27 Aug 2010

Hubbard audit finds assets overstated

10:15 pm on 27 August 2010

Timaru financier Allan Hubbard has criticised statutory managers appointed to comb through his accounts for what he says is attacking behaviour.

The Government placed Mr Hubbard and his wife Margaret under statutory management in June, along with seven charitable trusts and Aorangi Securities, and later Hubbard Management Funds.

A report released on Friday by the managers says Hubbard Management Funds' assets have been exaggerated by about $20 million.

The report says the assets were worth only $61 million at the end of March - not $82 million as stated by Mr Hubbard.

The managers say some investors are likely to be out of pocket and a similar fate could await those with money in Aorangi Securities.

Mr Hubbard says it is disappointing not to have received an advance copy of the report - which he says he was not consulted on - and it feels like an attack on him and his wife.

Mr Hubbard is accusing the statutory managers of ambushing him in the media, when he has respected their wish that he not speak publicly about the case.

Shock for investors

Statutory manager Richard Simpson says the value of investments in Hubbard Management Funds has been overstated by at least 25% and some investments and cash balances did not exist.

There are also expected to be further losses in the fund's value due to weaker markets in the past four months.

Mr Simpson says the news will be a shock to investors and a disappointment to the many people who have invested in the businesses operated by Mr Hubbard.

He is also warning that investors in Aorangi Securities Limited, which owes them $96 million, may suffer a loss in their investments.

Of the $130 million invested by Aorangi, the statutory manager says 64% was loaned to 25 farming businesses, which are struggling to meet their payments.

About 18% is invested in Te Tua Charitable Trust, and the statutory managers say some of that will not be recovered.

Supporters stand firm

Supporters of the Hubbards are standing by the couple and are questioning the veracity of the statutory managers' report.

Dr Albert Makary, a friend of Mr Hubbard's for two decades, is adamant the financier would not have ripped people off and that he is a frugal man.

"I cannot see him trying to deceive people, because he has got no use for the money himself. He spends $700 a month on his household while he gives away $200 million to charities - it doesn't make sense."

Christchurch businessman Paul Carruthers says the report is very short on detail and thinks the shortfall is probably being overstated.

Investor Tony Brazier says he is surprised and concerned at the report and there are questions he wants answered. He says would like to hear from Mr Hubbard and understand what happened and how it happened.

Mr Brazier says he has always been sure that Mr Hubbard would never do anything intentionally to defraud his investors.

However, Richard Simpson says the statutory managers realise some people depended on a flow of funds for their day-to-day living and that freezing the funds under statutory management has created hardship for them.

Mr Simpson says an emergency fund has been established for those people.

The next report from the statutory managers is due at the end of September.