Yesterday we heard that the Serious Fraud Office has decided not to prosecute anyone at Hanover Finance for the company collapse in 2008 which left 16,000 people losing most of their total $500 million savings.
The SFO say their three-year investigation raised serious questions about the running of the company but that they doubted they had enough evidence to make a prosecution stick.
They said the serious questions relate to:
· the actual financial position of the Hanover group and what investors were told
· the companies’ solvency when dividends were paid in the six months before payments to depositors were suspended in July 2008
· the propriety of a number of transactions made in the three months immediately before the suspension. These transactions appear to have provided little or no benefit to the companies but significant benefits to related parties
· the accuracy of the valuation of the companies’ assets in the financial statements supporting the debt repayment proposal put to investors in November 2008.
Read between the lines and it’s clear that as the company got into difficulties investors were kept in the dark while those closely associated with the company benefitted from “a number of transactions” in the three months leading up to the suspension of payments to depositors.
It stinks to high heaven. It seems hapless investors were screwed while those in the know were being rescued.
Meanwhile yesterday former Hanover director Mark Hotchin was running his own court battle to get up to $12 million from one of his family trusts. It seems that when things go wrong it’s every family member for themselves.
But why should Hotchin even have access to such a family trust when $500 million is owed to investors who put their faith in him and his other high-flying mate Eric Watson?
I’ve always been told that one of the beauties of capitalism was that those who invest money for rich rewards also carry the risk of failure. This applies the “discipline of the marketplace” which ensures sensible decisions and the most efficient allocation of investment resources.
This might apply to a family borrowing money to buy a dairy but for the super-rich almost the direct opposite applies. Hotchin took risks with investors’ money while he ensured his own unearned millions were ring-fenced in case things went wrong. Small investors who ended up with their life savings wiped out were exposed to the greatest risk. It’s a rich man’s world.
If Hotchin had any compassion he’d cash up his millions and help repay the most seriously affected depositors in Hanover.
Then he could get a real job and start again – burger flipping on the minimum wage would be a good place to start.
John Minto – small businessman’s friend?
Hotchin and Watson and their family Trusts didn’t break the Law. This is an important finding from the Inquiry. What they did do was “Game the System”. They ripped off/ scammed/ Squandered $500m of Kiwi Battlers money, kept a sizeable chunk for themselves via Family Trusts and gave the entire Nation the ‘Bird’.
They shouldn’t be allowed to safely walk our streets.
The law was established by looters, polluters and exploiters to protect looters, polluters and exploiters. It’s a brilliant system for transferring wealth from the many to the few.
And corollary to all this legalised criminality is an uninhabitable planet [for humans] in a few decades. See where the Keeling Curve is headed.
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