(NZ) Allan Hubbard - A Reprise (Before the Event). Related Party Transactions.

Mark Hubbard's picture
Submitted by Mark Hubbard on Tue, 2010-06-29 10:54

I’ve been thinking of Allan Hubbard’s ‘defence’ beforehand, as my opinion is he is a man of integrity, and there is no fraud in Aorangi or the seven trusts, however, I also believe he is not going to come out of the SFO probe well.


Because of what we are constantly hearing in the media from the Gaynors’ (http://www.nzherald.co.nz/best... ) and no-brainers: ‘related party transactions’. There (obviously) looks to be a lot of them in Aorangi. According to Nanny State’s rule book, such transactions are, apparently, naughty. And the business media in NZ, which we are poorly served by, lap up this concept as ‘bad’ without ever thinking what it means in context. So let’s look at what a related party transaction is in the case of Aorangi.

An investor - in this company only friends and associates of Allan Hubbard over the last thirty years, it does not solicit for public money thus does not need a prospectus - places their money into Aorangi with instructions to invest it. It is then invested in, for the sake of example, a dairy farm, alongside an equity stake from Hubbard himself, and perhaps bank financing. (Furthermore, often a small shareholding from say, to extend this example, a previous share milker, to help them up to the first rung of actual farm ownership).

The involvement of Hubbard in this sense, that is, a related party transaction, ‘has been spun to be’, in the media, that he is taking investors’ money for his own use (fraud): but that is not the case here whatsoever. I suspect we would find that 406 of the 407 investors in Aorangi who appear perfectly happy, have specifically invested in Aorangi precisely for the related party transaction: they want Allan Hubbard on board, that’s why they’re investing through Aorangi. His acumen is why they’re taking the Aorangi ride to possible wealth in the first place, and with Hubbard invested alongside them, risking his own capital also, that incentivises success even more.

Unfortunately, 1 out of 407 investors has somehow fallen through the cracks here. It then appears that instead of simply sucking it up, realising in free markets it is caveat emptor (buyer beware), and asking for his money back – which Hubbard says he would have freely given - they have gone tittle tattling to Nanny State, who, as Nanny State always will, has come stomping in with her jackboots, running roughshod over the transactions of 406 consenting adults and Allan Hubbard (and a successful 30 year history!), and left the latter party’s reputation in tatters. It’s a tragedy for what this signifies about the sort of country we now live in where there are 1.75 million bureaucrats, beneficiaries and retirees for only 1.75 million people working and pay tax in the private sector, Allan Hubbard and the 406 investors amongst them. (And the role of Jane Diplock and her conflict of interest ridden Securities Commission must surely be actionable by Hubbard).

This is a conflict of values verse the valueless welfare society that works on a ‘something for nothing’ ethic, thus can strip a man back to nothing without a fore or second thought; where country meets the cynical city (in this case, with no idea how the community of South Canterbury works); where an old style investment approach amongst friends and associates based on trust and honour meets the bureaucrats’ inflexible rule book made necessary by the second-handers’ word that can never be trusted. Given all the power is of course in the hand of the State, I can only see this ending sadly for Hubbard. And if the facts are as I have surmised above, and I’m pretty confident they are, then ‘if’ a case for fraud is taken, and I’m sure it will be, the facile media will be crowing, which will make the absolute injustice occurring here, at the brutal hands of Nanny State, all the more heinous for it would see the loss of reputation of a man who is better than any of the little men in suits baying like wolves at his feet to bring him down to their own low level.

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In thirty years Aorangi never

Mark Hubbard's picture

In thirty years Aorangi never missed a quarterly interest payment to investors. It is now just about to miss its first one - under the Statutory Manager:


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