SCF failure costs taxpayers $805m

Last updated 05:00 26/03/2013

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The failure of South Canterbury Finance looks to have cost taxpayers $805 million.

All assets have now been realised from the liquidated finance company, with $774.4m recovered, the latest report from receivers Kerryn Downey and William Black states.

The receivership is expected to be completed by Sunday.

After a failed recapitalisation bid, South Canterbury Finance (SCF) was placed in receivership in August 2010, owing $1.58 billion, which triggered a payout under the Crown deposit guarantee scheme, costing a net $805m.

Five men face charges arising from the collapse of SCF and will appear in the High Court in Timaru in February next year for a trial likely to take 12-16 weeks.

The report said ordinary and preference shareholders were unlikely to recover any money.

"SCF preference shares were not eligible for repayment under the Crown guarantee."

The receivers were appointed on August 31, 2010, and on June 7 last year, liquidators PricewaterhouseCoopers were appointed.

The 2-year receivership has cost $936,852 in legal fees.

The six-month liquidation cost $50,000 in fees.

The five SCF defendants - Edward Sullivan, Bob White, Lachie McLeod, Graeme Brown and Terry Hutton - face a total of 21 charges which were brought by the Serious Fraud Office in 2011.

The charges allege that the accused acted dishonestly, primarily in relation to the issue of prospectuses, between November 2004 and February 2010.

The Serious Fraud Office has previously confirmed former SCF chairman Allan Hubbard had remained a person of interest in the investigation until his death after a road accident on September 2, 2011.

The Serious Fraud Office had also laid 50 fraud charges against Mr Hubbard relating to his private investment vehicles, Aorangi Securities and Hubbard Management Funds.

He and wife Jean and these companies were placed in statutory management by the Government in June 2010.

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- The Timaru Herald

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