Friday, September 3, 2010

VIDEO: Jenni McManus Explains Allan Hubbard Collapse

Source: NZI Business Sept 2: Fairfax Media briefing with Jenni Mc Mannus

Few people watch NZI business at 6.00am but I occasionally do when I am getting my little girl ready for daycare. This is worth a look if you want to get your brain around Allan Hubbard and his failure at South Canterbury Finance (SCF), Aorangi Securities, Hubbard Funds Management and other divisions of his former business.

Jenni explains the saga over Allan Hubbard and the goings on at his business empire better than anyone else.

Known for her dispassionate focus on facts in terms of business commentary and investigation Jenni zones in on the following key points:

1. Disclosure and transparency of the SCF loan book has always been a problem and a big issue for Jenni.

2. SCF strayed from its core lending under Hubbard. A big reason for his empire collpse.

3. Lachie Mcleod, former CEO of SCF, was lent $15 million to buy shares in SCF with no interest by one of Hubbard's investment vehicles - big questions as to whether this was typical of the lending practices of Hubbard's business interests.

4. Hubbard made decisions without board approval or indeed reference.

5. The statutory management process made clear what was going on all the time. The second Grant Thornton Report is an important document that reveals typical financial processes of the company; hidden loans, inter-party lending, ghost assets. Statutory management had no bearing on the collapse of SCF or any other part of the business.

6. Insufficient due diligence done on finance companies let into the Govt guarantee - well duh.

The probability is, after more poking around in balance sheets and records, that the kinds of loans made by Hubbard and associated companies that will be disclosed will reveal a litany of embarrassing and possibly fraudulent loans and the relevance of the Serious Fraud Office part will become very clear.

You would have to say though that Allan Hubbard isn't alone in his financial skulduggery. Auditors, accountants and advisers to Hubbard and his former business have questions to answer as the SFO case unravels and a further report from Grant Thornton comes latter on this month. What is clear at present is that Mr Hubbard needs to take the biggest responsibility for the failure as he was the head and CEO of SCF.

From this reading, supporters of Mr Hubbard appear to be chasing a dead dog that will lead to further embarrassment of the kind already heaped upon them from the mainstream media that previously supported their stance.

See Chris Lee for an interesting "inside" look.

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