, Margaret, and seven of their charitable trusts were yesterday placed under statutory management in relation to unsecured and undocumented loans.
The matter was also referred to the Serious Fraud Office for possible breaches of the Crimes Act.
More than 400 investors and about $130 million were involved in Aorangi and the trusts.
Companies are put into statutory management to prevent fraud and reckless company management and to protect investors.
South Canterbury Finance, with which Mr Hubbard, 82, was closely associated, was not part of the statutory management order.
However, in a statement to clients posted on the internet, Mr Hubbard apologised for what had happened.
"I am sorry that this action was taken by a government official with little consultation with myself and can only conclude that the government official has been misguided in his action."
Mr Hubbard said he had operated Aorangi Security as a mortgage company for over 30 years and interest had been paid quarterly and the clients have suffered no loss of capital and have had a prompt return of capital.
Aorangi had mortgages and loans owed worth $126 million and $2m cash in the bank.
Client deposits were worth $88m which meant a surplus of $40m.
"The $40 million surplus belongs to myself and family and all our equity has been subordinated to client interest, ie, the Hubbard family stands any loss before clients do.
"The Crown seems to believe that your capital is at risk under my management and have appointed a statutory manager whose job is to realise all the loans and repay you your capital. This will take time as it is not possible for borrowers to repay loans at short notice."
However, there were sufficient funds to pay interest due at June 30.
"If for any reason you do not receive your capital back in full and provided it is within my resources I will meet any shortfall.
Mr Hubbard said that in the past month he had been working on finding a solution to South Canterbury Finance affairs and hoped to arrange an agreement with an overseas company, subject to confirmation by June 30 to inject a large amount of capital which would place South Canterbury Finance in a secure position for the future.
"I don't believe in the history of New Zealand that any person has acted more honourably than myself."
Commerce Minister Simon Power announced the statutory management yesterday and said Mr and Mrs Hubbard were personally placed under statutory management because they were so closely related with the businesses.
The seven charitable trusts included in the statutory management were Te Tua, Otipua, Oxford, Regent, Morgan, Benmore and Wai-iti.
Mr and Mrs Hubbard were involved with Aorangi and the trusts as depositors, managers and borrowers.
"These decisions have been taken to protect investors and the matters are now in the hands of the statutory managers and the Serious Fraud Office," Mr Power said.
