Widow's $60m fight delaying fund return - managers

MARTA STEEMAN
Last updated 07:29 07/11/2012
Jean Hubbard
FAIRFAX
CONTESTING: Jean Hubbard is contesting $60 million of assets promised to investors by her husband.

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The statutory managers of Aorangi Securities say it is Allan Hubbard's widow contesting $60 million of assets that is holding up sorting out the return of investors' funds.

The three statutory managers, from accountancy firm Grant Thornton, are defending their performance after angry investors sent an 18-page letter of complaint to Commerce Minister Craig Foss and Auditor General Lyn Provost last Friday alleging the statutory managers were inexperienced and incompetent and causing investors delay.

The letter was signed by 220 investors. Aorangi investors are owed about $96m.

The statutory managers said the late Allan Hubbard had pledged the $60 million of assets to the investors in Aorangi but did not complete the transfer of assets properly. The assets are shares in and loans to farming companies and commercial businesses.

The statutory managers said they regarded the Aorangi investors as the "beneficial owners" of the assets and would be fighting that in court because Jean Hubbard was now contesting the ownership of the assets her husband had pledged to the investors.

"A court ruling around the ownership of these assets is essential to protect investors against future claims of ownership by others."

The statutory managers said they had been progressing the matter of confirming the assets were owned by Aorangi investors and had commenced proceedings for that when Jean Hubbard changed her mind and and "is personally contesting Aorangi's ownership of the $60m of assets. She wants to keep the assets worth $60m".

"It is this action that is causing the significant delay, including having to find every relevant document on record."

The statutory managers said they accepted that their recent discovery of 70 storage boxes of important documents had caused further delays but the additional information in the documents was essential.

"Our assessment of the documents is that they significantly improve Aorangi's case and the likelihood of success."

Investors say the statutory managers should have secured the $60m of assets that Hubbard pledged to the investors and had failed to do so.

The statutory managers hit back, saying: "The unofficial Investor Liaison Group has failed to understand the situation with Aorangi Securities despite many meetings with them to answer their questions."

They said Hubbard transferred the $60m of assets to Aorangi over 2009 and 2010 but he failed to complete the change of ownership from his and Jean Hubbard's names.

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"It's like selling your car, but not completing the change of ownership papers properly. Someone else now owns your car, even though it is still registered in your name.

"As a result, it is the view of the statutory managers that Aorangi Securities has beneficial ownership of the $60m, even though the assets are in the names of the Hubbards."

Hubbard had tried to transfer those assets to several trusts but the statutory managers unwound the deals because they considered they had no validity.

The assets were not the Hubbards' to transfer to another legal entity as they were now owned by Aorangi Securities and the statutory managers would be arguing that in court, they said.

They defended the fees they charged, which investors claimed were exorbitant, saying they were transparent about those. They were reviewed by an independent reviewer appointed by the Business, Innovation and Enterprise Ministry and included fees other parties charged as well.

The total fees so far for the statutory management including the statutory managers and others is more than $12m, which is met out of investors' funds.

- BusinessDay.co.nz

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