SFO mounts new South Canterbury Finance probes

Tuesday 19th October 2010 1 Comment

The Serious Fraud Office will probe a number of related party transactions by failed lender South Canterbury Finance in a separate investigation to its Aorangi Securities case.

Director Adam Feeley said the department suspects a number of deals involving parties related to SCF may have involved false statements or other fraudulent conduct.

That's on top of the investigation already underway into Timaru businessman Allan Hubbard's Aorangi Securities investment vehicle.

Given the scale of the SCF collapse, it would be neither feasible nor productive for SFO to carry out an investigation into all aspects of the failure, Feeley said in a statement.

"We will focus on specific transactions which we consider may have been a fraud on the investors in SCF and/or the Crown as the guarantor of investor funds."

SCF collapsed at the end of August after a protracted bid to keep the firm alive failed to bring on new investors. The failure sparked a call on the government's retail deposit guarantee, which saw Finance Minister Bill English write a cheque for $1.775 billion for the Crown to take the role as sole creditor.

Feeley said the SFO is investigating SCF transactions that "have no material connection with the affairs of Aorangi Securities," even though there are some people common to both cases.

The Aorangi investigation is in its closing stages, he said. The SFO investigation came when a number of Hubbard's business interests were placed under statutory management in June, though SCF was specifically excluded from the government control.

Since then, a dump of documents relating to the handling of the SCF collapse show the Treasury expected it to fail in June, and was forecasting failure as early as December last year.

It also recommended putting the firm into statutory management as a better option to receivership.

Businesswire.co.nz

Comments from our readers

On 19 October 2010 at 11:09 am Sam said:

When will someone realise that Hubbard is a crook.