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New Hubbard statutory manager's report details new losses, miserly returns, undocumented loans, related party loans, PI etc

New Hubbard statutory manager's report details new losses, miserly returns, undocumented loans, related party loans, PI etc

Allan Hubbard's statutory manager, accounting firm Grant Thornton, has just released its third report on Hubbard, Aorangi Securities, Hubbard Management Funds (HMF) and other associated entities.

(Updates add further detail, background).

Here are some of the main points:

- HMF main portfolio worth NZ$49 mln at Sep 17, can't make repayments until High Court direction obtained

 - Investors' funds in HMF were probably pooled with others, rather than the expected individualised portfolios

- Grant Thornton expects to recoup just NZ$1 mln from NZ$19.57 mln worth of related party loans by HMF

-  Hubbard statutory managers applying to High Court for directions in relation to Hubbard Management Funds

 - NZ$10 mln Aorangi loaned to South Canterbury Finance's parent Southbury Group lost due to South Canterbury Finance receivership

  - Aorangi investors to get 3c in dollar payment during October. Asset (farm) sales at market value could see Aorangi investors get up to another 20c in dollar by mid-2011.

- The statutory managers say they are encountering difficulties with the collection of loans related to the Te Tua Charitable Trust, which owes about NZ$25 million to Aorangi but less than half is expected to be recovered, and have insufficent records to allow them to contact some borrowers who have received money from Te Tua. Furthermore, some borrowers are overseas and Grant Thornton wants to use a private investigator to help trace them.

- Rent payments have been received for the last two months for a tenanted property owned by Te Tua for which no rent seems to have been paid for the last 12 years. The statutory managers say they are talking to their lawyers and the tenant about the apparent rental arrears.

- "During our investigations we have noted that third parties have recorded security interests or charges against some HMF investments to secure liabilities related to Mr and Mrs Hubbard and other entities they are associated with. Should all of these charges prove to be valid, the overall assets available to investors would be reduced by approximately NZ$7.57 million."

- The HMF portfolio appeared to have been "constructed on a high risk-high return philosophy."

The statutory manager's next report is due at the end of October.

SFO decision nears

The Serious Fraud Office (SFO) is investigating and SFO director Adam Feeley expects to decide within weeks whether to charge Hubbard or close its investigation.

Hubbard, his wife Jean, Aorangi Securities and seven charitable trusts associated with the Hubbards were placed in statutory management by Commerce Minister Simon Power, following a Securities Commission recommendation and investigation involving the Companies Office, on June 20. The Registrar of Companies referred a number of matters relating to Aorangi Securities to the SFO to investigate potential breaches of the Crimes Act.

Grant Thornton's Trevor Thornton, Richard Simpson and Graeme McGlinn were appointed statutory managers on June 20. In their first report the statutory managers said they had frozen NZ$70 million in HMF, a vehicle they weren't previously aware of where the accounts were hand written.

In late August, after completing its first interim report, Feeley said the SFO would make further enquiries, noting there were now issues in relation to HMF that required consideration.

This came after the statutory managers’ second report which said there was an “alarming gap” between the income Aorangi was receiving from its loans and investments and the amount it needed to pay out to its investors, and that Hubbard had over stated HMF's position by at least 25%.

And last month the freezing of Hubbard's financial affairs also extended into trusts linked to HC Partners, the Timaru accountancy practice formerly known as Hubbard Churcher. The Government has added Hubbard Churcher Trust Management Ltd, Forresters Nominee Company Ltd to the statutory management, plus Temple Bar Family Trust and Barns Charitable Trust. Prime Minister John Key has also rejected calls from Hubbard supporters for a public enquiry into the Government's handling of Hubbard.

The original seven trusts placed into statutory management were; Te Tua Charitable Trust, Otipua Charitable Trust, Oxford Charitable Trust, Regent Charitable Trust, Morgan Charitable Trust, Benmore Charitable Trust, and Wai-iti Charitable Trust.

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Your headline is misleading.  I've read the report and there is nothing that wasn't known before.  Still no evidence to justify the statutory management.  Granted the entire empire was not efficiently handled but there is nothing there to indicate fraud.

"Still no evidence to justify the statutory management."

Wow, the cognitive dissonance is still strong within the minds of the Hubbard zealots, huh?

The Hubbadite force is strong in this one.......

Be interesting to know if the remaining Hubbadites who are still defending the old geezer are the ones who benefitted most from those 'special' interest free loans he arranged for his mates and associates.

It was reported earlier that HMF had initially $82m of depositors cash - $33m of that has now been established as being lost, or 40%. In the last report losses were spoke of as 'at least 25%'.

We have seen this pattern of mounting losses before have we not?

At the very least this reporting of specific losses will silence the bleating of the Hubbadites about 'investors have not lost any money' that we used to hear so often.

Investors cash has been lost. In spades - and its all down to Alan Hubbard.

Thanks goodness for Mark Daly on this thread, providing some rational insights finally.

These threads so quickly become toxic.

 I don’t know  him, I’ve never invested with him, but nothing I’ve read, yet, leads me to any conclusion other than Allan Hubbard is a ‘good’ man. Even now, he has offered to subordinate his own interests in Aorangiand make up any losses to investors.

 I’ll go further.

 Yes, the finance company sector has seen some shysters, however, the majority of the directors of all the companies that have gone under, are ‘good’ people.

 It was the finance company model that was broke, in respect of those finance companies that went down before August, 2008. It is the  massive asset devaluations from the credit/asset bubbles bursting, that has pulled Allan Hubbard down. Bubbles that were not due to an unfettered capitalism or lack of regulation, but the reverse,  that owed to Western planned economies: governments in control of the money supply, central banks distorting the true cost of credit, fractional banking (vis a vis unsound money) – all those intrusions of State distorting free market signals. 

I see laxity in Allan Hubbard’s case, most certainly, a needed rigour missing and consequent on growing too quickly after the Crown Deposit Scheme (yes, the State again and its unintended consequences), but I still see no fraud: though am prepared to wait until the SFO finally pronounce on this. I will note though that the Statutory Managers have never to my knowledge laid such an accusation.

 Any investment company that was stopped mid-res currently, due to the economic bust and (in hindsight) inevitable devaluations, would be showing – shock, horror – losses. How could it not. My Fisher Funds Aussie Growth fund is still over 10% down on what I paid three years ago, at some points it was over 30% down, but that’s fine, I’m a long term investor, and value is being created again. I think with only a few exceptions most Kiwisaver growth funds (and many conservative ones) are still – shock, horror – on losses.

 Unfortunately for Allan Hubbard, his empire is stopped by the State with timing that couldn’t have been worse. Moreover, putting the Aorangigroup into Statutory Management was the executioner of SCF ($2 million fund inflows per day went down to $200,000 on that). And now, the receivership of SCF ironically impairs the investments in the Aorangigroup. What a mess. And no one will ever be able to say if left alone Allan Hubbard and his investors could not have traded themselves out. 

And perhaps not. To return to my opening comment, with finance companies the model was broken and had to fail given certain conditions that occurred. Allan Hubbard’s  empire might always have struggled to beat the Keynesian nightmare that has overcome us all. 

But these are all things so easy to see in hindsight: and hindsight is the one thing business people, including all the directors concerned, those people who accumulate capital and hence grow our economies, don’t have the luxury of, thus sometimes, often even, get it wrong, or are overtaken by events. The luxury of 20/20 hindsight is left to the retards that bay on economic forums, retards who’ve probably never taken a risk, never invested nor been involved in business, but because they’re so childishly wise after the event, impugn the characters of people who do. I know who I respect: the old duffers like Allan Hubbard and the risk takers, not the retards.

 Retards are also deaf to reason and circumstance, so wise me will stand aside and go about their lives, while these holier than thous scream and shout their bile.



End Point: there was one group of economists who did predict the bust and the devaluations; they were bastions of freemarkets, the Austrians: unfortunately, Allan Hubbard was a Keynesian in his ill-fated belief that asset values would continue to go up, fed by the cheap money and cheap credit that kept getting our politicians voted into office. 

Actually Tribeless I suggest you go in the archives of in which you will find that I (along with a few others - I recall andrewj was also very dubious) were waving the red flag vigorously over SCF and Hubbard BEFORE the GFC ie pre - 3Q 2008. Just because you have the foresight of an ant dont think others do. Some of us have been VERY consistent in smelling a rat where SCF was concerned.

Back then Bernard was actually of the view that SCF was relatively speaking a 'good' finance company.

Just because you have the foresight of an ant dont think others do. Some of us have been VERY consistent in smelling a rat where SCF was concerned. 

My very point above. After twenty something finance companies had fallen over in the two years beforehand, because the model they were following was critically flawed, and after the farm valuations SCF, amongst other investments, were falling from the economic crisis, you 'smelled a rat with SCF'.

Very clever. in hindsight.

Did you smell a rate in 2003? In 2004? 2005?

Not one to do the research in the archives eh Mark?

No surprises there then.

It's called being busy with a job Andy. No, I don't have time to trawl through the archives.

You link me to your earliest post voicing disquiet at SCF ....

Speaking of archives - is there anyway we can find out when we first posted on this site?  I'm just curious as to how long I've been a "follower".

First came here from a link at GlobalHousePriceCrash - gee that seems ages ago and indeed at that time I certainly saw all the warning signs of a bubble and stayed well clear of the burgeoning finance/property development companies.

Did you smell a rate (sic) in 2003? In 2004? 2005?

Yes, I did, along with others, including many of those still posting here.

We tried to warn people but were told to shut up, because obviously we were foolish and wrong.

Most of the people we tried to warn have long since ceased to post their opinions here at

From that NBR piece:

''And a certain beneficiary of Te Tua was discovered to have been living rent-free for more than a decade: “Finally, we have received rent payments for the last two months for a tenanted property owned by Te Tua for which no rent seems to have been paid for the last 12 years. We are currently in discussions with our legal advisers and the tenant concerning the apparent rental arrears,” the report says.''

You could not make this stuff up.........

No-one you know I assume Mr Daly?

Nope don't know the man (Hubbard or the supposed tenant).  So who's guilty of the fraud?  Hubbard or those who have been taking advantage of him?

I would like to add that my stance on this - which I have held from the day that the Hubbards were put into statutory managemnet - is based on principle. (I have never had any investmnets with Hubbards or any other finance company ot funds manager that is for fools). That principle is that we are a country of laws and the Government can only act within the confines of those laws.  Despite what has transpired since the pertinent question that needs to be asked is whether the Governmnet acted correctly AT THE TIME in putting the Hubbards into statutory management.  They had an anonymous complaint from an investor in Aorangi which alleged that Aorangi, as a contributory mortgage company, was acting illegally in not having a prospectus. There was no allegation of fraud much less any evidence of it but nevertheless statutory management was imposed because of a suspicion of fraud.

HMF was not included in the original statutory management largely it seems because the regulators did not know that it existed (oops missed that 40-80m) so in respect of the original decision and the veracity of it any revelations about it are irrelevant (although it seems that they are very much valuation based which is a very dodgy area as everyone knows). 

At the initial stages of their work the statutory managers (based on their first report) spent time trying to guage whether Aorangi was a contributory mortgage company or not but we have not heard anymore about this so one must assume that this is not an issue now. Therefore one must assume that the original reason behind the statutory managemnet has proved unfounded.  that should be the end of the matter.

So should disregard everything that it has now uncovered.  In my view yes.  The law limits what they are entitled to do and they should leave the investors to sort it out for themselves.  If they lose money they lose money.

As the definition of fraud noted above there must be an intention to commit it.  No matter how bad some of the Hubbards decision making may be, how bad their record keeping is that is between them and their investors.

The ends do not justify the means.

Is not inflating the assets by 25% good enough evidence of an attempt to deceive, ergo, fraud?

Nope.  Half the business community would be in court.  Valuations are very subjective.

I used the word inflating, deliberately. I did not mean revaluing. There's a difference. One is subjective, the other fraud. Ask the ANZ, who currently have a case in court re inflated property prices ( Auckland) as opposed to valuation.

Yip then I agree.  Has to be proven of course and would be extremely difficult to do in this case if you consider how shambolic his processes are (reportedly).

"Grant Thornton expects to recoup just NZ$1 mln from NZ$19.57 mln worth of related party loans by HMF"

Wow, I hope he goes to jail. He wont, of course.

"NZ$10 mln Aorangi loaned to South Canterbury Finance's parent Southbury Group lost due to South Canterbury Finance receivership"

Whose fault is this.

"Aorangi investors to get 3c in dollar payment during October. Asset sales at market value could see Aorangi investors get up to another 20c in dollar by mid-2011."

Really??? Why dont they get AH in & start asking questions. Obviously the above didnt help. How much is Grant Thornton charging in way of fee's etc.

Hubbard should be involved in this process, if only to help maximise the returns to investors as quickly as possible. I've seen a lot of money dissappear in recieverships before and I will be surprised if they even return close to what they think they will.

According to the statutory manager's report, he is involved Taxman. The story is updated with more detail.

Will there be a court-based examination by the receivers ? Or does Statutory Management overule the receivers ?

One Legal Definition of Fraud

Legal Dictionary

Main Entry: fraud
Function: noun
Etymology: Latin fraud - fraus
1 a :  any act, expression, omission, or concealment calculated to deceive another to his or her disadvantage; specifically :  a misrepresentation or concealment with reference to some fact material to a transaction that is made with knowledge of its falsity or in reckless disregard of its truth or falsity and with the intent to deceive another and that is reasonably relied on by the other who is injured thereby b :  the affirmative defense of having acted in response to a fraud
2 :  the crime or tort of committing fraud fraud > —see also MISREPRESENTATION
NOTE: A tort action based on fraud is also referred to as an action of deceit.  

if only Blue Chip, Hanover, Hubbard, AFC and the likes were merged into one big f**k up then everyone would have seen it like the sky falling on their heads - too late now tonto....

where the Hubbard lovers now? this is one big fraud, inter party loans are only used as props nothing else.

 3c now and 20c from asset sales next year? which assets?  dairy farms I dont think so.

What a mess.Hubbard the same as Hanover etc, didnt know how to run a bath let alone a finance company.

Lets hope new legislation will stop this, more  mum and dad investors cleaned out .

Is there anybody left with money to invest.

Those Hubbard cult supporters should go and read the latest Nat Business review...there are cover ups all over the place...only question that should be asked is how did this go on for so long.

This is not just bad back office process or incompetence, some of this is just plain deceitful

Going right back to the top comment - Stat Management is not about fraud - it is an action by the Govt to effectively place a company into receivership when there are no creditors to do it or no shareholders able to do it - a public interest test, if you like.  Like a receivership or liquidation control is taken from the directors and placed into another party...

So there doesn't have to be evidence of fraud to justify Stat Management.  Even if the SFO says there is no case to answer here the decision to appoint Stat Managers is probably still the right one...  why?  

The thing is a complete dogs breakfast, there are related party transactions all over the place, poor governance, bad record keeping and mis management.  If this was Hubbard's own cash no one would give a toss, but it isn't his own cash, although he clearly has treated the investors funds as if it were his own private bank...  which is no better than what Watson/Hotchin/Petrecevic et al all did...

From Ministers pres release 20/6/10.  The other issues you mention are noted but the statutory management action was taken primarily because of the supposed suspicision of fraud.

"My action follows a recommendation from the Securities Commission, and I advised a meeting of the Acting Prime Minister and senior Cabinet Ministers of my decision at 2pm today," Mr Power said.

"The Registrar of Companies has referred a number of matters relating to Aorangi Securities Ltd to the Serious Fraud Office to investigate potential breaches of the Crimes Act.

"The recommendation of statutory management was the result of careful consideration by the Securities Commission.

"The decision to place these entities under statutory management is being taken pursuant to section 38 of the Corporations (Investigation and Management) Act 1989, and is effective from 3.30pm today.

"It follows a process that took a number of weeks and involved the Companies Office and Mr Hubbard.

"The main objectives are to prevent fraud and reckless company management, to protect investors and to enable the orderly administration of a company's affairs.

Copy of section 38 ofthe Act for your information:

 Grounds on which corporation can be declared to be subject to statutory management

  • The Securities Commission shall not make a recommendation under section 38 of this Act in respect of a corporation unless it is satisfied on reasonable grounds—

    • (a) That the corporation is, or may be, a corporation to which this Act applies; and

    • (b) That, in the case of a corporation that is, or may be, operating fraudulently or recklessly, it is desirable that the corporation be declared to be subject to statutory management for the purpose of—

      • (i) Limiting or preventing the risk of further deterioration of the financial affairs of the corporation; or

      • (ii) Limiting or preventing the carrying out, or the effects of, any fraudulent act or activity; or

      • (iii) Enabling the affairs of the corporation to be dealt with in a more orderly or expeditious way:

    • (c) That, in the case of a corporation referred to in section 4(b) of this Act, it is desirable that the corporation be declared to be subject to statutory management for the purpose of—

      • (i) Preserving the interests of its members or creditors or beneficiaries or the public interest; or

      • (ii) Enabling the affairs of the corporation to be dealt with in a more orderly or expeditious way.

    Compare: 1964 No 134 s 38R(4), (6); 1986 No 131 s 10

It says it all

So, Mark. You're saying Hubbard wasn't reckless, either?

Read my comment above again. I said he showed an incredible laxity (that could be read as reckless, I wouldn't dispute it whatsoever. Doesn't change the inferences of my post at all though.)

One thing I'm sure of reckless doesn't equal carelessness.

I'd disagree. "reck·less  adj. 1. a. Heedless or careless.

You could be right although I know in respect of tax they are not the same.  Plus the fact that the section talks about fraud or reckless trading would suggest a stricter test.  Ejusdem generis?

Don't know enough about how that term "reckless trading"has been defined if it has but been I would argue that at the time the statutory managemnet was imposed there was no evidence of this. I am very suspicious/sceptical of the investigation in this case.  "Complaint"letter received in February, meetings attempted to be arranged in June (I am sure Hubbard wasn't receptive to these approaches and probably dislikes regulators in general) - what the hell lets put him in statutory management.

I love this mans followers...reminds me of that event in texas a few years back..what was it..

WACO..yeah that was it..the Messiah can do no wrong.

What do you call seeking and accepting deposits without issuing a prospectus. I  thought it was illegal.

I suspect tghat it would be a breach of the Securities Act and therefore illegal (haven't heard anything about that since the first report tho).  Not fraud under the Crimes Act.

It has never been categorically stated, yet, including by the SFO, that Aorangi needed to issue a prospectus. Indeed, this whole affair probably turns on that. SFC, yes, most certainly, but it has not been ascertained Aorangi was soliciting for public funds: Allan Hubbard holds it did not (and the logic was he had SCF for the public solicitation, so why would Aorangi have too?)

Try this one then

Aorangi represented to investors that their funds were to be held in "segregated" accounts but the funds were in fact used as if the funds were "pooled".

That does not necessarily constitute "fraud" but is certainly "fraudulent" and "recklessly" stupid.

That was HMF in fact which was not part of the original SM and highly unlikely to constitute fraudulent or reckless trading - in my opinion.

I just heard of a rumour that the Reefton millionaire steps in with $ 1’000’000.- Terry Serepisos  with $ 150’000.- Eric Watson with $ 200’000.-Mark Hotchin  with $ 250’000.- Bryers $ 50’000.- Petrovic $ 15’000.- Summers-Edgar $ 2.50.- to rescue the "Hubbertism empire."

The government of Greece, Ireland and Spain are also keen of contributing some money. So, overall when all those good people get together the situation is not lost - quite the reverse a great positive restart like so many others.

mark daly, tribeless etc above...firstly, i was a reasonably substantial investor in SCF prior to any GG/tees.

i also defended Hubbard on this site for quite some time, even post the front cover Listener article, entreating people to wait and see etc.

but now i know the full and emerging facts i can only say to you... that this is not a case of a benevolent old man looking like a cross between colonel sanders and the santa on the coca cola ads......this is a tale of foolish, pigheaded business man who played ,well, santa claus with other peoples money throwing it around with no interest repayments, to charitable trusts etc without any sign of accountable business acumen....all of which any accountant ( which he apparently is) would know to be accepted business practice..i.e. accountability!

now, this tossing money around like confetti would be all very well if he was warren buffet or bill gates and was a genuine philanthropist... but he wasnt' and no matter how you try to dress this sorry saga up in semantics and "jolly good southern bloke-isms"...the truth of the matter is that allan hubbard was reckless, foolish and largely did all this giving away of other peoples money.(.and that's the core of all this money-go-round)...for reasons of hubris, arrogance and self ego gratification!

what else could you call it?

and this was extended when he refused to listen to the board's concerns about inept CEO Lachie Mcleod who compounded the felony in SCF.with immature and reckless lending whilst under the protection of the taxpayer funded  G/Gtee!

and the punishment for hubris in mytholgy?

"for those the God's wish to destroy; first they make them crazy"

and Allan Hubbard was/is!

I can't disagree with a lot of what you say, Rob.

But that aside, the current course is not one, it could be argued, that is in the best interests of the Aorangi group investors either.

There's an interesting comment from an investor here this morning: 


A frustrated Fairlie investor said he did not want the payout as he would have preferred the money to remain invested.

"We like our investments ... our investments have never failed and we have always been paid."

He did not believe the managers were acting to maintain the business of the investments, but as receivers or liquidators, leaving investors no power. 


Here's the questions this raises:

1) The group is under statutory management, not receivership. Why have the SM's moved straight to the language of paying out investors, ie, selling up the underlying investments and paying depositers back?

2) The SM's say there'll be no firesale, but, again, a) why are they talking of sale of farms as the only option, and b) any farm sale in this environment, especially while the new xenophopia from this government reigns, and the banks remain tight on credit to Kiwis, .... any farm sale now will be a firesale.

3) The one bright point economically at the moment is the Fonterra payout. I'm stunned at how the 2010 farm figures in general have turned around so well, not just on higher payout, but much better controlled costs, and this year is shaping up for very healthy profits and positive operational cash flows: the majority of farmers seemed to have learned their lessons well. The milk payout into the future is also looking solid, cycles aside .... it could well be argued the best interests served for Aorangi's investors is to hold onto the farms in the group, and take cashflow while the economic environment settles.

But the SM's, who are accountants, not farmers or businesspeople, seem set on a wholesale sell up in the worst of circumstances and lousy timing: why?

Since when did that become the brief?

Is that in the best interests of the investors?

The SM's might be dotting the i's and doing it legally right, but whose to say leaving AH in control of his empire wouldn't have brought the best result for his investors?

hi tribeless.

of course investor of Fairlie wants to go back to the Aorangi scheme of things under Hubbard 'cos he was getting good returns.

but that's the whole point of the Stat. Man in place now at A/rangi...the returns hubbard was giving were obviously not the result of smart investing but more like a money-go-round not dissimilar to a Ponzi where he was "borrowing " from Peter to pay Paul.

having said that i very much doubt you could ever compare Hubbard with scoundrels like Made-off but the priinciple is the same.

The best  summary of this sad story I have yet read  RotN.

Tribeless, regardless of the finer technical merits of the decision and grounds for statutory management, it is looking increasingly like the correct decision was made and discretion was properly exercised..  

It is always a tough decision about whether to sell down quickly or hang out for better returns; the results of the moratoriums of the finance companies suggest that selling down quickly was probably the better option in hindsight, just.   But  the feelings of one somewhat naive investor shouldn't be allowed to affect the returns of the other hundreds or thousands of fellow investors.  The Aorangi/HFM situation is clearly rotten, and cannot be allowed to continue.  If investors end up with heavy losses, the blame lies with the inherent untenable situation and the people who caused it, not actions of the receivers/liquidators.

Vis a vis the selldown, Teabagger, I agree about the other finance companies, however, they had different underlying assets, namely, black hole - in terms of money - property assets with no cash inflows. The Aorangi group, however, seems to be mainly dairy (?) and that currently has good positive operational cash  flows - or should have - but due to a number of external factors, a lousy market for farm sales. I'm simply saying the wiser choice with that asset class may be to take the annual cash flows and let the market for farms sort itself out - included in which would be the government to get it's oar out of foreign ownership and open up the market to international firms buying NZ farmland.  Surely any farm sale in this environment is a fire sale.

The only difference between SCF and the other FCs is you didn't have any money invested with the other FCs.

What does PI stand for? Thanks.

In this context, private investigator, I reckon:

"Furthermore, some borrowers are overseas and Grant Thornton wants to use a private investigator to help trace them."

Although in general on this website PI usually refers to property investor.

Cheers, Les. 

"property investor" Ahh! Thanks. Seen it on here a few times and scratched my head.

P.I. = Personally Insidious ............. from the Eric Watson  primary school report .

Back in your cage now , Gummy!

If you beleive the Hubbard case is seriously bad.- then read this !

And you wonder why we hate religious nutters such as yourself.

Sorry Malarkey. I got the web sight wrong.When I looked at it after your comment, I had to agree.Try the following;

There is a moral to the SCF story .. people need to learn from it .. there is much gnashing of teeth and self-flagellation .. but little in the way of constructive solutions .. reading the passionate pleas for compassion in this sad story reminds me of my own experiences .. here is a tale .. A long time ago I was the CFO of one of NZs larger public companies for 10 years .. employing 3000 people .. entering into contractual arrangements all the time .. many on the strength of a handshake or gentlemans agreement .. in 10 years never once did any contracts go sour .. then 5 years as an investigative accountant with one of NZs largest public companies .. again life was smooth .. When I had my first home built a small contractual dispute arose with the builder which was resolved satisfactorily on the steps of the Auckland court .. several years later developed a couple of home-units contracting with a local design-builder who was a sole-operator whose family life had hit the skids. The contract was about 3 pages long. We shook hands. Could never reach him Friday through late Monday. Found out he was a doper plus who disappeared into the smoke for 4 day weekends. Yet the job was completed perfectly ahead of time. I still remember this as an astonishing experience of the good kiwi way of doing things. Trust. Then I moved to Australia where my trust became my downfall. Every contractual arrangement went south when it came to obtaining payment. Spent the first six years fighting in the courts for my rights. Won them all. Eventually got smart. Certain ethnicities I will only deal with on a "cash up front" basis, otherwise they screw you. Doesnt matter the size of the contract. They offer you half the contracted fee on a take-it-or-leave-it basis knowing the cost of pursuing it is more than its worth. It's the custom. It's how they make their money. The moral is this .. NZers have a blind faith in the goodness of people .. it's cultural .. we grow up with it .. I had it once .. Invested in a NZ Finance company called "Investment Finance" which went broke .. still have the original share certificates to this day .. Johnson the MD went to jail for theft .. they call them related-party loans these days .. as for the SCF saga my investigative accounting background tells me that very little passes the sniff test ..   Right this time.Sorry


I have some third hand information on this situation and the basis of it is the Statutory Management move stinks, bad, real bad. That bad that I reckon that someone will pay a serious price for their corruption.

I think Dave has put a pretty good case forward here and although it looks like Hubbard is a bit of a cowboy, the rule of law has not been followed. 

Having spent a little time as a Police officer I can offer up is that Fraud involves a pecuniary advantage. Doesn't seen any of that has gone on with Hubbard.

With regard to reckless, well I could describe it as this: Knowing the risks but disregarding them. Careless would be more like not giving thought to the risks. Hope that helps.