Report to cover more entities

The anonymous letter to the Securities Commission in February which was the catalyst to...
The anonymous letter to the Securities Commission in February which was the catalyst to Government-imposed statutory management of Allan and Jean Hubbard and 13 business and charitable entities.
A third report by Government-appointed statutory manager GrantThornton on Allan Hubbard-controlled companies and trusts is expected tomorrow.

The report has expanded from covering nine entities, plus Mr Hubbard and wife Jean, a month ago, to encompass 13 entities.

The report is expected to reveal complex financial relationships between the 13 entities, especially Aorangi Securities Ltd, which received $96 million from investors, and Hubbard Management Funds, which was valued in March at $82 million, and loans made to charitable trusts.

The manager's second report, released a month ago, told investors the value of their investments may have been overstated by more than 25%, and another company may deliver losses, and highlighted interest-free loans, unpaid interest, accumulated losses, poor governance and claims cash balances as stated to investors did not exist.

The Hubbard entities under management were stung by volatility in the dairy sector and farmers' inability to repay loans of tens of millions of dollars.

Mr Hubbard's widespread investments in the dairy sector are unravelling as lenders are unable to pay, leaving an estimated 50% shortfall in interest payments due later this week.

The statutory management was sparked by an anonymous letter to the Securities Commission in late February.

The letter was released publicly by the commission last week but the content was heavily censored.

The letter, from an investor in Aorangi Securities Ltd, asks why Aorangi had never released an investment statement or prospectus: "With all the problems of South Canterbury Finance we are worried about our investment," the letter says.

In a shock move on August 20, the Government seized control of Mr Hubbard's Aorangi Securities and eight other entities through statutory management, while in a separate move the Serious Fraud Office launched an investigation into "potential breaches of the Crimes Act".

South Canterbury Finance, which was not under statutory management nor SFO investigations, was placed in receivership on August 31, owing 35,000 investors about $1.6 billion, after having failed to recapitalise itself.

The SFO is expected to make an announcement next week updating its findings and saying whether it will continue with the investigation, which has sparked widespread condemnation from Hubbard supporters.

South Canterbury receivers last week began making first payments towards the $350 million owed to bond-holders.

The Government's deposit guarantee scheme ensures all but preferance shareholders are paid a total $1.6 billion.

 

Add a Comment