A Serious Fraud Office investigation has found evidence inconsistent with former Allied Farmers chief executive Rob Alloway's complaint over the conduct of Hanover Finance, a source says.
Alloway's complaint in 2010 sparked a 32-month SFO inquiry that is understood to have cost taxpayers more than $1 million and ended this week without any charges being laid.
An SFO source said a part of their investigation had been taken up investigating inconsistent claims.
"It's fair to say there were a number of views of those transactions and [Alloway's] was but one of those.
"We found some inconsistencies between some of the things we were being told and what we later uncovered."
The SFO scrutinised the December 2009 deal in which Hanover group investors were issued 1.91 billion Allied Farmers shares, valued at 20.7 cents each.
Hanover shareholders have never received a cent, and the shares are worth less than 2 cents.
Former Hanover owner Eric Watson said it was a series of poor decisions after the deal that led to the Hanover assets being rendered worthless. Those decisions, he said, should be thoroughly looked into.
"In Allied, Hotchin believed he had a way to convert the liability into a debt. It might have taken 10 years, but the value of the assets would recover," Watson said.
"What intrigues me to this day is that they immediately started fire-selling the assets."
Hotchin said the Hanover assets had been audited and valued independently, and Allied Farmers representatives had visited every one of the more than one dozen developments they were buying.
"We thought it was fair value and they thought it was fair value. While the market has continued to deteriorate, the reality is it's now worth nothing. That's just impossible. In the first 18 months they took over $100 million. That's gone somewhere."
Hotchin said he wondered why authorities hadn't looked more closely at what had happened at Allied, and he thought there was still time for that scrutiny to happen. "They had a lot more debt than they disclosed to us. The idea was just to raise a whole load of cash to fix their problems." That was not what investors were told. They had their own pressures to pay off debt in their business.
Rob Alloway told the Herald on Sunday he was a victim, along with everyone else, and had lost in excess of $2 million from his shareholding in Allied. "This will follow me around for the rest of my business career, and I find it very, very disappointing."