Hubbard statutory managers seek independent review of administration costs

Tuesday 6th December 2011 1 Comment

The statutory managers for the late Allan Hubbard’s frozen investment vehicles want an independent review of their administration fees to allay fears of a cost blow-out.

Grant Thornton New Zealand’s Trevor Thornton, Richard Simpson and Graeme McGlinn asked the Ministry of Economic Development to commission an independent review of their administration of Hubbard Management Funds to provide an assurance the costs were in order, according to their latest report.

Since their appointment in June last year, the statutory managers have charged fees and disbursements for HMF of $1.3 million, with legal costs of $756,000 and other third party disbursements of $137,000. That’s accrued a GST bill of $315,000.

The administration of Aorangi Securities has attracted fees and disbursements of $2.2 million, with legal costs of $660,000, third party disbursements of $169,000 and a GST bill of some $430,000.

The total of the two administrations comes to $5.9 million, though it is unclear whether the review will also cover the cost of Aorangi’s management.

The statutory managers brought in Christchurch-based broker Hamilton Hindin Greene for advice on the management of the HMF portfolio, which it deemed to be a higher risk portfolio and was “assembled on an ad hoc basis.”

They also asked Eriksens, Actuaries and Professional Advisers to analyse some of the issues identified with the fund. That helped formulate the managers’ recommendation to the courts for it to pool the fund’s assets and share profits and losses proportionately.

In a separate report on Aorangi Securities, the statutory managers said they are delaying any further distributions to investors until the middle of next year as they struggle to resolve the ownership of some of the investment vehicle’s assets.

They will seek orders from the High Court that introduced or pledged assets to Aorangi should now be legally transferred, the report said.

“Depending on the outcome of this claim, Aorangi will have an alternative claim against Mrs Hubbard and Mr Hubbard’s Estate,” the report said.

BusinessDesk.co.nz

Comments from our readers

On 8 December 2011 at 9:36 am Mark said:

The basic principle of administration is “to produce acceptable combinations of efficiency, fairness, accountability and transparency”. On all accounts Grant Thornton has so far failed.