New Zealand millionaire under fraud investigation

Jun 21, 2010, 4:24 GMT

Wellington - One of New Zealand's richest millionaires said Monday that the government was 'misguided' in taking control of his financial affairs and instigating a Serious Fraud Office investigation against him.

'I don't believe in the history of New Zealand that any person has acted more honourably than myself,' Allan Hubbard, 82, who is well-known as a philanthropist, said in a statement.

Hubbard; his wife, Margaret; their company Aorangi Securities Ltd; and seven associated charitable trusts were placed under statutory management by the government Sunday, and an investigation into potential breaches of the Crimes Act was ordered.

No information was released on specific accusations against the couple, the firm or trusts.

'The main objectives are to prevent fraud and reckless company management, to protect investors and to enable the orderly management of a company's affairs,' Commerce Minister Simon Power said.

He said it was only the second time individuals had been placed under statutory management and the move was deemed necessary because the Hubbards were so intricately involved with all the entities as depositors, managers and borrowers.

In a statement to investors, Hubbard said he had operated Aorangi as a mortgage company for more than 30 years, there had been no loss of capital and clients had always been paid interest on time.

It has a surplus of 40 million New Zealand dollars (28.4 million US dollars), enough to pay interest due on June 30, he said.

The government excluded Hubbard's troubled South Canterbury Finance Ltd, which has 30,000 investors owed about 1.3 billion New Zealand dollars, from the statutory management action.

Hubbard was last month made president for life of South Canterbury, and its chief executive, Sandy Maier, said Monday that he was 'deeply shocked and surprised' by the government's move.

Hubbard, who personally put 150 million New Zealand dollars into the company in February, said, 'In the past month, I have been working on finding a solution to South Canterbury Finance affairs and hope to arrange an agreement with an overseas company, subject to confirmation by June 30, to inject a large amount of capital which would place South Canterbury Finance in a secure position for the future.'