Two more entities associated with Allan Hubbard have been put into statutory management as Prime Minister John Key said Allan Hubbard had not given straight answers on his financial affairs.
Key also rejected the need for an inquiry into the government's actions, saying everything would be transparent when more information was released into the public domain.
The freezing of Hubbard's financial affairs also extended into trusts linked to HC Partners, the Timaru accountancy practice formerly known as Hubbard Churcher.
(Updated with details from Commerce Minister's statement and the statutory manager of Hubbard Management Funds )
Speaking at his post-cabinet press conference on Monday afternoon, Key wouldn't say how big the entities were, but that they fit into the characterisation of other Hubbard entities currently under statutory management.
"They're sort of similar entities, it's all part of the puzzle really," Key said.
Commerce Minister Simon Power later announced that Hubbard Churcher Trust Management Ltd and Forresters Nominee Company Ltd had been placed into statutory management.
Last week, the government placed Temple Bar Family Trust and Barns Charitable Trust into statutory management, while Aorangi Securities and seven other charitable trusts were placed under statutory management on June 20 this year. See our September 13 story here.
In its second report out late last month, Grant Thornton, statutory manager of Hubbard, Aorangi Securities, Hubbard Management Funds (HMF) and other associated interests, said Aorangi investors wouldn't be getting any "significant" amount of money back before Christmas and that Hubbard had over stated HMF's position by at least 25%.
"We put two in last week, and we left a couple out. The two that we left out, we thought we could leave out, but in hindsight, for a variety of reasons, we don't think we can now," Key said.
When asked if this would now cover all of the Hubbard-connected enterprises that needed to be under management, Key said it would "to the best of our knowledge".
"But I say that because we've asked him questions before about all of the entities and haven't necessarily got a straight answer."
Meanwhile, Key said he did not think there was a need for a public enquiry into the Government's handling of Allan Hubbard.
"Because when we release the information in the public domain it will be quite transparent to everyone what's taken place," he said.
"There's no real magic here. On the one side, quite simply, South Canterbury Finance made loans to people that couldn't repay them. The vast bulk of those risky loans took place between 2007 and 2008 before the (Crown retail deposit) guarantee was actually put in place, and they form the majority of the bad bank."
Key said he was not aware of any more detailed progress on the realisation of South Canterbury Finance's assets.
Here is the statement below from Simon Power that was released late on Monday.
The Government today placed into statutory management two further companies that hold assets on behalf of businesses associated with Mr Allan Hubbard, Commerce Minister Simon Power has announced. They are Hubbard Churcher Trust Management Ltd and Forresters Nominee Company Ltd, two companies that hold assets connected with Hubbard Management Funds.
The decision to put the companies into statutory management follows a recommendation by the Securities Commission, which made its recommendation after receiving a report from the statutory managers of Aorangi Securities Ltd. The move is a result of ongoing investigations by statutory managers into Aorangi Securities Ltd and seven charitable trusts, which were put into statutory management along with Mr and Mrs Hubbard on June 20.
Two further trusts related to Aorangi Securities Ltd, Temple Bar Family Trust and Barns Charitable Trust, were put into statutory management on September 13.
Mr Power advised Cabinet of his recommendation today and the Governor-General made the Order in Council.
Hubbard Churcher Trust Management Ltd (HCTM) is owned and operated by the partners of HC Partners in Timaru, an accountancy firm formerly known as Hubbard Churcher.
HCTM holds the majority of the investment assets of Hubbard Management Funds, which invests funds on behalf of 300 investors.
HCTM is also a corporate trustee for some clients of HC Partners. Forresters Nominee Company Ltd has Mr Hubbard as its sole current director and shareholder.
"The decision to put these two companies into statutory management is a result of the ongoing investigations by the statutory managers," Mr Power said. "It has been taken pursuant to section 38 of the Corporations (Investigation and Management) Act 1989, and was effective from 5.30pm today.
“The Securities Commission recommended this action to preserve the interests of the beneficiaries of trusts administered by the companies, preserve the interests of investors in Hubbard Management Funds in the public interest, and allow the affairs of the companies to be dealt with in a more orderly or expeditious way.
"The Securities Commission was satisfied that those interests could not be adequately protected any other way.
“I am advised that the Securities Commission consulted Mr Hubbard's legal representatives and the other directors of HCTM before it made its recommendations. They were all advised this afternoon of the Government's decision. I am advised the directors of HCTM do not object to the placing of HCTM and Forresters Nominee Company Ltd into statutory management. "I am advised that the directors of HC Partners will be in touch with their trust clients shortly.”
Trevor Thornton, Richard Simpson, and Graeme McGlinn, the statutory managers of Aorangi Securities Ltd, and the nine trusts, have been appointed statutory managers of the two companies.
Later, the statutory manager of Hubbard Management Funds, Graeme McGlinn issued the following statement:
The directors of HC Partners Ltd have been caught up in the complex investment ownership arrangement that is part of the Hubbard Management Funds, according to Graeme McGlinn, Statutory Manager of the Hubbard Management Funds.
“I would like to make it clear that the statutory management is in no way a reflection on the directors' management of their clients' trusts. It merely provides us with the control we need in protecting and managing the investments in Allan Hubbard’s Hubbard Management Funds business,” he said. Hubbard Churcher Trust Management Limited, which is associated with the Timaru accountancy practice of HC Partners Ltd, was one of a number of entities that were placed in Statutory Management recently.
Nigel Gormack, director of HC Partners, confirmed that they recognised Statutory Management was necessary.
“Some of the investments in Allan Hubbard’s Hubbard Management Funds business were found to have been recorded by Allan Hubbard as being held by Hubbard Churcher Trust Management Limited as a Bare Trustee for the fund.
“The Statutory Managers wanted to ensure that these investments were under their control and protection and the best way to do this was to place Hubbard Churcher Trust Management Limited into Statutory Management until they have completed their tasks.”
“They have our full support in protecting the investors’ interests,” he said
Hubbard Churcher Trust Management Limited is otherwise not linked in any way to Allan Hubbard’s Hubbard Management Funds business.
As an independent trustee company it holds assets for and on behalf of clients.
“To ensure minimal disruption to the affairs of other non-related trusts, Hubbard Churcher Trust Management Limited would be retired as an Independent Trustee and replaced by a new trustee as each client trust considers appropriate.
”Discussions with the Statutory Manager have seen this transfer process commenced and we wish to place on record the firm’s appreciation to our clients for their support and understanding through these trying times.” HC Partners also thanked the local legal and banking fraternities for their positive and helpful stance.
Mr McGlinn confirmed that the Statutory Manager has, and will continue to have, no objection to Hubbard Churcher Trust Management Limited retiring as an Independent Trustee of any Trust not associated with or linked to Allan Hubbard, or any of the other entities currently subject to Statutory Management.