Allan Hubbard says PM Key's absence from NZ a factor in shock decision

South Canterbury Finance owner Allan Hubbard believes he would not have been put into statutory management and investigated by the Serious Fraud Office if Prime Minister John Key had been in the country to sort things out before they got out of hand.

Hubbard told Radio New Zealand he had been denied natural justice and the Companies Office had not given him enough time to show that 'everything was Kosher' with the loan documentation around Aorangi Securities, which was also put into statutory management by the Commerce Minister Simon Power. Power said on Sunday there was not adequate documentation of loans made on behalf of 407 investors who were owed NZ$98 million.

(Updated with comments from John Key on his return from Africa that he supported Power's decision and knew about it)

"I think if Mr Key, who knows me, was in New Zealand, he wouldn't have done that," Hubbard told Radio New Zealand. Key has been in South Africa attending the recent All Whites 1-1 draw with Italy.

"The day they came to see me, I didn't have time to review all the files and work out where the documents were. They just assumed there aren't any documents without giving me the opportunity to produce them. I said come back at the end of June and I'll show that it's absolutely Kosher," Hubbard said.

"It's against the laws of natural justice," he said.

Hubbard said he could rebut every single charge laid against him and prove his innocence in a matter of weeks.

"That is totally incorrect," Hubbard told Radio New Zealand's Geoff Robinson when asked if he did not have the correct documentation for loans made by Aorangi Securities.

"Every loan was documented. When they came to see me, I was going to Dunedin for Queens Birthday Weekend to speak at the 150th anniversary of Knox Church and I was rung on the way down about 4pm by a lawyer in Christchurch telling me they were coming at 9am on the Tuesday morning," Hubbard said.

"I said get them put off for a week, but they wouldn't be put off. I was tied up all weekend. I just came back in time to go to the office and then they demanded all these things. If I'd had time to prepare for them I could have located them all and made sure it was Kosher," he said.

"I did say to Mr (John) McPherson who came down that if he came back at the end of June I would make sure that they were all Kosher and there was security for every loan."

Asked if loans were not secured by mortgages, Hubbard said: "There's no unsecured loans."

Asked if there was just a lack of documentation, he said: "They've assumed that (there were no documents) because they couldn't find the mortgage, but they didn't tell me which ones they wanted. I was in the process of getting a lot of the loans renewed because we were looking to issue a prospectus, and I was renewing the loans for two or three years and I had instructed various lawyers around the town to prepare those documents."

Hubbard was then asked if the loans were made with the full knowledge of investors.

"The loans were verified by me and we don't consult the investors. What they're saying is some people wanted first mortgages. We used to operate that way for many years, but it became very cumbersome, and we basically operate a fund. If anyone wanted a first mortgage, there's enough first mortgages on the books to satisfy those requirements," he said.

"If they'd said to me we will give you a fortnight to come up with everything, I could have come up with everything."

Hubbard was then asked if there should have been documentation immediately available for the Companies Office.

"Yeah, but I mean they were in the process of being renewed by various lawyers so I didn't have them. But with a bit of time frame I could have got them back from the lawyers and made sure it was all Kosher."

Robinson then asked: "So you are saying they will find it's all kosher when they go through the books?"

Hubbard replied: "...or I will get it right for them by tracking down where they are."

Asked if he had had any further contact with the Companies Office or the Serious Fraud Office, Hubbard said:

"I've had discussions with the people involved. I'll cooperate with them. The essential thing is we have NZ$126 million of mortgage loans and NZ$88 million of deposits and the difference of NZ$40 million is the funds which my wife and family have injected into the company and an I've made an underwrite that our funds would disappear before any of the investors if there was a shortfall."

Later, the NBR reported Prime Minister John Key telling a pre-cabinet news conference that he knew of and supported the decision by Power to call in statutory managers.

“I was advised before I left the country that it was likely that ministers would have to group together on Sunday to make that decision,” Key was quoted as saying by the NBR.co.nz.

“I was aware of the decision they made and I support the decision they made,” he added.