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SFO to keep probing Hubbard vehicles

Monday 30th August 2010

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The Serious Fraud Office will continue to probe Allan Hubbard's investment vehicles after completing its preliminary report into Aorangi Securities.  

Director Adam Feeley said the investigation began because the office believed "serious or complex fraud" may have been committed, and will look at Hubbard Funds Management, which the statutory managers for Hubbard his wife, Jean, has also looked into.

"This is a major investigation into a very complex range of issues," Feeley said in a statement.

"It would be foolish to think that some investor interviews and a cursory examination of the documentation would do justice to the issues that have been raised."  

Statutory managers Richard Simpson and Trevor Thornton, of Grant Thornton, flagged more concerns about Hubbard's Aorangi Securities and HMF in their second report, issued last week, saying the former was too exposed to the dairy sector and the latter was over-valued by at least 25%.

Hubbard disputes the findings. 

Feeley said the SFO will move "as swiftly as possible," but won't compromise the integrity of the investigation.

There are several interviews and considerable financial analysis to be done before a further report will be completed for consideration, he said.  

The government appointed statutory managers over some of Hubbard's interests on the advice of the Securities Commission after a complaint was made by an investor in Aorangi who claimed not to have been given a prospectus. 

Since then, the decision has polarised the investing community, with South Islanders rallying around the man who has propped up much of the region's economy, while others have bayed for blood in the wake of the finance sector's collapse several years ago. 

The news comes as Hubbard's South Canterbury Finance fights for its survival, with the deadline to find a new investor looming as its trust deed waiver expires tomorrow.  

Though SCF was specifically excluded from the statutory management, the turn of events has kept reinvestment rates under pressure, though the lender did manage to get through a $500 million wall of maturities at the end of June.

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