BusinessDesk: Crown claws back NZ$645 million in South Canterbury Finance receivership, still over NZ$1 billion down

 The Crown has clawed back $645 million of the $1.78 billion it stumped up to pay out depositors of South Canterbury Finance and is in negotiations to finalise its takeover of the failed lender's assets.

SCF receivers Kerryn Downey and William Black of McGrathNicol paid the government a further $125 million in the six months ended Feb. 29, bringing total distributions to $645 million since the lender collapsed in August 2010.

The receivers clawed back $74.8 million from the distressed loan book, realised $56.4 million from the sale of SCF's 33 percent stake in Dairy Holdings, and achieved a further $17 million from the sale of assets and properties and other receipts, according to the latest receiver's report. As at Feb. 29, the receivers held $108 million in cash and term investments.

"The receivers are presently in discussions with the government to finalise the purchase of certain assets by the Crown, which will then be transferred to Crown Asset Management," the receivers said.

The government stumped up $1.6 billion to pay debenture holders under the retail deposit guarantee, and also paid George Kerr's Torchlight fund $175 million on top of that, which held security above investors.

Finance Minister Bill English has since said the government will take control of some $350 million of assets from the failed finance companies through a new entity called Crown Asset Management, to control fees paid to receivers.

SCF was the biggest call on the government guarantee, under which the Crown stumped up about $2 billion and expects to write-off $1.1 billion.

The Timaru-based lender was singled out in the Auditor-General's review of the scheme as taking advantage of the offer by increasing its debenture base by 25 percent and ramping up its lending over risky property developments.

SCF's lending practices attracted the ire of regulators and five former executives and directors face 21 charges of fraud worth $1.7 billion, the bulk of which relates to the Crown guarantee.

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7 Comments

Stand out from the Journo crowd Bernard. Don't just parrot goverment media propoganda; investigate the purchase of "certain" assets by the crown, what happens to them ultimately and deals done with SI based aspiring "bankers". What has become of the SCF > PGG $25mil?
Happy hunting, Ergophobia

Sorry, that's comercially sensitive.

Don't expect too much in the way of investigative reporting.
 
Here's an example from one of the best investigative financial journalists going around today. He only does about one article per week if that. Very well worthwhile following him.
 
In this particular article he highlights the run-around that is showered on people when they try and get the truth. Using Freedom-of-Information requests. And how they obfuscate. And it's even worse when one of the obfuscators is the regulator itself. And the regulator is, guess who, ASIC, the regulator who is being promoted as the benchmark standard for the FMA.
 
Yeah, read it and believe it. It's why you will never find out. You will never get answers.
http://www.theage.com.au/business/one-mans-cry-for-freedom-disappears-into-a-black-pit-20120504-1y441.html

And there is Trevor Sykes
 
http://www.pierpont.com.au/
http://www.pierpont.com.au/six-months-of-panic.htm
 
I was thumbing through The Bold Riders just last week looking at the write-offs the banks took 1989-1993. Page 573.
Westpac $6.3 bn
ANZ $4.7 bn
NAB $3.3 bn
BNZ $1.3 bn
State Bank of SA $3.1 bn
State Bank of NSW $ 0.8 bn
- so not todays money
 

The SCF saga is possibly the most complex event in the annals of NZ corporate failures. Just about every loophole that was available was exploited. So much was done on the back of an envelope. The power of one person exercising total control was profound. For current and future generations to be educated as to the possible pitfalls it is essential that a full and frank forensic investigation be undertaken and published to be available in the public domain forever. Failure to do so would be tantamount to the same failures perpetrated in the case of Euro-National and Rod Petricevic in the 1980's. Silence. Only to rise out of the swamp 30 years later and bite everyone on the bum. The situation that is now unfolding is identical to the Enron post-mortem autopsies which ceased the minute Kenneth Lay died.

 
So who was buying bonds in preceding week to the government takeover?
 What happened the large dairy farmers who appeared to have interest free loans from Hubbard and the loans were forgiven by him in the months before the government stepped in? 
What with all those 2nd mortgages on dairy farms in Canterbury, what happened to those farms has ASB taken the debt on or have they been sold?
 

Old Father Hubbard,
Went to the cupboard,
For to get his investors a bone,
But when he got there,
The cupboard was bare,
So he gave Aorangi a phone......