'Hubbard understood people's price'

04:42, Mar 25 2014

Former chairman Allan Hubbard has been described as ungovernable, the Wizard of Timaru and the Holy Ghost as the trial of South Canterbury Finance continues.

Cross-examination of former director Stuart Nattrass continued today at the trial of former South Canterbury Finance (SCF) chief executive Lachie McLeod, and former directors Edward Sullivan and Robert White at the High Court at Timaru before Justice Paul Heath.

The accused have pleaded not guilty to 18 charges laid by the Serious Fraud Office.

SCF collapsed in August 2010, with $1.58 billion of taxpayers' money paid to investors under the Government's retail deposit guarantee scheme.

Nattrass was an SCF director from 2002 to 2009. He described Hubbard as ungovernable and called him the Wizard of Timaru because he was capable of running a ruse. Hubbard died in a car crash in September 2011.

At the time of his death he remained a "person of interest" in the SFO investigation, and faced 50 SFO charges for his private investment companies.


He appointed McLeod as chief executive without the board's approval.

"Mr Hubbard understood people's price. He had a habit of putting people in a position where they owed him. Loans could be a way of putting people in his favour.

"The board would have looked for someone more independent of Mr Hubbard. He (McLeod) was a hard worker but at the end of his time he was fundamentally out of his depth.

"Another feature of Mr McLeod and Mr Sullivan is loyalty, they were loyal to a fault.

"I refer to them as the Father, the Son and the Holy Ghost."

He was asked who was who.

"The son Mr McLeod, the father Mr Sullivan and the Holy Ghost he (Mr Hubbard) who is being judged by his maker rather than his peers as we speak."

As a crash of thunder was heard outside the courtroom and Nattrass commented, "the chairman (Mr Hubbard) returns".

After a vote of no confidence was passed in Hubbard, Nattrass went to visit Hubbard who gave him the option of resigning or being fired. Nattrass resigned the next day.

He described White as the most concerned about Hubbard's behaviour. Hubbard had nicknamed him, "handbrake Bob".

"Mr Hubbard was a personality that was highly focused on outcomes and lightly focused on process, Mr White is the opposite. More often than not Mr White would thwart his proposals."

An email was discussed in which White emailed Sullivan and Nattrass about entry into the guarantee scheme. A proposal had been put forward to backdate a number of Hubbard's transactions so they would not need to be declared as related party transactions.

"Any suggestion that we should contemplate back-dating any of Allan's proposals would see the lot of us in jail before lunchtime."

The business had grown from $400 million to $2 billion during his tenure however the culture of a closely held company remained at SCF instead of being a public company, he said.

McLeod's former secretary Megan Anderson, RSM Law practice manager Greg O'Brien, and Sullivan's legal secretary Florence Smith all gave evidence in the afternoon, outlining office practices and how documents were prepared.

Tomorrow evidence will be given by Trustee Executors Yogesh Mody.

The Timaru Herald