I think you'll find that it is actually:
"There's none so blind as those who will not see."
Alan.
Printable View
Fascinating - so who is to be blamed? more to the point, who to believe?
http://www.listener.co.nz/issue/3657...781088583EA656
SETTING A COURSE
The article on Allan Hubbard (“A South Canterbury tale”, May 22) contained many inaccuracies about South Canterbury Finance (SCF) and me.
Any loan I may have had to SCF has been fully repaid. I have no liability to SCF. The comments that I owe loans and interest were totally inaccurate and damaging to me and my family.
The finance industry has been in its worst crisis since the 1920s Depression. The chairman and board were fully involved in the running of the company and received remuneration accordingly.
Senior management and I were employed by the chairman and the board to carry out policy, governance, strategy and direction – which were all set by the chairman and board. The board monitored this direction regularly and at all board meetings. Property loans have been a large portion on SCF’s loan book for over 20 years. The board approved all major property loans under the SCF credit process and in many cases introduced them to SCF.
Management team, general managers and all staff worked extremely hard over a difficult two-year period. For this team to have been implicated by the chairman and outside commentators is unfair and inaccurate. This team was one of which any finance company would be proud.
Lachie McLeod
CEO, South Canterbury Finance, 2003-09
I reject the allegation that my article contained “many inaccuracies”. It referred to a 2008 loan from SCF to McLeod for $15.4 million. I reported that this loan had not been repaid and that interest was not currently being paid. I based this information on interviews with Allan Hubbard and SCF director Stuart McLauchlan. Since receiving McLeod’s letter this week, I have checked with McLauchlan as to the status of the loan and again been told that it remains unpaid and that no interest is being paid.
McLeod says “property loans have been a large portion on SCF’s loan book for over 20 years”. In my article I described property lending as a “small” portion of SCF’s loan book prior to its period of rapid growth over recent years. In 2000, for instance, the “property and business” category of loans accounted for about 11% of the total book, and in 2001, 15%. By 2008, property was over 25% of the book. – Rebecca Macfie
If I recall correctly Lachie was said to have "settled" his $15m loan from SCF - at the time (November 2009). It was never suggested he had "repaid" it. It might be conjecture that Lachies obligations to repay the loan were written into a severance deal and remain confidential. So from his perspective he no longer owes SCF $15m.
The "no interest paid" aspect is consistent with AH's approach to giving loans with no interest due - so no surprise there.
However SCF, presumably still has a $15m loan on its books. I don't recall any mention that this is one of the impaired loans - so it looks like we can add another $15m into the pot of impairments. Unless of course SCF are using new depositor money against that loan and if SCF go under the tax payer will repay the depositors who repaid Alan who forgave Lachie his loan obligations.
Let me try and get what you are saying in another way :
Farmer sold land to developer = big profit.
Developer borrowed money from SCF and paid himself big salary = big profit.
SCF borrowed money from public at higher interest rates = better than in the bank for depositor due to govt guarantee.
SCF goes broke = taxpayers suck the lemon.
Farmer, developer, AH and depositors = all very happy.
Taxpayers = bewildered.
Or does it go something like this.
Lend Pea Trader $15m = "good loan" book improves in value by $15m.
In recognition for improving Good Loan book, lend CEO $15m to buy shares in Co. = $15m more added to "Good loan" book.
Tell punters there is $30m in Good Loans and $15m in equity has been put into Co. = good news
Punters deposit $45m = $45m churned through related party loans etc
Related party loans enable second mortgage lending on depreciating assets = "good loan" book improves 10 fold.
Frozen peas don't sell = bewildered tax payers
Aorangi's preliminary report is now written and in front of the SFO and we should know the outcome within the next few weeks.
I'm picking it will show that there is insufficient evidence an offence has occurred because AH relied on the expert advice of his Accountants.
There you are ... your credibility rests on there being a $500m hole in primary equity - which would mean SCF are currently insolvent.
My view is that reconstruction capital of the order of $100m-$150m would be nice to replace the equity assets (Scales, Helicopters, Dairy) as tier-1 equity (thus healing the current covenant breach). Another way of dealing with this is either the sale of the "Bad Bank" loan book or sale of some of the equity assets.