South Canterbury Finance's (SCF) receivership has seen the biggest taxpayer loss of any corporate failure in New Zealand's history, Labour MP David Cunliffe says.
The country faces a net loss of $1.3 billion, and growing, following the collapse of SCF, the Labour finance spokesman said when visiting Timaru yesterday.
He says the Government could have limited its loss to $500 million and took a shot at Rangitata MP Jo Goodhew's handling of the issue. She labelled his comments "distasteful".
After a failed recapitalisation bid, SCF was placed in receivership on August 31 last year. Allan Hubbard, the former chairman and chief financial backer, died after a car crash last Friday.
He and his wife Jean, their companies Aorangi Securities and Hubbard Management Funds, and several charitable trusts, had been placed in statutory management by the Government on June 20 last year.
In June this year the SFO laid 50 charges against Mr Hubbard in relation to Aorangi and HMF, but these have been dropped following his death.
"In light of Allan Hubbard's tragic death there are some serious questions that need to be answered. Why was Allan Hubbard placed into statutory management when so many others in the finance industry weren't? Was the treatment of the Hubbards by the statutory managers appropriate?" Mr Cunliffe asked.
He believed the Hubbards had not been given enough time to get their papers in order before statutory management was imposed.
"Why didn't the Government have a clear strategy for dealing with SCF? They have been confused the whole way through.
"In mid-2007 ministers were advised that South Canterbury Finance was in financial difficulty but they chose not to put it in statutory management. Yet in 2010 they put Allan and Jean Hubbard into personal statutory management which had the effect of stopping the refinancing of SCF."
In August 2010, then SCF chief executive Sandy Maier and others had brought some recapitalisation deals to the table, he said.
"The best of those involved the NZ Super Fund, Ngai Tahu and a merchant bank which would have limited the taxpayer loss to $500m. The Government walked away from that deal and placed SCF into receivership where the assets were left to wither on the vine with a net loss of $1.3b and climbing for taxpayers." The Government had overstated the risk of the deals on the table and had persecuted the Hubbards, he said.
"It has been the personal victimisation of some citizens who weren't perfect and do not have perfect systems, but who in my view were not dishonest and made many valuable contributions to this community." This was amid a background of corporate conflicts of interest, he said. "When that book is written it will be well worth reading."
He was also critical of Rangitata MP Jo Goodhew.
"Jo Goodhew has not lifted a finger to defend the Hubbards or further South Canterbury's interests.
"She has been AWOL on South Canterbury Finance – as a Government MP she had the best chance of influencing ministers, but she didn't."
Mrs Goodhew said she found his comments "politically motivated and frankly distasteful".
"His timing is regrettable given that the Hubbard family should be allowed space to come to terms with their loss right now. Secondly, as a former minister he should know that once a process like statutory management or receivership is under way, local MPs have no opportunity to intervene."
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