22 Jun 2010

SFO confirms Hubbard firm probe

6:32 pm on 22 June 2010

The Serious Fraud Office says it will investigate businessman Allan Hubbard's investment firm Aorangi Securities for alleged fraud, saying there may be a case to answer.

The Government on Sunday put the Timaru businessman and his wife Margaret Hubbard under statutory management along with Aorangi Securities and several trusts.

SFO chief executive Adam Feely says it decided to carry out an inquiry after reviewing a Companies Office report that found irregularities among Aorangi's $134 million in loans.

"I would stress that this investigation is focussed on Aorangi Securities only," he says.

"It inevitably has cast a shadow over [Allan Hubbard's] other companies and for that reason it's in everyone's interests that we not only conduct the inquiry but that we deal with it quickly and thoroughly."

Mr Feely says he and other SFO staff are in Timaru and have visited Mr Hubbard's offices.

The investigation will be conducted under Part 2 of the SFO Act, where there are reasonable grounds to believe serious or complex fraud may have been committed.

Mr Hubbard says regulators acted hastily and he has the documentation that shows he complied with the rules.

I've done nothing wrong, insists Hubbard

Mr Hubbard says he could have proved he had done nothing wrong if investigators had given him enough time.

He says his loans were documented, but the papers were out with lawyers for legal work and investigators jumped to the conclusion that the papers were missing.

Mr Hubbard says there is no money missing, and he is not a fraudster.

He says he put $150 million into the company the Hubbards are most associated with, South Canterbury Finance, to ensure the shareholders would not suffer any loss. Mr Hubbard says he has also given millions of dollars to charity.

South Canterbury Finance is not affected by the statutory management order.

Mr Feely says it would be unwise to put a time frame on its investigation into Aorangi Securities.

But he says in light of the importance to the financial markets and the public interest, the SFO is acting quickly.

Credit rating downgrade

Standard & Poor's has downgraded the credit rating of South Canterbury Finance in the wake of Allan Hubbard's troubles.

The international credit rating agency lowered its long term rating from B plus to B minus, and its short term rating to C.

It warns further downgrades can't be ruled out.

Standard & Poor's says the imposition of statutory management is likely to erode investor confidence in South Canterbury Finance and may delay plans to attract much-needed capital to bolster the lender's financial position.