Deborah Hill Cone
Friday 5th December 2003
|Text too small?|
But its subsidiary, Australian Finance Direct (AFD), is at the centre of a storm of controversy on the other side of the Tasman after handing out millions of dollars in high-interest loans to naive seminar attendees to cover the $A4000-55,000 fee to attend Kaye's events, which promised to turn them into property tycoons.
Hanover chief executive Kerry Finnigan was on his way to Australia at press time yesterday, presumably to sort out the mess.
Hanover spokesman Klaus Sorensen maintained the would -be millionaires would still pay back the AFD loans despite Kaye's companies, National Investment Institute and the Empower Group, being placed in receivership.
"The money was lent to individuals rather than Henry Kaye and people have an obligation to pay them off ... AFD shouldn't be made to take responsibility for investment decisions made by borrowers," Sorensen said.
Most loans were for about $10,000, Sorensen said. He could not give a figure for how much Hanover stood to lose in total if the seminar borrowers defaulted but others have estimated the loans total $A10 million.
"In retrospect, AFD would have preferred not to have got involved," Sorensen said.
Kaye's companies went belly up after months of legal battles with regulatory authorities and this week it was estimated the amount owed by the companies could top $A81 million.
Australian Finance Direct has also been embroiled in some legal scraps.
It is being pursued by the Ministry of Consumer Affairs for allegedly not disclosing the real rate of interest charged on the loans.
Sorensen said those proceedings had been set aside to be heard in February and the company maintained it had not broken any laws.
Meanwhile, disgruntled borrowers have applied to be heard at local disputes tribunals as they argue they should not be held liable for the loans.
AFD is a wholly owned subsidiary of Hanover Group, which is 50-50 owned by property developer Mark Hotchin and London-based investor Eric Watson.
Financial sources said there had been some conflict between the two shareholders, which led to Watson stepping back from any involvement in the company now run by Mr Hotchin. Watson takes a sleeping partner role and does not sit on the board.
Hotchin has trumpeted the financial performance of one Hanover subsidiary, Elders Finance, which made a $24 million after-tax profit in the year to June 2002 but has refused to release financial statements for the group.
Last year The National Business Review revealed the complex web of related-party transactions and intercompany loans between subsidiaries in the Hanover Group, which made it difficult to assess the true financial health of the company.
No comments yet
12th November 2019 Morning Report
MARKET CLOSE: NZ shares gain, retirement villages buoyed by Auckland housing market bounce
NZ dollar rises, shrugging off US-China trade war woes
Long-serving ACC investment chief calls it a day
Institutional investors continue to shun Fonterra
Card spending stalls; dearer petrol crowds out other goods
Abano directors cave to takeover by scheme of arrangement
Fletcher dismisses subcontractor claims as vague
11th November 2019 Morning Report
Odds favour a rate cut but it's a line ball call