Crown claws back $645m in SCF receivership

BUSINESSDESK: The Crown has clawed back $645 million of the $1.78 billion it stumped up to pay out depositors of South Canterbury Finance and is in negotiations to finalise its takeover of the failed lender's assets.

SCF receivers Kerryn Downey and William Black of McGrathNicol paid the government a further $125m in the six months ended February 29, bringing total distributions to $645m since the lender collapsed in August 2010.

The receivers clawed back $74.8m from the distressed loan book, realised $56.4m from the sale of SCF's 33% stake in Dairy Holdings, and achieved a further $17m from the sale of assets and properties and other receipts, according to the latest receiver's report.

As at February 29, the receivers held $108m in cash and term investments.

"The receivers are presently in discussions with the government to finalise the purchase of certain assets by the Crown, which will then be transferred to Crown Asset Management," they said.

The government stumped up $1.6 billion to pay debenture holders under the retail deposit guarantee, and also paid George Kerr's Torchlight fund $175m, which held security above investors.

Finance Minister Bill English has since said the government will take control of some $350m of assets from the failed finance companies through a new entity called Crown Asset Management, to control fees paid to receivers.

Allan Hubbard's SCF was the biggest call on the government guarantee, under which the Crown stumped up about $2 billion and expects to write off $1.1 billion.

The Timaru-based lender was singled out in the auditor-general's review of the scheme as taking advantage of the offer by increasing its debenture base by 25% and ramping up its lending over risky property developments.

SCF's lending practices attracted the ire of regulators and five former executives and directors face 21 charges of fraud worth $1.7 billion, the bulk of which relates to the Crown guarantee.

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Mr Downey, you know this wasn't all Mr Hubbards fault. Come clean. Some of us have long memories!

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Old Father Hubbard,
Went to the cupboard,
For to get his investors a bone,
But when he got there,
The cupboard was bare,
So he gave Aorangi a phone......

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@crowdpleaser

You have just made my evening and now I plan to have a great weekend as well.

:)

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You have a good evening Siena.

I had an even funnier last line but I didnt want to be too risque.

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The receivership is a scam, just as the statutory management of Allan Hubbard and the fraud investigations were. Nothing but smokescreens.

The receivership/asset sales process constitutes the largest fraud in New Zealand history, and the trial of the 5 directors is simply an attempt to distract voters' attention away from the real fraud that has been committed.

There needs to be a full inquiry into the asset sales process - right now.

SCF assets have been given away for sums far, far below their fair market value, and NZ taxpayers need to know that this has happened, and they need to know why, as well as who benefited from this.

When entire blocks of land are sold for less than 1/3 of market value to buyers who are personally known to the receivers/asset managers, there needs to be an inquiry.

When $1 million is wiped of a Christchurch restaurant owner's loan because of a "procedural error" by the receivers, there needs to be an inquiry.

When 5 staff working for the receivers run up a bill for more than $1000 in the same restaurant a week after $1 million was wiped off the owners loan, and then walk out the door, telling the owner to "deal with it"......there needs to be an inquiry.

The whole receivership process, and everything that led up to it, stinks to high heaven. It has the rotten stench of bureaucratic abuse of power, and political corruption and cronyism.

There absolutely needs to be a public inquiry - now.

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Start with investigating the behaviour of the team employed to manage the bad bank assets who appear to be conflicted all over the place. And who wrote off large amounts but who were remunerated and received bonuses for obtaining in excess of the reduced loans on the books - ie they wrote it off so far that almost every deal was recovered at a higher rate than the reduced book value - hence big bonuses for the managers - this was absolutely shocking and is ripping off the taxpayer

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The Doctor

Your are correct. I would add that the greatest mistake the receivers of SCF made was keeping the existing Asset Management staff, headed by Ian Thompson. This division lacked the skill set to secure maximum returns from impaired loans. Ian was a former hire of Lachie McLeod... enough said. Their remuneration structure of taking a percentage of any cash received in above the impaired value was disastrous as the asset mangers were unbelievably permitted to write loan values down far below fair value to ensure maximum bonuses for themselves even when they practically gave loans and assets away, which was common practice to their friends, business associates and former colleagues.

I do hope the SFO takes a sniff at the asset management division as it was not only inept but ethically rotten and with some clear evidence of fraud on certain deals.

The fact that the government has placed all remaining assets into a new Crown Asset Management Company proves the point, and I think their reasoning that it was to save on receivers' fees is only one half of the story as the savings pale in comparison to the millions which will be saved by getting in competent skilled non-corrupt staff.

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Wonder how much Kerryn Downey and William Black of McGrathNicol ripped out of this?If the Govt had half a brain they could have transferred all to Kiwi Bank and eventually recouped the lot over time.But still doesnt escape the injustice done to Allan Hubbard.

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Sickening how some people seem to think it's humorous or funny to poke fun at the old man, especially after he's dead. They are not even interested in fairness. No regard for the 50 years of sheer hard slog and diligence he put in to the businesses or his investor's interests - just trampling each other in the rush to rip his heart out and fry it in pan the second Key and his mates point the finger and issue accusations. Just a despicable display of cynicism, hatred, greed, and lack of balance or critical analysis of all of the facts. A disturbing indictment of some people in our business community, some business commentators & journalists, and the sheer lack of humanity present in them. Stripping the old man of his dignity in the way that they have says nothing about him and everything about them.

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I think its important to remember when trying to label Allan Hubbard as either good or bad, that there is palpable evidence for both badges. For most of his career he was a generous philanthropist who also profited himself from significant tax benefits via his charitable trusts, and the end of his career saw him engage in fraud on a massive scale to dig him and his company out chasm created by him, his fellow directors and executives.

It is not an intelligent or accurate approach to label him all good or all bad, as his many actions spanned decades, many good, some great, some atrocious. If I had to label him I'd go for "Righteous Crook".

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I think it is almost certain that 'the old man' you talk so highly of would have been facing criminal proceedings had he been alive today. That $1 billion plus that 'the old man' managed to cost the taxpayer by his leadership of SCF would have bought an awful lot of hip replacements, cancer treatments and dialysis machines. Always remember that when you try and defend that 'nice cuddly old man'.

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The twisted logic of Hubbard's critics invariably reveals a hidden agenda. Always has the same ring as those who justify the bombing of innocent civilians. Not one allegation made against him was ever proven, and he can't defend himself now he is dead. Why do his critics need to keep promoting the idea that it was all his fault? Very, very, very suspicious. Very suspicious indeed. Their argument is always based in allegation and innuendo - never ever backed by any facts. Statutory managers reports are not 'facts', especially not when they were paid to co-author the report that got him put into statutory management in the first place, which also got them appointed to the job - for $51,000 per week. It is proven beyond doubt that the government are completely responsible for sinking SCF, not Allan Hubbard. Why do his critics try so desperately, breathlessly hard, to promote the myth that one man could be completely responsible for the whole thing? The absurdity of that logic is the first clue to their hidden agenda...

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