Much-heralded court action by the Financial Markets Authority against Hanover Finance appears stalled.
On December 15 the FMA announced it would be filing civil proceeding against the directors and promoters of Hanover Finance.
The regulator said their case would focus on the finance company’s 2007 prospectus, during a period where $35 million was raised from investors.
Media reports said Christmas leave for many staff at the FMA had been canceled to push through the paperwork required for court action against Hanover.
The announcement followed building pressure against the FMA to resolve its investigation into the finance company after a December 2010 freezing order obtained by the regulator against Hanover director and co-owner Mark Hotchin stretched into its 12th month..
But, seven weeks on from the announcement court action would be filed, the FMA have no developments – or even a timeframe – to report.
A spokesman for the FMA told the National Business Review there was no update to the Hanover case, and nothing was likely to be made public in the next fortnight.
The Serious Fraud Office is running a parallel investigation into Hanover. With the laying of charges against the directors of Rockforte Finance last week, the Hanover probe is the last finance company probe still on the SFO’s books.
Hanover and United Finance froze $554 million of investor funds in August 2008. The assets and loans were later transferred to Allied Farmers with investors swapping their stricken fixed interest debentures with shares in the small Hawera-based firm.
Those shares have plummeted in value with Allied Farmers writing down the value of the assets acquired from $396 million to $93 million.
Comments and questions
Allied Farmers pulled the plug on their allegations that Hanover had pulled a "swifty" on them. They back tracked, and finally stated that Hanover was "whiter than white". Surely this is all the FMA need! The FMA do not need to look into Hanover any more!
Whether it's coming down to just complete incompetence by the bureaucrats involved, or worse, by design, all free men and women in New Zealand should be appalled by this man's asset freeze continuing without charge well into it's second year, despite any personal opinions about the man.
Under the weight of an obese, flatulent Nanny State, the rule of law is being destroyed , and our individual freedoms handed over to arbitrary government, and the arbitrary whims of bureaucrats.
Time for a Western Spring in New Zealand.
The regulators are no match for Hotchin and co. The chairman of the FMA is a well known "nice guy". He sits comfortably in a big house in Parnell or Remuera no doubt. He builds his career as the friendly face of an investment bank, ABN Amro. Everything is nice and comfortable in his world. To fight Hanover a street fighting mentality is needed. The FMA culturally do not have what it will take. And that starts at the top.
Couldn't agree more.
The FMA should seek help from overseas regulators who are battle-hardened and know how to deal with people who are smart, rich, devious and utterly unprincipled.
Hanover have run rings round the authorities for over a year now, and some would say the people involved have been doing so for over ten years. They are more than capable of keeping them at bay indefinitely.
Just interested Ben: how do you square, quote, 'have run rings around the authorities for over a year', with having in actual fact had your assets completely frozen for over a year, without charge, so you can't live your life or pursue opportunities?
Tribeless - the freezing of Hotchin's assets and the ability of the FMA to successfully bring a case are completely separate issues. In a way the crudeness of the asset freeze move highlights the ineptitude of the regulator. In the US or Australia the regulator would have been in boots and all probably well before the Hanover moratorium let alone the dud Allied deal. Instead the poor investors only line of defence against Madoff, sorry I mean Hotchin, was the media and Bruce Sheppard. The asset freeze highlights the excessive slowness at processing one of the worst instances of cynical wealth transferance from innocent moms and pops to some fast living greedies. But Tribeless, you and I will agree on something - if the FMA now fails to bring this home heads must roll - you cannot freeze the guys assets for a year and then fail in your allegations - especially where that failure is due to a lack of effective case management.
Heads should roll whether or not there is a successful prosecution, yes. When a man's assets are frozen, justice must be timely, or it will never be justice.
Tribeless, why is it you appear more concerned about Hotchin's frozen assets than the 16000 investors, many of whom have lost their life savings? Yes, there may be an issue about the asset freezing, in the same way as there is an issue about capital punishment for murderers and rapists. But first things first. Those poor people that have lost their savings so unfairly and need help from the FMA and it seems fairly clear where responsibility ought to lie. Once those victims have been sorted we can indulge in the luxuries of debate about the constitutional rights of Mark Hotchin.
I'm not more concerned about Hotchin than the 16,000 investors. You're reading what you want to read, not what I have written.
I am concerned about something much more important to every single one of us: the rule of law, and how successive governments are running roughshod over it. Hotchin is just one example of it, though for me has become the litmus test. In the same area, Kim Dotcom in my opinion has become the victim of arbitrary decision making by a philosophically bereft judiciary, regarding his bail, and I won’t even mention the thuggish behaviour of the keystone cops who raided him and his nannies. And if you then want to scope outside of that, the almost Stasi like powers of snooping, search and seizure given to IRD, and soon, for Rand's sake, Food Safety Officers, are far beyond the powers the State should have taken for itself in a free classical liberal society. The latter of which, of course, we are not, and it the biggest issue in New Zealand, and the West, today. The judiciary in New Zealand has become the mindless defenders of the might of State to interfere in every individual’s life, property rights and freedoms, not the defender of the individual against a State unhealthily over-reaching itself.
The rule of law; an individual's freedom from an abusive State, is not some ‘luxury’ you deal with after 'sorting out the investors of Hanover': it is the a-priori position to everything that should've been defended, but which the tyranny of the majority, reliant as they've become on the Nanny State, have given up in my damned name, to those incompetents in the State service who think they have some special vocation to run my life for me. And they don't. I wouldn't let most of them walk my dog.
And where are the civil liberties lawyers like Peter Williams championing these crucial issues? You’re right, perhaps if Hotchin had been a rapist or a murderer, from a bad, sad, background, he’d have had a better shake of the arbitrary whims of those who continue to treat his life, and the lives of his family, like a plaything to make their public service careers on as if they had all the time in the world (which in New Zealand circa 2012, apparently they do).
Tribeless, you're missing the point. Deliberately I expect. The NBR article is about the FMA dragging the chain on its civil case against Hanover. The Hanover story represents a crisis to all those whose lives have been so devastated by the likes of Hotchin and cronies. Yes, there is a real constituational debate to be had around the asset freeze - one can sympathise with that. But for you to diminish and distract from the claim of all those people that lost their money in Hanover by focusing on the freezing order ahead of their situation runs the risk of making you complicit. 16000 families were the "playthings" of Hanover well before 1 family was the "plaything" of thhe FMA - the only difference to date, as things stand, is that the former has lost its capital altogether whereas the latters is simply frozen temporarily. Tribeless, if you really are all about justice, sort out your priorities.
Read the link in my first post above, Nico. The FMA has no right to be taking a civil case: in itself that's an abuse of the rule of law.
If there's fraud or criminal activity they/SFO should go after that, otherwise it's no business of the State, period.
Tribeless
On Kim Dotcom - I don't believe there is anything arbitrary in the way he has been treated or any doubt that due process has been followed. The case has yet to be tried but there is a huge amount of prima facie evdience that he has been running an extremely lucrative racket based on the systematic theft of IP and copyright material developed at great expense and owned by others. How gulible do you have to be to think that he and the people downloading copyrighted material did not know what they were doing is criminal, even if it can be rationalised as a victimless crime?
To present him as some sort of innocent victim of the US goivement or US legal system is patenty absurd.
As regards Hotchin - the fact is that many innocent invvestors lost most or all of their savings in the Hanover collapse. Hanover's profits were boosted by all sorts of suspect related-party deals and out of these paper profits the shareholders took huge dividends shortly before the whole thing collapsed. The board signed off these dividends and will no doubt claim the usual excuse of relying on professional advisers. This may or may not stand up in a court of law.
Didn't the head of the auditing firm attend Hotchin's 50th birthday bash in Fiji? No doubt he and Greg Muir were enticed into the fold by the glamorous lifestyle funded by the Hanover investors.
The Hotchin and Watson lifestyle is I am sure much more exciting than the usual life of a retailer of Chinese plastic products and kids' clothing or an Auckland bean counter so no wonder their heads were turned and their critical faculties disabled.
I don't think anyone with half a brain would believe that poor Mr Hotchin is struggling to pay for the champagne and caviar. Despite having known assets frozen I am sure there is plenty stashed away out of reach of the FMA. You can bet your bottom dollar he is infinitely better off than the Hanover investors.
Any news on the libel case he was taking against NZ media?
I believe it was the guy who wrote one of the "independent" reports for the nmoratorium that attended the Fiji bash, not the auditor. I don' t think anyone has pointed the finger at the auditors.
Regarding Dotcom, I have no time for IP thef - I'm a libertarian, not an anarchist - but in this thread I'm referring to:
a) the heavy handed tactics of our keystone cops in their raid on him: 70 to 80 armed officers, and making his pregnant wife stand in the rain for one hour under armed guard? For IP theft, and when many violent offenders would've got bail. Outrageous.
b) some questions for you:
If I build a private toll road between two major cities, not only am I likely to suspect, but I know for a certainty, that at some stage that road will be used to commit criminal acts, be it to transport stolen goods from a burglary of a house on that road, or whatever.
Am I liable for such crimes because I built a road that gave a burglar a getaway route? If so, why?
Do I have any responsibility to police my road for such criminal behaviour? If so, why?
Regarding Hotchin, you're simply emoting, like the rest of the lynch mob. Read the post on my link: this is about the rule of law. The Crown should only be involved in prosecuting any criminal activity; they have no right to be involved in civil proceedings: that is between Hanover and its investors. And frankly, after this length of time and that they seem mainly on plan B of a civil case, it appears they're having trouble making a criminal case. Thus, vis a vis the rule of law, the State is way out of bounds on its over one year asset freeze. I would've expected it to have a solid case before the asset freeze.
Finally, you say, ' Despite having known assets frozen I am sure there is plenty stashed away out of reach of the FMA.'
Are you? Sure? By what facts and evidence do you make that astounding statement? I put it to you, as with all your post, you're simply emoting again. The State's powers of snooping, search and seizure are more akin to the Stasi than the limited State of a free society, so I'm sure they've got all his assets nailed down. The fact Hotchin has been in Court trying to unfreeze his funds before Xmas is proof of this.
The rule of law: there's nothing more important. Certainly not 16,000 investors who voluntary invested their money with Hanover. Though I have empathy for them.
oh dear ... that's voluntarily ...
oh dear Tribeless...I suspect you also meant sympathy not empathy
Also don't be "astounded", it'll stress you out - anyone in the informed market is well aware of many Hotchin controlled assets that escaped the net
oh dear Tribeless...I suspect you also meant sympathy not empathy
Also don't be "astounded", it'll stress you out - anyone in the informed market is well aware of many Hotchin controlled assets that escaped the net
Well, you obviously believe Hotchin should be 'taken down' by the State, and as you've just said, you are part of the 'informed market' that 'is aware of many Hotchin controlled assets that escaped the net', so have you given this information to the appropriate authorities?
If not, why not?
Indeed, why not state them here on this thread so at least the NBR can squeeze another story out of it. They'll even be almost able to call it investigative journalism. Unless, of course, you're just emoting again?
And for the record:
Empathy: Identification with and understanding of another's situation.
So empathy is exactly what I meant. I can identify with the angst of these investors, however, that changes nothing I have said about my concerns regarding the State running roughshod over the rule of law here, either by incompetence, or worse, design.
Nico you seem to conveniently forget that the Hanover investors actually voted to go with the Allied Farmers deal. You fight for the "poor mums and dads" and blaming it all on Hanover is actually is misleading as they could have easily voted to put the company into receivership - but they didn't.
The issue is that the FMA has continued to make public statements about the "case" pending against the Directors of Hanover, and that "charges" will be laid soon. You just need to read Fran O'Sullivan's pre-Christmas interview with the FMA's Sean Hughes and his pleading for a settlement with Hanover to make the issue go away.
Meanwhile Hotchin has been subject to a asset freeze for over 12 months - which in anyone's book is slightly unfair (aside from the FMA). But moaning about his Fiji birthday or his house etc and claiming it is all gained on the backs on the investors is not only petty but demonstrates a lack of understanding of the issues.
I note Tribeless hails form Banks Peninsula. Does "Bankside resident" coincidently also reside there?
Tribeless/Bankside - I think we can agree on something. If the FMA don't get their act together they're going to look pretty silly having frozen the man's assets for over 12 months
The balance of our debate seems to be about whether your hang up about his assets being frozen or my hang up about a regulator not effectively looking after a bunch of moms and pops is more worthy. On that count, whatever. Let's just hope justice is done.
No. My point is by the SFO not having, obviously, a strong case before the asset freeze, justice has not been done. The bureaucrats might be acting within their authority, but that's all the worse, because they've just jackbooted all over the rule of law - that is, we seem to have arbitrary acts of government, per my linked blog post above.
Now take Hotchin out of the picture, and for any reason, put yourself in there: you, or anyone can just as easily be a victim of the State when the State has taken on itself the ability to ignore the rule of law and act arbitrarily. There is nothing worse than this for ending New Zealand as a land of the free.
Regarding geography: I have no idea where Bankside is. Googling, I can see an 'area' known as Bankside around Rakaia, or a Bankside Apartments in Auckland: 'Bankside Resident' could be either - I don't know as I have no idea at all who he or she is.
The Diamond Harbour, Banks Peninsula address I have on my bio at SOLO is out of date - I'd not thought about updating it. That is obviously a Christchurch address (Lyttelton Harbour): unfortunately we still own the house, but, for reasons it's not too hard to fathom, since about May/June 2011, we reside semi-permanently in Geraldine, South Canterbury :)
Tribeless, you are right. Arbitrary state powers stink especially when misused. Now tell us more about how it is exactly that you empathise with the 16000??? Your comment about their ability to vote for receivership ahead of moratorium suggests anything but empathy. These folk were spinning. They didn't know who to trust. The only people informing them were directors of Hanover on one side versus Bruce Sheppard on the other. I know a good empathetic soul like yourself might say "tough titties, those investors have free will, it's their own fault" or "if some law has been breached they can take action". If you were empathetic you might understand how unrealistic those positions are. Those people, in fact, are totally reliant on the law and regulators to protect them. Hotchin on the other hand has spent millions on lawyers fighting the FMA/SFO - as is his right.
The remark about the Allied vote came from Bankside, not me - I agree with it, but you don't seem to be comprehending what you read Nico.
I can have empathy with these investors, but it doesn't change anything I've said. There are much bigger issues here. In this post you're just emoting again.
Your posts are the perfect example of how freedom in the West has been lost, and we've all ended up being coerced into a Gulag of Good Intentions, which like all Gulags, is a Gulag.
Buyer beware .... these investors will next time. Ask yourself, and don't ask Dr Jesus Morgan, why these investors were so financially illiterate? If you keep bailing people out so they don't have to face the consequences of their bad decisions, where do you think a society ends up? Hint, the welfare state is one big answer to this question, and I would point out, that as well as the sacrifice of my freedom and privacy that is involved with the welfare state, it is more and more characterised by what it always only could've become: violent. Continuing on this theme, I'm sure you understand by now the harm done by bailing out the big banks in Europe: namely, Europe is going broke.
So my empathy with these investors would go to private charity only, that's where the emoting must stop, and the State can have no part to play.
You've got to start thinking about stuff ...
Correction:
I should've said 'and the State can have no part to play, other than prosecuting any criminal behaviour that has occurred'. The trouble is with this case, it's starting to look like the State doesn't have a criminal case it can make.
Tribeless, you say you believe in the Rule of Law. The law explicitly empowers the FMA to bring civil action. Let's hope they do so effectively. I'm sure you and your empathy would be all for that.
Per the first link I gave, I believe criminal prosecution is the only purview of the State. Read my link, and argue that case.
The Nanny State in NZ is way overreaching the powers it would have in free, classical liberal, society, so what power 'it' gives to the FMA (itself) becomes irrelevant.
The rule of law is a concrete, black and white thing. The abnegation of the rule of law is arbitrary government, including government that can arbitrarily state the FMA can take civil action.
Does no one in New Zealand understand the importance of freedom, anymore, and the classical liberal society? Rand, I'm depressed.
Tribeless - you really ought do what Rand advocates in such circumstances: leave. The poor Hanover investors will suffer in deprivation of your abundant empathy for them but on the positive side you might finally be able to relax
You're emoting also, Alan. And double posting, strangely enough: just like Nico.
You've got to think about stuff.
Thanks Tribeless.
Has it ever occurred to you that you're the one emoting and that you use that word too often? NZ is a caring place. That's one of the things that makes it relatively unique. It's bureaucracy however may be somewhat inept at converting that compassion of the vast majority into meaningful help in the case of Hanover. That's what this article is about - the FMA dragging the chain on Hanover.
Double posting? What's that? Are you emoting yet again? I think you, Howard Rourke and Dagney would be very happy together somewhere other than a place that cares. Are you also brilliant architect when you're not busy trying to change the world blogging?
Compassion is only possible when given freely, Alan. The only compassionate society is the free one. I am a supporter of private charity, my donation receipts attest to that, and via that I can support what I believe in, not the morally bankrupt wet dreams of a politician over whose actions I have no control of.
All I have to do is cite the atrocities evident throughout the human history of the nation state, to show you what happens when the State takes on it the roll of forcing compassion at the point of a gun. You can see this in microcosm in New Zealand at the rise of solo parent numbers on the DPB, of those now dependent on welfare to live, and the lost generations of children, and growing violence, that was always going to be the result of this. Why do you think NZ has ever worsening baby murder statistics when surely 80 years of the welfare state should've put us all into some sort of peaceful nirvana by now? Then add to that the question of why we have worsening numeracy and literacy skills to the point many kids leaving the state school system are nearly unemployable, due to both lack of skills, and a predominant sullen, entitlement attitude. There's no 'compassion' in the welfare State, it’s become a Gulag of Good Intentions, and it’s chewing us all up.
You've got to start thinking about stuff. And none of this changes the fact I feel sorry for those investors who have lost their savings.
(NBR have cleaned up all the double posts over-night).
Oh, summation: New Zealand is not a 'caring place' at all Alan. Haven't you watched the news lately?
Alan, just today, all the investors on the following link have lost 100% of their money:
http://www.nbr.co.nz/article/investors-distraught-kiwi-gold-trader-folds-db-p-109185
Does the State bail them out also? After all, if Hanover investors are bailed out, why not?
Indeed, if we are to be the caring society, shouldn't the State bail out everyone who loses money?
Where do you think such a policy would lead a society and an economy?
Oh look, this investment here, batshit in Moldavia, 2000% return: jeez, I can't lose; the State bails me out if I lose. I might even pop to the bank tomorrow and see if I can borrow a bundle of dosh to invest ...
Helen Clark had one good saying "move on". This could be equally applied to the FMA in terms of either fronting up with charges or fronting up and allowing the removal of the asset freeze that has been applied to just one director of the entire failed finance company sector.
Tribeless - I agree. State bailouts are less than ideal. It is idiotic though to suggest that an FMA civil action against Hanover is a bail-out. If anything it is the opposite of a bail-out. A bail-out is what the South Canterbury, Mascot and other qualifying finance companies got. Far better would be civil and criminal action to make those responsible for the loss (assuming there has been behaviour warranting accountability for loss under the law) pay for the losses. If you don't like bail-outs for the reasons you say you presumably do like the concepts of personal accountability and responsibility. You should also recognise that a state mechanism to hold those responsible and accountable for the beneift of innocents (where a wrong has been committed and where the individuals have no ability/means to bring individual action) is constructive in terms of avoiding state bail-outs. So we agree, bail-outs stink and incent the wrong types of behaviours. Holding wrongdoers accountable is what is needed - and that is exactly what the FMA are trying to do. If the fail to do so, heads should roll at the FMA.
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