A few months ago I wrote about how the people accused of a $1.775 billion dollar fraud related to the taxpayer bailed-out South Canterbury Finance were afraid of their own names and got name suppression.
The five people I will be investigating and writing about as the trial progresses are the following:
- Lachie McLeod, former CEO of SCF
- Edward Sullivan
- Robert White
- Terry Hutton
- Graeme Brown
The charges include theft by a person in a special relationship, obtaining by deception, false statements by the promoter of a company and false accounting. They carry maximum penalties of between seven and 10 years in prison on conviction.
It is plausible that they have been very naughty boys.
How?
Well, after South Canterbury Finance got the Crown Deposit Guarantee behind them, they allegedly entered into many risky loan deals that enabled them to shuffle paper around so that related party loans were paid off and the ponzi scheme finance company operation could continue.
I say ponzi scheme, because many finance companies disclosed in their prospectuses that if they did not have investors rolling over their investments and fresh investments coming in, they could not meet their obligations to investors when it came to paying interest quarterly and paying out redeemed debentures.
I find the collapse of South Canterbury Finance fascinating. It seems that innocent old man Allan Hubbard was actually a dodgy bastard. He was taken for a ride by every wide boy south of the Bombay Hills and some in Auckland!
The loan book was to the worst kinds of businesses – hospitality, property development, hotels i.e. real sub-prime crap that the major trading banks wouldn’t touch. Some of the guys lent money by South Canterbury Finance had been involved in major company collapses before.
There have even been outright frauds like Gavin Bennett of DataSouth that have come out of the woodwork following the collapse of SCF and the invocation of the government guarantee.
Essentially, South Canterbury Finance was a Timaru based bunch of provincial hicks who got taken for a ride by the big boys in better suits and with hotter wives and girlfriends.
They tried to play in the big leagues and got burnt so bad that New Zealand taxpayers, most of whom could never afford to invest in anything as a function of low household incomes, got to pick up the tab.
I will be following the trial very closely because this sort of thing disgusts me. Provincial upstarts should not meddle with things they possibly cannot understand. We have a cognitive elite for a reason!