Sharechat Logo

Hubbard misled investors, says suppressed 2011 report

Monday 14th January 2013

Text too small?

Former National Bank chairman John Anderson concluded Timaru businessman Allan Hubbard had misled investors in his tangled affairs, in a report written shortly before Hubbard's death in a car accident in September 2011.

The report by Anderson and Deloitte insolvency specialist Rod Pardington has been released after a 16 month wait that included an appeal to the Ombudsman's Office, which had intended to suppress the comment about Hubbard making "misleading representations to investors" but mistakenly released the conclusion to BusinessDesk.

Hubbard died with fraud charges hanging over his head, and had been battling a decision to place him, along with his wife Jean, under statutory management along with much of the rest of his tangled business affairs.

In their July 2011 report reviewing the order freezing the Hubbards' assets, Anderson and Pardington concluded the statutory management should remain in place.

Anderson and Pardington said the managers needed to figure out the value of couple's assets and liabilities and had to clarify the uncertainties around the business affairs, and that once those issues were cleared, the order could be lifted.

The uncertainty as to who held what assets was seen a risk for terminating Allan Hubbard's statutory management, as was the claim that there were "misleading representations to investors," the report said.

"The administration of the statutory management of the other entities without the inclusion of Mr and Mrs Hubbard would be counterproductive to resolution given the high degree of intermingling of Mr Hubbard's affairs with the affairs of the other entities in statutory management," Anderson and Pardington said.

The statutory managers also considered there was a possibility Hubbard's liabilities would exceed his assets once the dispute reached the court-room, the report said.

Anderson and Pardington saw fewer risks to lifting the order on Jean Hubbard, Allan's wife and the executor of his estate, saying her statutory management could be removed earlier once certain matters were addressed.

The government seized control of the Hubbards's affairs in June 2010, controversially leaving out South Canterbury Finance, after an anonymous complaint was laid by an investor claiming they hadn't seen a prospectus for their investment in Aorangi Securities.

Trevor Thornton, Richard Simpson and Graeme McGlinn of Grant Thornton were appointed the statutory managers of the Hubbards, Aorangi Securities and several charitable trusts.

During the course of the administration the statutory managers found an investment had been transferred into Southbury, even though Allan Hubbard had told an investor it was in Aorangi Securities, the report said.

They also uncovered the existence of the Hubbard Managed Funds business, which had operated without clear instructions or authorities and was unknown to investigators before the statutory management order, as well as assets and liabilities that were omitted from the Hubbards' statement of financial position.

The report was commissioned by Companies Registrar Neville Harris in 2011, and Allan Hubbard died while it was being considered. Harris subsequently sought more advice, leading to his recommendation to then-Commerce Minister Simon Power to lift the order over Jean Hubbard.

The statutory managers are now locked in High Court battle with Jean Hubbard over $60 million of assets she denies were transferred to Aorangi Securities, the cost of which is being picked up by investors in the frozen firm. A hearing has been set down for May this year.

 

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ shares take a breather after hitting a fresh record
NZ dollar gains against Aussie as Westpac picks two RBA rate cuts
NZ Windfarms cans asset sale, plans share buyback
Livestock Improvement more than doubles FY net profit
Asians, men more confident in financial markets than Pacific Islanders, women and poor people
June trade surplus $365M, higher than expected
Govt opts for sweeping review of 'underperforming' RMA
AFT gains Australian registration for intravenous Maxigesic
24th July 2019 Morning Report
Should Fletcher Building persist with Australia?

IRG See IRG research reports