This
is a story of the town of Timaru, where I was born, of the South
Island and of a generation of people like my father.
He
was a Canterbury farmer who, returning from the war built up his farm
and through simple living and hard work built up a nest-egg to hand
onto his children.
I
can recall how he would seal a business deal with a handshake, rather
than a water-tight contract.
He
invested his money with finance companies like South Canterbury
Finance and would have placed his trust in people like Alan Hubbard.
Alan
Hubbard came out of the same world as my father. He made his money
through dairy farming and through sound investments and made a small
fortune.
Unlike
the financial elite of today (the 1%-ers) he never saw this money as
his own, rather as a means of helping others. He often gave
interest-free loans to give people in his community a step-up. He
was there for others – there are stories of him travelling out at 2
in the morning to talk some farmer out of committing suicide.
He
never lived an opulent lifestyle.
In
fact he lived in the same simple house in Timaru he had lived in for
35 years; drove a 1970's Volkswagen and withdrew $750 a month to
support himself and his wife Jean.
He
made his money in Canterbury and his money stayed there too.
These
are values which won him the support and admiration of the people of
Timaru.
They
were values that many of us could aspire to.
And
yet, these were the very values that were cruelly dismissed and
criticised in 2010 New Zealand. Alan Hubbard was portrayed by
government and media as someone with bad business practices, someone
who was 'corrupt' and 'senile'.
By
the time this story was played out, the lives of perhaps 200,000
mainly older, upstanding New Zealanders were destroyed by the failure
of finance company after finance company. The media has been full of
the stories of the fraud and greed on the part of those involved in
the ownership and management of these companies.
By
2009-10 South Canterbury Finance was bit of a 'last man standing' –
the last independent finance company left in New Zealand.
So
what happened?
I
am no expert in the area of finance (quite the opposite), so I would
like to leave you with the sources so you can find out for yourself.
Briefly
though,as I understand it, the new National government saw Alan
Hubbard as a weak link.
Alan
Hubbard had a company, Aorangi Finance which was open to local
investors (but not to the general public – so they did not issue a
prospectus). He was also the Chief Executive of one of NZ's largest
finance companies, South Canterbury Finance.
In
2009 a single anonymous complaint was made to the Serious Fraud Office (SFO) about Aorangi
on the basis that the company had failed to issue an investment
statement.
This
became the basis for the SFO to raise questions about Aorangi and the
business practices of Alan Hubbard, who was accused publicly of
fraud and placed by the SFO under statutory management.
At
the time all his companies were solvent and had come through the
worst of the Finance Collapse. He had made the highly unusual step
of putting $40 million of his own money into SCF and was already
moved from the everyday investment decisions of the company.
In
2009 the government talked about $337 million of “related property
loans at risk”.
Yet
by 2010, with Hubbard being removed from control of his companies,
this had ballooned to a $1.5 billion loss which was covered by the New
Zealand taxpayer.
What happened is that John Key and his friends, by destroying the
reputation of Alan Hubbard and his companies and putting them into
receivership, were able to strip the assets under the guise of
protecting investors' assets and subsidising the losses with tax
payer money (to the tune of a massive $1.5 billion).
They
were then able to put the blame for all this onto Alan Hubbard and
his 'outdated', 'quaint' but 'corrupt' business methods.
The
fact was that not ONE of these assertions was ever tested in court.
The SFO removed his records and then, instead of the Crown having to
prove their assertions Alan Hubbard was forced into the impossible
position of proving his own innocence. Meanwhile the statutory
managers were able to feed a compliant media news releases every few
weeks that reinforced the perception that Hubbard was guilty of
fraud.
Finally,
in 2011, just days before Alan Hubbard was due to have his day in
court, he was killed in a car accident.
There is a perception amongst
many that his demise was not accidental and I have seen
circumstantial evidence (that was shown in confidence and I cannot
divulge) that persuades me that this is indeed the case.
Whatever
the truth, this outcome was very convenient to the Crown, who were
spared the possible embarrassment of Alan Hubbard's testimony and
which allowed them to drop the (fraudulent) fraud case.
THE
IMPACT ON INVESTORS
There
were 40 investors in Aorangi Finance, (a local company that didn't
take deposits from the general public) which was subject to a sole anonymous
complaint that came on the very day that Alan Hubbard paid $40 million of
his own money into South Canterbury Finance.
This
was a company that was solvent, yet by the time the SFO had finished,
these people had lost their lives savings.
Victim
Impact Statement
“The
impact of this situation on all of our lives has been enormous. The
worry
and
stress endured is unbelievable.
“We
invested with Alan after meeting with him in Timaru because we
trusted
his integrity and knack of wise investing. He was a well-respected
businessman
for around 60 years and was a self-made man.
My
parents had known him personally and had happily invested with him
for
many years. They supported our decision to put our money with him.
“We
have been planning for our retirement (as the government wants us to
do)
but when you get to our age and stage in life, it is extremely hard
to get
your
head around how to start again from scratch. This puts pressure on
any
healthy relationship.
“We
have no complaints with the investments Allan chose for us. They had
been
doing very well. On the odd occasion that we required money out,
there
was never any problem.
“I
firmly believe that this whole Hubbard ‘set-up’ has been a
catalyst to my
mother’s
death. Six months ago my mother was driving and gardening. She
had
recently developed many stress related problems which seemed odd as
she
has always been a very active and well person.
This
has been incredibly stressful for both my parents and really saddens
me
that
this seemed her only escape from an uncontrollable situation. My poor
dad
is now living with the consequences of all this.”
Our
families are feeling like a ‘by-product’ of a few other people’s
selfish
gains.
They have misused the system to distort things for their own benefit
and
the most frustrating thing is the powers that be have closed ranks
and
are
turning a blind eye to things that are far worse than what Allan has
been
accused of.....
For 60 Minutes documentary GO HERE
For further background on this see the research done by Kerry Grass
Also listen to the following discussion of Paul Carruthers and Vinny Eastwood.
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