Hubbard misled investors, says suppressed 2011 report
"On the face of it, an exercise in 'managing the news'."Featured comment
Former National Bank chairman Sir John Anderson concluded Timaru businessman Allan Hubbard had misled investors in his tangled affairs in a report written shortly before Mr 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 Mr Hubbard making "misleading representations to investors" but mistakenly released the conclusion to BusinessDesk.
Mr 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, Sir John and Mr Pardington concluded the statutory management should remain in place.
They 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," Sir John and Mr Pardington said.
The statutory managers also considered there was a possibility Mr Hubbard's liabilities would exceed his Sawfewer risksassets once the dispute reached the court-room, the report said.
Saw fewer risks
Sir John and Mr Pardington saw fewer risks to lifting the order on Jean Hubbard, 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' affairs in June 2010, controversially leaving out South Canterbury Finance after an anonymous complaint was laid by an investor claiming they had not 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 Mr 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 Mr Hubbard died while it was being considered. Mr 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 Mrs 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.