Searching for candidates

March 5, 2014

One of the good points of MMP is that it ought to make it easier to find candidates to stand in electorates they have little if any hope of winning.

When it’s the party vote that counts, maximising that is more important than winning a seat and the candidate who does well campaigning in tiger territory has a better chance of entering parliament on the party list.

That’s the theory but it doesn’t seem to be helping Labour in practice:

The Labour Party is still without a candidate for the Rangitata electorate for this year’s general election.

A party spokesman said it had extended the deadline for another month after it did not receive any applications before the February 28 cut-off date.

Julian Blanchard stood unsuccessfully against incumbent Jo Goodhew of the National Party in 2008 and 2011, but has said he has no intention of standing this year.

Mrs Goodhew won by 8112 votes in 2008 and 6537 votes in 2011. . . .

Labour shouldn’t take any comfort for the drop in her majority.

Local support for Allan Hubbard in the face of SFO investigations, which was beyond the MP’s control, accounts for that.

So much for David Cunliffe’s claim that Rangitata was winnable for Labour.

That the party opened nominations without a likely candidate doesn’t say much for its organisational ability and problems with that are showing in Invercargill where they still don’t have a candidate either.

Lesley Soper was the only one nominated but the party re-opened nominations when sitting  National’s MP Eric Roy announced his retirement.

Michael Gibson is now contesting the Labour nomination against Soper  but the party has yet to announce which of the two it will be.

Whoever, it is, won’t find it easy to challenge National’s candidate, Sarah Dowie. While Labour’s still sorting out who will run, she has begun her campaign.

She was selected on Friday evening and hit the ground running  or more literally walking – spending a good part of the weekend competing in the Relay for Life.

Given Labour’s dislike of Soper and its policy to have an equal number of men and  women MPs, neither she nor Gibson can expect the reward of a list place for the work they do in the electorate.


Death of a legend

September 3, 2011

Timaru financier Allan Hubbard has died after sustaining serious injuries in a car crash.

Had it happened a couple of years ago he’d have died a hero for the contributions he made to business and philanthropy.

He had been a legend for positive reasons but became became equally legendary for negative ones.

He died with serious fraud charges hanging over him and equally serious questions about his business and charitable dealings unanswered.


It’s not north saving south, urban paying rural

September 2, 2010

The government’s honouring the Deposit Guarantee Scheme which will return funds to people who lent money to South Canterbury Finance has unleashed a nasty stream of north vs south, urban vs rural vitriol.

It’s not supported by the facts and it may be partially fuelled by a failure to differentiate between depositors and borrowers.

The people who are getting their money back are the  depositors, the ones who invested funds in SCF. They came from all around New Zealand and overseas.

Timaru District Mayor Janie Annear said the guarantee had provided relief nationwide not just South Canterbury.

“South Canterbury Finance is a business which is much wider that just South Canterbury. The Government’s prompt response has minimised the impact of New Zealand’s shaky post-recession recovery.

“All investors, irrespective of where they live, will be pleased that the Government guarantee scheme has worked as promised.”

SCF chief executive Sandy Maier said only about a quarter of the investors were from South Canterbury and the rest of the country had benefited from the scheme.

“`Fifty five per cent [of the investors] are spread through the South Island, and around 40 per cent in the North Island and the rest in Australia and Fiji.

“Undoubtedly this has been a massive decision for the Government to pay the guarantee out and it will have let a lot of people, including those in South Canterbury, breathe easier. I am hugely thankful as well.”

If one group is likely to be under-represented among investors it is farmers. They don’t usually have much cash to  spare and if they do they generally put it back into their farms.

Then there’s the borrowers. They’re the ones who got loans from SCF. They too came from all over New Zealand and in an ODT interview  CEO Sandy Maier said:

South Canterbury was largely caught out by increasing its lending to property developers during boom time.

Many of those debts were never repaid, and it ended up booking losses of about $200 million.

Property development isn’t usually f arming. It’s much more likely to have been urban than rural and some of it was in the North Island, including Auckland.

In an interview with Interest.co.nz Maier said:

Speaking to interest.co.nz after SCF’s receivership was announced yesterday, Maier said he still believed the best value in SCF was as one. This includes its “Bad Bank” which holds about NZ$700 million worth of loans, and its “Good Bank” which holds about NZ$900 million of small ticket rural lending. Then there’s Helicopters NZ, a 79.7% stake in Scales Corporation and 33% stake in Dairy Holdings which were tipped in by owner Allan Hubbard earlier this year.

If the small ticket rural lending is in the “Good Bank” those borrowers are paying their interest and are expected to be able to pay back what they’ve borrowed when their loans fall due.

The 33% stake in Dairy Holdings  is one of the assets which will be sold to help recoup some of the money the government is putting in to the company.

If farms are among the businesses with loans which turn sour the farmers will be treated like other debtors. Finance companies are always lenders of last resort . If the farms have to be sold the farmers will almost certainly lose any equity they had. 

Taxpayers should be grateful the campaign to prevent land sales to foreign owners hasn’t yet gained much traction because limiting sales to New Zealanders will depress the price and reduce the amount the receivers get back.

SCF was a victim of its own success as money poured in it moved from its traditional lending to more risky ventures.

South Island farmers weren’t  responsible for bad decisions made by the company and none will be getting anything from the taxpayer  unless they had deposits with the company. In that case they’ll be treated the same way as all other depositors.

This isn’t a case of the north saving the south, urban people paying for rural mistakes.

 It’s a business failure which won’t be quite as serious for the wider economy as it might have been. Depositors all over New Zealand and overseas will get their money back and an orderly sale of assets will realise more than the firesale which would have resulted had the company been left to fall over.


Risk and return

August 31, 2010

When the Finance Minister postpones an overseas trip to deal with a finance company investors it will not be to deliver good news.

High returns in investments are almost always matched by high risks.

People investing in South Canterbury Finance, Hubbard Management Funds and Aorangi Securities have had very good returns, now they’re being faced with the realisation that their investments were also high risk.

Apropos of this, Scott at Imperator Fish writes:

… I predict that many of Alan Hubbard’s supporters will turn on him, like sharks who’ve scented the blood of one of their own. He may be a well-meaning old gentleman, but nothing is quite as educational as the pain of losing one’s life-savings.

… we must remember to blame the Government. They acted too slowly. Or did they act too fast in putting Hubbard into statutory management? Does it matter? All this market stuff is confusificating me. . .

It will be more than confusificating for the the people who are concerned about losing money.

 Depositers are covered by the deposit guarantee scheme but they are not the only ones with something to lose if SCF falls over.

The uncertainty over SCF, HMF and AS has shown just how the threads of the various Hubbard entities are woven through rural and provincial South Island. There are valid concerns that if one thread is pulled a lot more will unravel.


People still trust Hubbard

August 28, 2010

Disbelief was the first reaction to the news that Allan Hubbard was being investigated by the Serious Fraud Office and that he and his wife Jean were under statutory management.

This wasn’t a flash Harry, living the high life. This was a man who learned the lessons of his Depression-era childhood; who is spite of his wealth, lived a very modest life; the man who’d done so much for individuals, business, charity and the community,

When banks wouldn’t back would-be farmers, Hubbard often would. He looked at the business case, but he also looked at the people and their personal drawings. Those who were prepared to work hard and spend little on themselves, almost always got his support.

Assistance was often given as a personal loan with low or no interest and he was rarely, if ever, let down.

He took a personal interest in his clients and adjusted his fees to their circumstances. It wasn’t unusual for someone having a bad year to find their accountant’s bill was a lot less than expected.

His investment vehicles, Hubbard Management Funds and Aorangi Securities, have always given investors very good returns.

But the second report from Grant Thornton,  the statutory managers,  has very bad news for investors, many of whom rely on the interest payments.

. . . it is highly unlikely that we will be in a position to return any significant amounts of capital to investors this side of Christmas.

On a slightly brighter note, it is our priority to try and be in a position to make a small repayment to investors in October. There is an alarming gap between the income that Aorangi is presently receiving from its loans and investments and the amount it needs to pay out to its investors. Any payment at this time will be treated as a repayment of capital and will be dependent on the amount of funds paid to Aorangi by borrowers and from the investments in farms. Interest payments remain suspended.

Grant Thornton says a large part of the problem is that Aorangi accepted deposits from investors on call and put them into long term investments or loans including minority shares and mortgages in about 25 dairy farms.

The dairy payout is holding up but farm sales are slow. Those who received loans are unlikely to be in a position to repay them quickly and forcing sales would be disastrous.

 The protracted sale process for the Crafar farms shows the difficulties of putting several farms on the market at once. Forcing more sales would depress prices and threaten equity in the properties concerned which would impact on the value of all farmland.

The ripples from the statutory management and SFO investigation have spread through the southern South Island and further, showing just how big an influence Hubbard and his various operations have.

When other finance companies have failed it’s not been hard to find people ready to criticise the principals. There has been no public condemnation of Hubbard, and I haven’t heard any privately. People still trust him and the feeling of disbelief continues.


Facebook fans for Hubbard

June 24, 2010

Supporters of Allan Hubbard and  his wife Margaret have undertaken an advertising campaign and set up a $1m fighting fund.

The couple and some trust have been put in statutory management and are being investigated by the SFO.

No-one who knows them doubts their inegrity but someone has raised questions about paper work:

Timaru lawyer Edgar Bradley, who has been a friend of Mr Hubbard’s for more than 50 years, was another staunch supporter.

“Allan takes a long-term point of view and does not look at things on a daily basis or on a three-yearly basis as politicians do.

“He has the ability to stand back from a problem and look at it dispassionately. Even if it affects him personally, he does not allow that to affect his judgment.

“If a sometime criticism of Allan is a lack of documentation then it must be remembered he is a product of the days when trust was more important than paperwork. Sadly the reverse is now the case.”

There’s a Help Allan Hubbard page on Facebook and another page Leave Allan Hubbard Alone.


Bad business for good man

June 21, 2010

Allan Hubbard is Presbyterian by both faith and nature.

Although he features on the NBR’s rich list, he lives a modest life, spends little on himself and drives an old VW car.

The story of his modest beginnings  and what he’s achieved is inspiring and a  few weeks ago he talked about it to The Listener.

He grew up in the Depression, one of five children in a very poor household and the poverty he experienced then was a strong motivating factor in his life.

He did well at school but his father wouldn’t let him go to Otago Boys’ because they were working class and Allan might get ideas.

He gained School Certificate and University Entrance at night school while working fulltime, put himself through university then set up an accountancy firm in Timaru.

His company prospered and as it did he used his business acumen and wealth to help others.  Some of his business dealings and philanthropic acts are a matter of public record – including underwriting the Opuha Irrigation Scheme by buying all its shares which he  sold to farmers at the original price once the scheme was operating.

The rural grapevine tells of many other acts of generosity which aren’t public, stories of people he’s helped into farms or businesses. He backs people he trusts, who are prepared to make sacrifices to get ahead, as he did,  and , very few have let him down.

Hubbard’s company South Canterbury Finance has been the subject of several bad-news stories in recent months. Now Aorangi Securities, seven trusts and Allan and his wife Margaret ( but not  it is important to stress, SCF) have been placed into statutory management.

I know little about his business dealings but have always been impressed by him as a person.

Principals of other finance companies and organisations which have attracted negative headlines have been criticised for extravagant living at the expense of their creditors.

This is not a criticism that can be made of the Hubbards.

A fact sheet on the statutory management is here.

The NBR covers the story here.

Interest.co.nz covers it here.

UPDATE: The Timaru Herald has a statement from Hubbard here.


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