SFO alleges $1.7b fraud at South Canterbury Finance
UPDATED THURSDAY: The charges laid by the Serious Fraud office involve "five or so" South Canterbury Finance transactions.
"We have simply focused on the most material transactions that have been of concern to us. There is a possibility that we may look at other transactions, but our priority at the moment is very much focused on these five or so transactions to which these charges relate," SFO boss Adam Feeley told media this morning.
He would not say what those transactions were.
The Serious Fraud Office says charges filed today in relation to South Canterbury Finance represent the biggest alleged white-collar fraud in New Zealand history.
The agency has confirmed media reports this afternoon and a subsequent statement from the Financial Markets Authority that 21 charges against five individuals have been laid in the Timaru District Court.
The charges follow a 14-month investigation into a variety of transactions involving South Canterbury Finance (SCF).
The finance company, mostly owned by the late Allan Hubbard, collapsed into receivership last August – triggering a $1.58 billion payout to investors under the Crown Retail Deposits Guarantee Scheme.
In a statement just released, SFO chief executive Adam Feeley said the charges allege a variety of offences, including theft by a person in a special relationship; obtaining by deception; false statements by the promoter of a company; and false accounting.
The alleged offences carry maximum penalties of between seven and ten years imprisonment.
Mr Feeley said it was inappropriate to comment on which individuals were charged until the charges are first heard and any suppression issues are dealt with.
Former South Canterbury Finance director Stuart Nattrass told the National Business Review he will not be charged by the Serious Fraud Office.
Mr Feeley said the total estimated value of allegedly fraudulent transactions is approximately $1.7 billion, which includes an estimated $1.58 billion from entering the Crown guarantee.
“The collapse of SCF was one the most significant of all the failed finance companies. The value of the fraud alleged to have been committed exceeds anything in the history of white-collar crime in New Zealand, and the time we have taken to complete this matter is a reflection of that scale," Mr Feeley said.
“Given the number of commercial transactions SCF was involved with, we have not investigated all transactions concerning SCF.
“We have not ruled out the possibility of investigating other matters, but our priority will be to progress the current charges through the Court.”
Earlier the FMA issued a statement saying it has completed its criminal investigation of SCF and will support the Serious Fraud Office’s case.
FMA chief executive Sean Hughes said the FMA will supply particulars of "false statements" in two SCF prospectuses to support some of the SFO charges.
The FMA was also examining avenues to take civil proceedings in order to recuperate some of the money paid out to SCF investors under the Crown guarantee scheme.
The receivership of SCF has not gone well in terms of recoveries with likely losses to the Crown in the order of a billion dollars.
The remaining assets not already sold, including the most toxic assets, will now be administered by the government with the formation of a new special purpose company in the New Year.
At the time of his death in a car accident in September, Mr Hubbard, who was 83, was facing 50 fraud charges relating to his private investment vehicles Aorangi Securities and Hubbard Management Funds.