SCF getting into trouble is no surprise when you look at how Hubbard was using the finance company as his private piggy bank to do exactly as he likes - with no heed to credit risk or cash flow considerations.
A good example of how reckless and dismissive of the fact that he was managing the public's money was the loans made to McLeod and other hanger-ons :
http://www.nbr.co.nz/article/key-sou...es-deal-132712
You need to be a subscriber to be able to access the article.
Essentially the deal was SCF advancing McLeod and gang $21.5m interest only-capitalising loans to buy shares off Allan Hubbard in Southbury - the loans were non-recourse and repayment limited to the lower of Southbury shares or the loan value! How sweet a deal is that?
So $21.5m went to McLeod and gang from SCF and was then, paid to Allan Hubbard.
History records that SCF got zippo out of the loans but Hubbard received $21.5m.
No words can describe the contempt investors in SCF should have towards the totally reckless and blatant self-serving use of their money.
It will be fair to attribute $21.5m of the SCFHA invested as being used for the loans to McLeod. Kinda puts it in perspective, doesn't it?
One hopes Hubbard has his day in court to explain how he justified making such loans.