By Gareth Vaughan
The Securities Commission could reveal whether it will lay criminal charges against directors of failed property development financing group Hanover as soon as this month.
In a highly unusual move, the regulator announced last November that it had nearly completed an investigation into the Hanover group and might lay criminal charges against directors in the New Year. Then in December the Securities Commission successfully obtained approval from the High Court to freeze Hanover co-founder Mark Hotchin's New Zealand assets.
Asked when the Securities Commission might reveal whether it is laying charges or not, Commission spokesman Roger Marwick told interest.co.nz further news was likely this month.
"We expect to be able to update you on further progress around the middle or towards the end of this month," Marwick said.
A court hearing is scheduled for Monday and Tuesday February 14 and 15 as Hotchin looks to overturn or alter the court orders covering the freezing of assets and living expenses Hotchin's allowed. See Justice Helen Winkelmann's December judgment here.
Hanover's other co-owner, Eric Watson, was never a director of Hanover Finance, Hanover Capital or United Finance according to Companies Office records. However, he did sign Hanover prospectuses. Aside from Hotchin, other former directors include Greg Muir, who was forced to relinquish the chairmanship of sharemarket listed children's clothing retailer Pumpkin Patch late last year shortly after the Securities Commission revealed the possibility of criminal charges against Hanover directors.
Hanover froze NZ$554 million owed to 16,500 investors in July 2008. Investors' subsequently approved a moratorium proposal in December 2008 that pledged to pay them back over five years. Then a year later after getting back just 6 cents in the dollar, Hanover investors agreed to swap their Hanover debentures for shares in Allied Farmers valued at 20.7c each which are now worth less than 2c each.
Valued at NZ$396.2 million in last December 's deal, Allied Farmers had slashed the carrying value of the Hanover assets it acquired by more than NZ$300 million by June 30 to just NZ$94.3 million.
The SFO revealed last November that, after a three month investigation, it had decided to investigate at least four or five Hanover Finance transactions with a particular focus on dividends Hotchin and Watson paid themselves prior to the company freezing investors’ money in July 2008, and debt restructuring before Hanover's finance book was sold to Allied Farmers in late 2009.
"We've got an entire room full of boxes, not to mention the (computer) hard drives we have," said Feeley. "It's a beast of a case in terms of size."