16 Jan 2012

South Canterbury five accused of $1.7b fraud

9:50 pm on 16 January 2012

The nature of charges laid against five men in the biggest fraud case in New Zealand to date has been revealed in court. The case involves the failed South Canterbury Finance and $1.7 billion.

The Serious Fraud Office laid 21 charges at the Timaru District Court relating to the company which collapsed in August 2010.

None of the accused appeared at the hearing on Monday morning. All have been granted interim name suppression to allow more time for discovery by their lawyers and will reappear in court on 13 February.

The most important charge the accused face is of entering the Crown Retail Deposit Guarantee Scheme by deception.

The Government was forced to pay out $1.58 billion to South Canterbury Finance investors under the scheme when the company went into receivership.

It is this amount that makes up the lion's share of the money involved in the case.

The accused also face charges including false accounting, claiming to have a banking facility of $100 million, failing to disclose loans to companies they had an interest in, and theft by a person in a special relationship.

Maximum penalties for the offences are between seven and 10 years' jail.

The charges involve a transaction concerning the Hyatt Hotel in Auckland and claims made by South Canterbury Finance to Treasury officials which allowed the company to qualify for the Crown Retail Deposit Guarantee.

South Canterbury Finance founder Allan Hubbard, 83, died in a car crash near Oamaru on 2 September last year.