Hanover

Cactus Kate has an opinion piece in the NZ Herald this morning excoriating the dirty underhand way the FMA is dealing with the Hanover case.

Fittingly on April Fools morning, it came down to Sean Hughes from the Financial Markets Authority chest-beating civil proceedings against six Hanover directors and loosely termed “promoters”.

At least one individual claims to have not received the 69 pages of Statement of Claim at the time of Hughes’ very public announcement.

Hanover was deliberately sensationalised by leaks, drip-fed to media and anti-big business bloggers as their conduit. Should you attempt blogging balance, within minutes hatemail hit the inbox invoking your deceased Grandmother’s legacy.

It was billed as the FMA’s show-stopper but sizzled like cold sausages on the Mad Butcher’s gasless barbecue to just $35 million from a 7-month timeframe, an unknown tiny percentage of investors with civil proceedings involving alleged prospectus violations that unless a suitably vintaged professional, no one has a hope of comprehending.

That is interesting, because just yesterday the full 69 page statement of claim in the proceedings was leaked to the NBR (subscriber content)…looks like more underhand tactics from the FMA intent on running the case in the media rather than in the court room.

The FMA played a dirty game freezing whipping-boy Mark Hotchin’s assets back in December 2010. They strategically stretched the truth and patience of Justice Winkelmann in a way the writers of Shortland Street could not beat with Christmas specials as tantalising. Last year more promises until Hughes paraded himself unquestioned by business media on morning television as a big game hunter back from a shoot with the equivalent of the head of an aged tame pet goat.

It is not uncommon for regulators to play with accused through media. They know conservative lawyers advise clients to keep silent. It may be legally sage but lacks commerciality as business is all about investor confidence and telling your story first.

The FMA know the battle that goes on between client and adviser and milked it for all it is worth, knowing the first wave of bad publicity Hotchin received was almost impossible to come back from.

The moment there are market rumours of an investigation your life is effectively stalled and close to ruin.

The family ask questions, friends shun you, bankers stop taking you out in public and even the kids’ schoolteachers start gossip.

And the bottom line is after all the bluster and all the puffery and all the delays from Sean Hughes and the FMA, all they have come up with is a 69 page statement of claim and civil action against the directors and promoters of Hanover.

Cactus Kate suggests the FMA would ahve been better advised to look closely at the asset stripping and destruction wrought by Rob Alloway at Allied:

Precisely what happened to investor value since is where a more worthy FMA investigation should lie. Allied professionally due diligenced Hanover, accepted the deal, cherry picked $100 million of value off the tree and oversaw the ultimate loss of value. Allied then conveniently blamed Hanover after stripping out assets directors wished to keep.

Sean Hughes has been clear that no criminal intent was present in Hanover and pumped these civil pleadings as the “easiest” for the FMA to prove.

A civil action on behalf of a select few investors for 7 per cent of total value of funds invested.

ᔥ NBR

John Bowie channels Cactus Kate on Hanover:

You would have to say the Financial Markets Authority’s civil suit against the Hanover directors is something of a damp squid [sic] after a long three-year wait by out-of-pocket investors.

The anticipation of a criminal trial and the front-page-ranking of frozen Hotchin assets, as if he were the only director, has evaporated like morning dew. The small civil claim, being for a mere $35 million for which the directors may even be covered by insurance, will achieve next to nothing.

All eyes must now turn to Tim Rainey, the Auckland litigator representing something over 2500 investors, to see if he can turn up the recovery heat with his own action. But without the FMA resources to shoot home any liability, investors will doubtless not be holding their collective breath.

It would be interesting to find out how much the FMA begged Hanover to settle out of court so they could claim a victory…I guess we will never know now. The FMA talked large for more 15 months…they delayed and delayed and delayed, and this is all they have come up with, a pissy little civil action…John Bowie is right, this is small beer indeed.

Cactus Kate analyses the whisperings of the FMA head, Sean Hughes, into the flapping ears of Fran O’Sullivan:

The FMA has fed this information to the media on purpose in a far more blatant manner than their usual under-handed fashion of a “leak” (wink wink).

It all leads to the conclusion that the FMA are after a settlement with Hanover before this even makes a court room much to the teary eyes over at NBR in Jock Anderson who wants to sex this baby up.

Such a tactic in law is not one of a confident party with a bullet proof case. The FMA need Hotchin’s scalp and those involved in Hanover in a far uglier fashion than a cash settlement. The FMA have sunk to such depths that they are willing to use the media to put information into the public about more than just the bare bones of progress of an investigation while it is still occurring.

That the FMA has now dragged all the other directors and even possibly those down to Richard Long into the debacle, tells me that the emphasis is not so much on Hotchin anymore but the entire outfit including auditors because they cannot nail Hotchin’s backside hard enough to any wall.

The FMA and Sean Hughes in particular are acting like the playground tough guy who is more than a little afraid to actually have a dust up. They are strutting around and trash-talking and hoping that their victim quivers into submission. I saw this plenty growing up and attending an all boys secondary school.

What usually happens is one of the victims steps up and smashes the trash-talker in the gob and then much blubbing ensues.

Let’s look at the facts from a play-ground point of view.

• The bully has been trash-talking for more than a year. Still no charges have been laid, none even specified. The victim of their attacks is none the wiser as to what they have actually done wrong, yet the bully is trash-talking it all out in the media.
• So far all they have done is talk, no punches have been thrown, none even feinted. If they could have laid criminal charges they would have by now. They certainly wouldn’t be talking about a far lower lower threshold of civil charges
• After talking big a week ago about maybe, possibly  laying civil charges, they are now whispering that perhaps a settlement might be a good idea.
• Not only that they are now talking about going after a few more people as well. Trash talking on more victims.

These are not the actions of a regulatory body that is sure of its case. They are the actions of a big talking bully that talked big but the facts don’t fit the talk.

In the play-ground there are two types of bullies. Those that give you the bash, and those that talk about giving you the bash. The ones that actually give you the bash never talk about what they are going to do, they just do it and everyone knows what the outcome is going to be. The ones that talk about it can usually bluster and threaten for a short period of time and then someone usually calls them out and sorts them. The second types disappear from the playground and order is restored.

The FMA has talked big in the press, they have talked big in the court, but the time for talking is over and it looks like, increasingly, someone is going to call them out. I wonder if that might start with Winkelmann J?

What is it with the mainstream media. Check out these articles from the past week, all have one thing in common. The silly and unnecessary addition of  ”is the brother of Mark Hotchin” or something similar in articles about John Hotchin.

Nathans directors ‘could have been more conservative’
New Zealand Herald
A fourth director, John Hotchin, younger brother to Hanover’s Mark Hotchin, pleaded guilty to similar charges in February and was sentenced in early …

Hotchin fronts up to Nathans trial
Stuff.co.nz
Hotchin, brother of former Hanover Finance director Mark Hotchin, had earlier pleaded guilty to three charges of making untrue statements in a Nathans …

John Hotchin testifies against former directors
TVNZ
John Hotchin is the brother of Mark Hotchin, whose failed finance company Hanover is also being investigated by the Serious Fraud Office and the Securities …

Nathans came close to merger - Hotchin
Stuff.co.nz
Nathans Finance – co-founded by John Hotchin – was close to being merged with another finance company owned by his brother, Mark Hotchin, just six months …

This article in the NZ Herald doesn’t even mention John Hotchin’s name in the first sentence, only that of Mark Hotchin.

John Hotchin admits Nathans Finance documents wrong
New Zealand Herald
The younger brother of former Hanover director Mark Hotchin pleaded guilty to Securities Act breaches in February. His sentence was reduced from a jail term …

That is just from the last 72 hours and all the stories have nothing at all to do with Mark Hotchin other than it is his brother appearing in court ratting on his former mates.

I wonder how long it is before the media reports that someone with the same last name as former Hanover director Mark Hotchin was caught jay-walking in Levin on the weekend.

Cactus Kate has picked a rather unsavoury scab in her article about the Herald and APN who appear to have confused the ethical lines between advertising, content, editorial and the high moral ground.

As readers will well know the Herald has been running a remarkable campaign of denigration about Mark Hotchin and Hanover, especially in the pst 10 or so days with story after story after story about how Mark Hotchin got scammed in a Ponzi scheme.

They posted an editorial as well taking the moral high ground and ticked off a judge and sounded all po-faced and sage in talking about name suppression. They spent a not inconsiderable amount of money with top end of town lawyers, reputed to be well over $100,000 attacking a victim’s rights to privacy as ordered by a court through a suppression order.

Sure I attacked suppression orders myself, but I only named kiddy fiddlers, rapists and thugs. This is why I have been so hot under the collar about this. The Herald went after victims and played for the high moral ground in doing so.

What Cactus Kate has done, and I am slapping myself for not thinking of this myself, is go straight to the source and asked Carrick Graham, spokesperson for Hotchin/Hanover about how much Hanover loot the Herald pocketed, all the while knowing that the two principals of Hanover were the victims in an elaborate Ponzi scheme.

2006 – $342,695 (Only November on)
2007 – $1,146,280
2008 – $328,807
2009 – $94,469 (all for FAI Finance)
Total – $1,912,251

So The Herald, knowing as they did that the principles of Hanover had been scammed, continued to repeatedly take truck loads of loot for their advertising.

Cactus Kate rightly points out the ethical dilemma for the Herald in continuing to accept their advertising revenue and also waxing lyrical in cu/paste opinion pieces about Hanover and their various investment vehicles. She also quite correctly asks whether or not the gamblers investors in Hanover would have been more influenced by the Herald opinion pieces by Adam Bennett and Maria Slade amongst many others along with the millions in advertising featuring a former newsreader spent with the Herald than with the prospectus proffered by some spotty investment advisor across the desk of one of myriad of advisory houses who likewise pocketed Hanover coin.

I just bet that Hanover’s and Hotchin’s lawyers are licking their chops with joy, salivating at quenstioning  gambler investor after gambler investor just exactly where they obtained their investment advice from: “Was it from advertising? Or perhaps you read something in the paper? Or did you actually read and digest with some solid research from a truly independent investment analyst the prospectus provided by Hanover?”

You can see where that is going to end can’t you. Badly…for the investors and possibly for APN.

The Herald took the high moral ground in spending huge amounts of money in overturning a victim’s name suppression, they stood on a pedestal and proclaimed their moral righteousness when all along they should have been on the naughty step for palming almost $2 million in investors cash to enable Hanover to take more investors cash from them, all the while knowing that Mark Hotchin was subject to a name suppression order.

Their retrospective moral righteousness is nothing but shameful hypocrisy. I wouldn’t mind betting that Cactus Kate has much more information about other media outlets and journalists and the large amounts of cash they similarly received. If she wasn’t so busy working in her Guangdong sweatshop she could bother to return my emails.

Not content with breaching their confidentiality agreements of 7 years ago, with Mark Hotchin and Kerry Finnigan, the Herald is really going gang-busters today with Hotchin Over-use Syndrome (HOS). Now I’m no mate of Hotchin but when I read that banal article today it really ticked me off.

In their article they used one and half pages and 3157 words to say almost nothing. In that 3157 words they used the name of Mark Hotchin no less than 8 times. About once every three paragraphs.

This is almost as bad as Jock Anderson’s repeated cut and paste of Mark Hotchin’s name and details in order to help Barry Colman sell a few more issues of the NBR. Between the Herald and NBR they are really challenging David Farrar as the cut and paste king.

The NZ Herald has sat on this story for more than seven years and then when it suited them to put the slipper into Mark Hotchin, they regurgitated it two weekends in a row purely because it contains, and due to their HOS contains a lot, the name of Mark Hotchin.

The Herald and the NBR should be giving Mark Hotchin a cut of all the additional revenue they are scoring through the over use of his name.

The worst thing about their continued campaign to denigrate a man who hasn’t even been charged with anything is that he can’t retaliate because the authorities have tied up all his cash in an attempt to starve him of legal oxygen. This is not only a case of state authorities bullying someone who is innocent and not even charged with anything but also a case of the media bullying him as well through the gratuitous use of his name so they can sell a few more newspapers.

It seems that the names of Hanover and Mark Hotchin can sell newspapers in the good times and now in the bad times. And all the while it is the media outlets that have creamed it off of their backs, good news or bad news.

What would be good is some honest reporting of the situation, and some honest analysis using facts and not emotion. Fat chance of that happening. Between Jock “Cut Paste” Anderson and Fran(k) O’Sullivan the truth seems to get slaughtered along the way.

While I am slamming the Herald I may as well ask why they haven’t as yet started legal proceedings to over-turn the name suppression of the prominent politician who is fighting over a couple of dogs in the Family Court. Exactly the same reasons they trotted off to court and spent over $100,000 with their top notch lawyers over-turning Mark Hotchin’s name suppression and at same time destroying any pretense of protecting victims of crime from ever having their details revealed apply in this case, and it is far more relevant because it is happening now, not seven years ago. In fact in this case there are no victims, no children, just a couple of silly adults and some silly dogs.

Surely the Herald should exhibit some consistency, or was it just the chance for another free hit on Mark Hotchin that drove them to assail victims rights in such an egregious manner?

Cactus Kate completely destroys Jock “Itch” Anderson at the NBR for his world exclusive equivalent that Mark Hotchin’s grandma’s cat has fleas.

There is no other way to describe this nonsense really, other than fraud. The predilection of the mainstream media, if you can call NBR, that has a weekly readership less than my daily readership, mainstream, to embellsih any story remotely connected with Mark Hotchin as though he is evil incarnate is actually not only journalisticly bankrupt, intellectually fraudulent and an actual fraud on the reader when they expect people to pay for this drivel from behind a paywall.

The way the mainstream media, particularly the Slowly Sinking Tabloid, has denigrated Mark Hotchin, usually in fact free, breathless repeating of every nasty rumour around town could actually be classed as a full blown character assassination by broken arsed, lazy, and frankly jealous repeaters.

The way they have framed the characterisation of Mark Hotchin could lead to scenario where John Key walks into Queen Street in front of the Civic, waits till the crossing lights go then shoots an old lady in the head in full view of 10,000 witnesses who will swear on a stack of bibles that it wasn’t that nice Mr Key what shot that lady, but in fact that nasty Mark Hotchin, whose grandma’s cat has fleas.

Now don’t get me wrong, I’m not fan of Mark Hotchin, never met him, probably never will, but seriously the media in the country are shocking in their repeatage of anything to do with him.

If I was Mark Hotchin I would start telling the truth about the dodgy pricks at Allied Finance. If their lawyer can argue in the High court that Hanover’s book is great and talk out of his arse before the SFO that the same Hanover book is rubbish then he should really look at standing in Epsom for the new right wing party with an ability to tell pork-pies like that from both orifices.

If it is good enough for the SFO and the ComCom to run an underhand negative PR campaign, leaking documents to tame media hacks, then it should be just fine for Mark Hotchin to start front footing these cowards. He started last night on Close Up let’s hope he keeps it up.

Here’s a curious coincidence for the readers of WOBH.

Q. The name of the bank that famous pyramid scheme fraudster Charles Ponzi had a controlling interest in and used to perpetuate his frauds?

A. Hanover.

Yes very curious indeed, I wonder how hose share sales in Allied Farmers are going?

As usual Cactus Kate is spot on with her observations over some culpability for the Hanover fiasco. Watson and Hotchin were far too clever for the dimwitted gamblers who lent the company money as they nimbly skipped away without sanction and all the debt now resting with the shareholders of Allied Farmers.

By fronting the advertisements Richard Long became vicariously liable for the reputation of Hanover. If the gamblers have any money left they may as well have punt on suing Richard Long while they are frittering money away.

Well I could have said I told you so, but the idiots wouldn’t have listened. Allied Farmers shares have plunged like a stone.

Allied Farmers shares have plunged 31 per cent, falling 6 cents from 19 cents to 13 cents after a trading halt was lifted just before noon.

These shares have been sold by existing Allied Farmers shareholders, since Hanover investors who voted yesterday to accept a $400 million deal to convert the company’s loan book into Allied shares will not get their new shares till next week.

Many fear that a rush of disgruntled Hanover investors trying to cash up their newly-minted shares will send the share price plunging.

Oh dear, by the time the fools get their shares in Allied Farmers they will be worthless. In fact they could probably get more at the recycling station for the paper.