Allan Hubbard (businessman)
|Allan James Hubbard|
Allan Hubbard in 2010
23 March 1928|
Dunedin, New Zealand
|Died||2 September 2011(aged 83)|
|Known for||Setting up a major finance business South Canterbury Finance in the South Island of New Zealand and its eventual failure|
|Partner(s)||Margaret (Jean) Hubbard|
Allan James Hubbard, QSO (23 March 1928 – 2 September 2011) was a businessman who lived in Timaru in the South Island of New Zealand and was the founder of South Canterbury Finance, New Zealand's largest locally owned finance company. In 2006, the New Zealand Listener described Hubbard as the most powerful businessman in the South Island.
Hubbard had significant interests in dairy farming, irrigation systems, finance and helicopters. He was one of three directors of Dairy Holdings Limited, which in 2007 owned 57 dairy units, and 10 grazing blocks in the South Island. In the 2006-07 season Dairy Holdings Limited milked 44,000 cows on 16,120 hectares and produced 14.3 million kg of milksolids.
Hubbard died as the result of a car crash (after being stabilised at Oamaru Hospital Hubbard then died in a short helicopter ride whilst in transit from Oamaru Hospital to Dunedin Hospital) on 2 September 2011. In February 2012, the Oamaru police charged a 40-year-old man with careless driving causing death.
Allan Hubbard was born in 1928 in Dunedin. His parents lived with five children in a three-bedroom Dunedin North cottage with no electric lighting. In the Depression, his father was unemployed plumber who had to plant pine seedlings on a work scheme. Hubbard's first job was on a Taieri Plains dairy farm. He then worked as a clerk for Trustees Executors while studying part-time for his School Certificate, University Entrance and an accountancy degree from the universities of Otago and Canterbury. In 1953, he and Jean Hubbard, who had been a fellow student at Otago, moved to Timaru where he did bookkeeping for the Craighead school while establishing the accounting firm Hubbard Churcher. In the mid-1950s he provided the backing for Doug Shears and Helicopters New Zealand Ltd. Also in the 1950s, Hubbard gained control of South Canterbury Finance, a small-time lender to local businesses and households. In 1962 Hubbard bought a dairy farm.
South Canterbury Finance
In 1926, South Canterbury Finance Ltd started as a small-time lender to local businesses and households in Timaru. Allan Hubbard bought South Canterbury Finance in either the 1950s or in 1960. Hubbard was considered the driving force behind the company's growth as it ultimately became the largest financial institution in the South Island of New Zealand. By the late 2000s, South Canterbury Finance had 35,000 investors and its assets were considered to be worth almost $NZ2 billion. South Canterbury Finance owned 13 companies including fruit packaging and warehousing company Scales Corporation, helicopter and tourism business Helicopters NZ, and a third shareholding in Dairy Holdings Limited, New Zealand's largest dairy farming group.
Despite its reputation as a South Island rural lender, South Canterbury Finance had made loans to property development throughout New Zealand, Australia and Fiji. At 30 June 2009, property loans were $414.2 million. Real estate lending represented 207 loans with an average net loan value of $1.15 million. Further, 37 per cent of lending was secured by a second or lower ranking mortgages. There were ten property loans greater than $10 million. For some lending, the interest was capitalised into the loan debt, so borrowers did not have to immediately fund interest payments.
In June 2010, Allan Hubbard stood down as Chairman of South Canterbury Finance and was replaced by Bill Baylis.
On 31 August 2010, South Canterbury Finance asked its trustee to place it in receivership after negotiations over a recapitalisation deal failed. The Government immediately paid out investors $NZ1.6 billion under the Government's Retail Deposit Guarantee Scheme. Alan Hubbard was reported blaming the Government and the other South Canterbury Finance directors for the receivership: as the directors had sidelined him and the Government had placed him in statutory management.
On 7 December 2011, the Serious Fraud Office laid 21 charges against five individuals in respect of South Canterbury Finance. The charges relate to a variety of allegedly fraudulent transactions which have a total estimated value of approximately $1.7 billion. This includes an estimated $1.58 billion from the Crown Retail Deposits Guarantee Scheme. The charges include entering the Crown Guarantee Scheme by deception, omitting to disclose a related party loan of $64.185m from SCF to Southbury Group and Woolpak Holdings, failing to disclose related party loans of $19.1m from SCF to Shark Wholesalers, and breaching the crown guarantee scheme by lending $39m to Quadrant Holding Limited. The five accused are; former South Canterbury Finance chief executive Lachie McLeod, former South Canterbury Finance directors Edward Oral Sullivan and Robert Alexander White (a lawyer with Raymond Sullivan McGlashan), former chief financial officer of South Canterbury Finance, Graeme Brown, and Timaru chartered accountant Terry Hutton, formerly of Hubbard and Churcher. The alleged offences include theft by a person in a special relationship, obtaining by deception, false statements by a promoter of a company and false accounting. All five defendants deny the charges. A date of Monday May 28, 2012 was set for a post committal conference.
On 20 June 2010, the New Zealand Government placed Allan Hubbard, his wife Jean Hubbard and his business Aorangi Securities and seven charitable trusts into statutory management, with Trevor Thornton and Richard Simpson of Grant Thornton appointed as statutory managers. This decision was based on recommendations from the Securities Commission of New Zealand after a complaint from an investor. Allan Hubbard established Aorangi Securities Limited in 1974. The directors are Allan and Margaret Hubbard and the share capital is owned by another Hubbard-owned company, Forresters Nominee Company Limited. Aorangi had operated as a finance company, having raised $98 million from 407 investors living in Otago and Canterbury and making loans of approximately $134 million to borrowers. The review of the Securities Commission concluded that many of the loans were inadequately documented, appeared to be unsecured and contrary to instructions from investors. The Serious Fraud Office (New Zealand) initiated an investigation for fraud.
The news was met with disbelief in his home town of Timaru and elsewhere in the South Island, where Hubbard is seen as a pillar of the community. There was widespread support for Allan Hubbard and a rally was held for him on 26 June 2010 in Timaru attended by thousands of people who protested against the investigation. In June 2010, supporters of Allan Hubbard started a campaign to clear his name.
In July 2010, the Statutory Managers reported that Allan Hubbard also controlled an additional business that they had not been aware of when appointed. This was Hubbard Funds Management, an investment management business estimated to be worth $70 million. It had inadequate accounting records consisting of a hand written cashbook and journals maintained by Mr Hubbard.
In September 2010, two further companies related to Hubbard Funds Management, Hubbard Churcher Trust Management Ltd and Forresters Nominee Company Ltd, were also placed under statutory management. On 11 May 2011, Allan and Jean Hubbard filed judicial review proceedings in the Timaru High Court to challenge the decision to place them into statutory management.
Two other assessments of the statutory management were also released in September 2011. On 6 September 2011, Kerry Grass released a report to the Government. Businessman Tur Borren also provided a report on the statutory management.
After an independent review of the statutory management organised by the Registrar of Companies, Jean Hubbard was released from statutory management on 11 November 2011.
In May 2012, Statutory managers Grant Thornton reported that investors in Hubbard Management Funds were owed $82 million, and the fund was valued at $44.8m. Grant Thornton asked the High Court to decide how to distribute the fund given the lack of a prospectus and gven that the 'largely fictional' investor statements had not been reconciled to investment assets for three years.
Serious Fraud Office investigation
On 20 June 2011, the Serious Fraud Office announced that it had laid fifty charges of alleged fraud under sections 220, 242 and 260 of the Crimes Act against Alan Hubbard in the Timaru District Court.
On 9 September 2011, the Timaru District Court made an order permanently staying the prosecutions in light of Mr Hubbard's death.
- Diane Morcom (6 June 2005). "Queen's Birthday Honours List 2005". Department of Prime Minister and Cabinet. Retrieved 30 October 2010.
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- Denis Welch (November 2006). "People who matter". New Zealand Listener. Archived from the original on 29 March 2012. Retrieved 26 June 2010.
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- Gibson, Anne (1 September 2010). "Bad property deals crushed rural lender". New Zealand Herald. Retrieved 17 January 2012.
- Vaughan, Gareth (9 June 2010). "South Canterbury Finance appoints Bill Baylis to replace Allan Hubbard as chairman | interest.co.nz". Interest.co.nz. Retrieved 18 June 2012.
- Parker, Tamsyn (1 September 2010). "Three bidders but deal proved too hard". The New Zealand Herald. Retrieved 21 June 2011.
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- Rhonda Markby and Emma Bailey (21 January 2012). "Two SCF accused named". Timaru Herald. Retrieved 21 January 2012.
- Gibson, Anne (13 February 2012). "SCF fraud accused all named". Otago Daily Times. Retrieved 23 March 2012.
- "Beehive - Aorangi Securities, charitable trusts, and Hubbards placed into statutory management" (Press release). New Zealand Government. 20 June 2010. Archived from the original on 22 September 2010. Retrieved 23 October 2010.
- "SFO to investigate Hubbards". The New Zealand Herald. 20 June 2010. Retrieved 21 October 2010.
- Minister of Commerce (20 June 2010). "Aorangi Securities Limited & Hubbards – statutory management fact sheet". New Zealand Government. Retrieved 9 July 2010.
- NZPA (31 July 2010). "Gentleman millionaire investigated". TVNZ News. Archived from the original on 25 June 2010. Retrieved 31 July 2010.
- NZPA (31 July 2010). "SFO to continue Hubbard investigation". TVNZ News.
- Bernard Hickey (23 June 2010). "Top 10 at 10: The real Allan Hubbard". Interest.co.nz.
- Amiri Halberg (26 June 2010). "People Back Allen Hubbard". Topnews.co.nz. Retrieved 31 July 2010.
- NZPA and Herald Online (24 June 2010). "Ads kick off campaign to clear Hubbard's name". The New Zealand Herald. Retrieved 30 March 2012.
- "First Statutory Managers’ Report to Investors Aorangi Securities Limited Hubbard Management Funds Mr AJ and Mrs MJ Hubbard and Associated Trust Entities". Grant Thornton Ltd. 12 July 2010. Retrieved 31 January 2012. Text "author-R G Simpson and T F Thornton " ignored (help)
- Commerce Minister Simon Power (20 September 2010). "Two further Hubbard companies in statutory management". New Zealand Government. Archived from the original on 10 June 2011. Retrieved 21 May 2011.
- NZPA (11 May 2011). "Hubbards fight court decision". The Otago Daily Times. Retrieved 21 May 2011.
- Independent Report in to the Statutory Management in September 2011 http://www.scribd.com/doc/64311081/Hubbard-Report
- APNZ (3 November 2011). "Jean Hubbard released from statutory management". New Zealand Herald. Retrieved 30 March 2012.
- Berry, Michael (22 May 2012). "Hubbard accounts 'largely fictional'". Fairfax NZ News/(Stuff). Retrieved 22 May 2012.
- Steeman, Marta (20 June 2011). "SFO charges businessman Allan Hubbard". The Southland Times. Retrieved 20 June 2011.
- "SFO v Allan James Hubbard" (Press release). Ministry of Justice. 9 September 2011. Retrieved 11 September 2011.
- Bridgeman, Duncan (21June 2011). "50 charges: will Hubbard survive them?". National Business Review. Retrieved 2 September 2011.
- Macfie, Rebecca (25 June 2010). "Allan Hubbard - a working-class boy with big dreams". The New Zealand Herald. Retrieved 21 June 2011.