Friday, June 25, 2010

Bothered by Simon Botherway

I made some comments about potential conflict of interest at the Securities Commission (SEC) in April and Simon Botherway was on my list because of his directorship on Fisher & Paykel Appliances [FPA.NZ] board while also being a board member on the SEC.

In an interview this week on National Radio's Nine to Noon Mr Botherway was explaining his appointment as chairman of the new regulatory body, the Financial Markets Authority (FMA) set up to oversee our financial markets.

While much of what I heard was commendable, his comments didn't really excite me enough to make me think that the FMA would be a force to be reckoned with - Remember Mr Botherway has been on the board of the SEC when they have been about as effective as a wet bus ticket slapper (without the ticket) on errant financial offenders or preventing offenses in the first place.

Mr Botherway and his SEC have been of course behind the statutory management of Allan Hubbard and his Aoarangi Securities, a crackdown which has apparently come out of the blue and inconsistent with the SECs track record in terms of the aforementioned bus ticket slapping.

It turns out that this is where things get really interesting in terms of Mr Botherway and his capacity as the a SEC board member. has reported this morning that Mr Botherway has a conflict of interest of his own when it comes to his recommendation to send Mr Hubbard to Coventry:

A member of the Securities Commission (Mr Botherway) which recommended Allan and Jean Hubbard be placed in statutory management is also the brother of a businessman placed in receivership by South Canterbury Finance (SCF) last year.

Allan Hubbard is the owner of SCF.

Mr Bothwerway only disclosed his conflict yesterday:

Commission member Simon Botherway yesterday declared he had a "potential conflict of interest" in the Hubbard case as the brother of businessman Jonathan Botherway.

Jonathan Botherway's hospitality empire collapsed in July 2009 after SCF, which was then owed $7.8 million, put him in receivership.

Simon Botherway would not comment yesterday and instead referred questions to the commission.

Commission spokesman Roger Marwick said chairwoman Jane Diplock was made aware of the connection yesterday, five days after the recommendation was made to Mr Power, but did not believe there was a conflict on interest.

"Mr Botherway was on the division of the commission that recommended that Aorangi Securities Limited and associated persons be placed in statutory management. Mr Botherway has informed the commission of matters concerning a family member and South Canterbury Finance.

"This was done at the monthly meeting of the commission today in the context of declaring a potential conflict of interest in relation to South Canterbury Finance."

This is a clear conflict of interest on Mr Botherway's part and Jane Diplock has got it wrong when she says it isn't.

Mr Botherway needed to declare his conflict of interest before the SEC made its decision to put Mr Hubbard in statutory management and excuse himself from the process.

Perhaps there is no direct conflict of interest but the process has to be at least free of potential conflict.

Botherway should re-consider his position of chairman of the FMA. This incident over his brother and Mr Hubbard is a major oversight on his part and his inability to judge this correctly and excuse himself from the decision to put Mr Hubbard in financial limbo needs to be recognised by himself and by those that appointed him as below the standard for a person in his position.

When asked about his opinion on Mr Hubbard and the position he has found himself him in his Wednesday interview, Mr Botherway decided not to comment.

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