Sec Com close to decision on Hanover charges
UPDATED: As Hanover Finance engages in trench warfare with Allied Farmers, the Securities Commission says it is nearing the end of its investigation into the Eric Watson and Mark Hotchin-owned companies.
The commission said its investigation into Hanover Finance, United Financeand Hanover Capital has been complex and involves a team including investigators, forensic accountants, financial analysts and lawyers.
“Commission members will meet before Christmas to decide whether criminal charges will be laid against directors of the companies., a statement said.
“Although no decision has yet been made, it is likely any charges will be laid in the new year.”
Meanwhile, Hanover Finance has accused Allied Farmers of blaming others for its own mismanagement, failing to deliver promises to shareholders and forcing Matarangi Beach Estates into receivership.
In a statement authorised by Hanover Finance director David Henry, the company said the Allied board had failed to fulfil their obligations made to investors after taking over the assets of Hanover last December.
“It is with regret that we have for nearly 12 months now seen the continued deterioration of the value of the assets transferred whilst under the management and ownership of Allied,” the statement said.
“Noticeably the promises and commitments made by Allied have failed to materialise, and these assets seem to have been sold with urgency to meet the distress in Allied's own financial position with the obvious adverse consequence to the former Hanover investors.”
Since December Allied Farmers has written the value of the hanover loan book from $396 million to $95 million, while posting a loss of $77.6 million for the year to June 30.
Allied's share price has fallen to below 2c.
The outburst follows a statement from Allied Farmers yesterday announcing the receivership of Matarangi Beach Estates – a golf course and development property transferred as part of a shareholder support package pledged by its owners Mark Hotchin and Eric Watson.
Both Mr Hotchin and Mr Watson are reportedly back in the country this week.
In its statement to the stock exchange Allied Farmers accused Hanover of providing unrealistic valuations of its assets prior to the takeover last December.
''It seems obvious to us that the value of these assets in the audited 30 June financial statements, on which Hanover debenture holders were entitled to rely at the time of acquisition, was unrealistic, as there is no way that the market for this type of asset has deteriorated that much in such a short time frame,'' Allied managing director Rob Alloway said.
He said Matarangi Beach Estates (MBEL) was valued at $26.1 million as at May this year, resulting in a carrying value net of debt on Allied's books of $7.9 million.
That compared with a $45.8 million gross value attributed to the asset in Hanover's June 30, 2009, financial statements.
''It is also disturbing to us that in the days leading up to the receipt of the repayment demand from HSBC we were, with the knowledge of HSBC, approached by Mr Kerry Finnigan, representing an entity owned by Messrs Hotchin and Watson, proposing a purchase of the [Matarangi] assets for the loan value of circa $19m,” Mr Alloway said.
That approach was made with the knowledge of HSBC, which cancelled the loan facility when the offer was rejected, he said.
In its statement, Hanover Finance said Allied recently stopped paying the interest and fees on the HSBC facility and advised HSBC that it had no further interest in the asset.
That led to the appointment of Grant Graham and Michael Stiassny of KordaMentha as receivers of MBEL.
“The HSBC facility was guaranteed by Axis Property Group Holdings Ltd and HFP Investments Ltd (in liquidation), companies related to Hanover. These entities have limited financial resources since the assets they held previously had already been transferred to Allied, Hanover said.
“In a confidential meeting with Rob Alloway, and with HSBC's knowledge, a proposal was put forward whereby, if Allied was no longer prepared to support the asset financially, then parties associated with Hanover would look to assist the bank. Their interest in doing so was to assist HSBC to secure repayment of its debt.
“Hanover believes that Rob Alloway and the rest of the Allied board have managed the assets poorly, failed to fulfil their obligations made to investors, and need to start taking responsibility for their own actions rather than blaming others.”
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Comments and questions34
Regardless of subjectiveness of Hanover loan book value, Allied made the decision to proceed with purchase saying they had completed throrough due diligence. Alloway seems to think he could just rock up to the local real estate and convert value to $396M cash ... this was never going to happen (if it was that easy Hanover would have done this themselves)
Even a first homebuyer gets a valuation (even if they are buying off a nun). where are Allieds valuations and peer reviews. I understand they sent a "suitably qualified person to do quick drivebys and give the thumbs up. Its an inside job,or go the valuers, go Alloways lack of pro conduct, or the consultant
Yeah, the Watson, Hotchin spin machine in action!!
The most interesting part of this article is the statement " Their interest in doing so was to assist HSBC to secure repayment of its debt." Since when have Hotchin and Watson shown any interest in assisting anyone with anything? There is more to this than the Hanover Spin makes out - further why are both of them back here is NZ ath the same time? Neither of them would come back to NZ voluntarily at the moment.
The reality is they must still hold guarantees over the loan hence their wish to "help" HSBC as they don't want Cullen & Bendon brought into play.
Do an Aussie trick
Pull their passports so they cant leave until the mess is sorted out
The ATO (Australian Tax Office) had the power and connections and influence to pull Hogans passport. Does the IRD Te Tare Take have that power.
Result? Nothing suspicious here,same as all the other rogues gallery Finance co thieves, cut throats, and con artists.
If you owe a $100 speeding fine unpaid they wont let you out of the country
but again the state bullies the small fry
Money isn't everything? No, it is, says any money manipulator.
H Kelly what do you mean "nothing suspicious here, same as all the other rogues gallery"? So far Bridgecorp, Nathans, 5 Star, Lombard, Capital & Merchant, National Finance 2000 and their directors have all been prosecuted by Seccom and /or the Companies Office and SFO. The regulators have clearly shown they will prosecute if offences have been committed. Remember not every company failure is due to criminal behaviour.
Cully - how about some results from all this diligent activity by our fearless law enforcement agencies?
It is good to see Allied making some noise at last but sadly this is a classic case of city clickers fleecing small town wannabees. At least Rob Alloway has stuck around to deal with the fallout unlike his chairman.
Will Greg Muir retain his board seat at Pumpkin Patch with the prospect of legal action hanging over him?
Isn't it great to live in a country that is top of the league tables for lack of corruption?
Sec-com don't forget silver toungue Muir!
By the time the SEC gets its act together, they'll be needing to serve the court papers to a retirement home's address.
alleluia
Well done Securities Commission. Put these guys away - Watson, Hotchin and Muir and then do the same at Strategic Finance.
then the NZ finacial markets have got rid of these crooks for good and the new FMA and market participants can move forward without the threat of these crooks repeating their crimes.
This may not be PC to say. But the tall poppy syndrome strikes again.
Culy get your head out of where the sun dont shine,BLUECHIP.ETC ETC ETC.
H Kelly clones - there have been some results, 5 Star guilty pleas for example. For the rest, the prosecuting agencies can't control the court process, or its speed (or lack of it). Bridgecorp and Nathans charges were filed in 2008, others more than a year ago.
Bluechip, although unpalatable, was probably the right result. Like I said above, just because people lost money doesn't mean anyone committed a crime.
Culy you must be very naive. When Sale &Purchase property agreements were altered or forged by Blue Chip henchmen a criminal offence had taken place,yet as i said earlier the offences were overlooked."Treated as nothing suspicious here",Yeah Right.
Eddie 3.40 --- what is it that you find admirable about Eric Watson and Mark Hotchin - other than their glamorous lifestyles?? They have not built any enduring businesses, not created jobs, not done anything other than cut corners and enrich themselves at other people's expense. They are expert at dodging responsibility and keeping themselves out of court but they are hardly upstanding citizens ... I am sure it's not easy making money the way these guys do but you'd have to be a moral vacuum to pocket millions of investors money then spend it all on very public and utterly shameless displays of wealth. They are not unpopular because they are tall poppies.
The clinical term for that behaviour is "psychopathic"
Eddie - you're not Mike Hosking are you???
Greg Muir has thrown in the towel at Pumpkin Patch.
Do you guys not realise, that you round up one horrible lowe life thief, only to be replaced by 5 more, the whole world revolves around money.....greed....lies & thieving, another day dawns and another thief wakes up somewhere, every goddam day.
How are we expect to believe David Henry now, when he hasnt told the truth in the past.
Budfox, I think you may be onto something with Watson & Co. Lets chain them up in Aotea square, and let them endure some public ridicule.
They have been conveniently avoiding the hard questions. Its time someone put the blow torch of them.
Hotchin and Watson are businessmen of questionable talent.....multiple failures, concerns of insider trading etc,etc I hope that sooner or later there previous deeds catch up with them.
Listen to the bleating from Alloway - small time incompetent mugged by two more cunning crooks - they saw him coming and he only has himself to blame. He had to use his own judgement on the valuations and got it wrong.
It is just window dressing from Alloway.... Wink wink... The deal between Hanover & allied is all running from a script
"It is just window dressing from Alloway.... Wink wink... The deal between Hanover & allied is all running from a script"
This could be one massive con job with both parties in cahoots. Wouldn't put it past Hotchie and Watsie. And Alloway, could be smarter than what we think. The 3 of them could be surreptitiously devaluing the assets, so that a related party can get them on the cheap.
Hotchin's played this ruse out before re golf course sale.
Bud Fox
Good question, why else would Mark and Eric be back in NZ. Lots of assets to try and sell, and perhaps a personal gaurantee sitting in at HSBC that they want to bury. If Allied keep going and uncover documents that they don't hold it could look very bad for M&E. If M&E could do a deal via the back door with HSBC the big annonymous bank will not care what shinanigans M&E got up to in NZ
I recall when this whole Allied equity for debt deal with Hanover started it was in the back of my mind that at some stage way in the future (like now) M&E would come back and via some back door means buy back the Hanover assets at $0.005 or less on the dollar, there by burying all the debt they have should a personal gaurantee emerge for some dark corner.
If this is the case they will be very worried as it could amount to fraud of the most serious kind. Jail time could await.
Will be interesting to watch this play out. The fact that the dark brown stuff is starting to stick to those assciated with M&E (Greg Muir forced out of Pumpkin Patch), is another sign that this might be unravelling in a major way. Loosing money, loosing other peoples money i one thing but loosing your freedom and doing time is another.
Many have commented upon Alloway's skill or lack thereof, he was just as dsperate as M&E when the deal was done. He may loose some money but not likley to be fighting to stay out of jail if the Fraud Office fnd what they are looking for.
TO: Watson & Hotchin well done lads you must be in the top 10 most disliked Kiwi's list ... you're winners but in good company with the likes of Bryers and co...
And Jock Hobbs, Kerry Finnigan and the rest of the Strategic Finance crooks
Have no fears these boyz are no mugz. It's all part of the masterplan. Time now to cherry pick the best fruit at one tenth of what you sold it for just a few months ago. Like lambs to the slaughter - it could only happen in in good ol' New Ziland
You'd have to think that SecCom ARE going to lay charges.. otherwise why flag the situation in the manner they have then not file.. doubly seriously bad press, that would further dilute their already weak profile !!