Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Hotchin, Watson didn’t commit fraud at Hanover, SFO finds

Hotchin, Watson didn’t commit fraud at Hanover, SFO concludes

By Paul McBeth

April 30 (BusinessDesk) - The Serious Fraud Office won't lay charges against any of Hanover Finance's directors or owners including Mark Hotchin and Eric Watson, saying it's exhausted all avenues of investigation and found nothing to meet its threshold to pursue a prosecution.

Acting chief executive Simon McArley said there were serious questions over Hanover's behaviour, including how it disclosed its financial position to investors from late 2007, its solvency at times when dividends were paid up to the 2008 moratorium, the propriety of transactions in the lead-up to the freezing of payments to investors and the accuracy of how the company's assets were valued.

Still, those questions didn't meet the bar for the white collar crime investigator to proceed with a case that could prove beyond reasonable doubt that an offence had been committed, he said.

"While many may view the conduct at Hanover Finance as egregious, that alone is not sufficient for me to commence a prosecution," McArley said. "We have now exhausted every available avenue of enquiry and the time has come to move on and focus our resources elsewhere."

The decision is the second time the SFO has had to give up pursuing a high-profile case, having decided the failed property investor Blue Chip group could be seen as operating in a "moral vacuum" but didn’t cross the threshold for a criminal prosecution.

Hanover Finance froze $554 million of funds for its 17,000 investors after running into financial difficulties before convincing them to accept a disastrous deal where their debt was swapped for equity in Allied Farmers.

The SFO spent 32 months investigating Hanover in what it says as the "Most extensive and challenging of the finance company investigations."

McArley said he consulted with crown solicitors, leading criminal Queen's Counsel and the deputy Solicitor-General in making his decision not to go ahead with the prosecution.

"The vast majority of the information we have accumulated has already been shared with the FMA (Financial Markets Authority), but if there is any additional material we can provide to assist we will do so," he said.

The FMA is pursuing the former Hanover directors and promoters in a civil suit over the period between December 2007 and July 2008 when $35 million was deposited with the failed lender, and the SFO will provide information and evidence to assist that claim.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news