'Wizard' Hubbard able to run ruse
Former chairman Allan Hubbard has been described as ungovernable, "the wizard of Timaru" and the "Holy Ghost" during the South Canterbury Finance (SCF) fraud trial.
Cross-examination of former director Stuart Nattrass continued yesterday at the trial of former SCF chief executive Lachie McLeod, and former directors Edward Sullivan and Robert White, at the High Court in Timaru, before Justice Paul Heath.
The accused deny 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 retail deposit guarantee scheme.
Mr Nattrass was a SCF director from 2002 to 2009. He described Mr Hubbard as ungovernable and called him the wizard of Timaru because he was capable of running a ruse.
Mr Hubbard died in a car crash in September 2011. At the time he remained a "person of interest" in the SFO investigation and faced 50 SFO charges over his private investment companies.
Mr Hubbard had appointed McLeod as chief executive without the board's approval, Mr Nattrass told the court.
"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 who is being judged by his maker rather than his peers as we speak."
As a clap of thunder was heard outside the court, Mr Nattrass commented, "the chairman returns".
After a vote of no confidence was passed in Mr Hubbard in 2009, Mr Nattrass went to visit Mr Hubbard, who gave him the option of resigning or being fired. Mr Nattrass resigned the next day.
McLeod's resignation was also called for by the board, but this was not actioned.
Mr Nattrass said White was the most concerned about Mr Hubbard's behaviour. Mr Hubbard had dubbed 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 Mr Nattrass about entry into the government retail deposit guarantee scheme.
A proposal had been put forward to backdate a number of Mr Hubbard's transactions so they would not need to be declared as related party transactions.
"Any suggestion that we should contemplate backdating any of Allan's proposals would see the lot of us in jail before lunchtime," White had written.
Mr Nattrass said SCF grew from a $400 million to a $2b-business during his time as a director. The culture of a closely held company remained at SCF, instead of it 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 gave evidence outlining office practices and how documents were prepared.
Today evidence will be given by Yogesh Mody, of Trustee Executors.
- The Timaru Herald