The receivership this week of South Canterbury Finance and the Government's $1.6 billion payout to investors was a shock to many.
But there were seven signals evident in recent years that New Zealand's largest independent finance company was headed for the rocks.
Extremely rapid growth: South Canterbury's lending rose from $778 million in 2004/05 to $1.63 billion in 2008/09, with much of that happening at the end of 2008 just as South Canterbury received a surge of funding because of the introduction of the deposit guarantee.
Related party lending: Allan Hubbard was well known for allowing and encouraging South Canterbury to lend to other companies in the Hubbard empire, including Helicopters NZ, Scales Corporation and other entities in Hubbard's own Southbury Holdings. These related party transactions rose from $33.9 million in 2005/06 to $230.3 million by 2008/09.
Withdrawal of bank loan: South Canterbury regularly boasted that it had the support of a major bank in an undrawn loan facility of $100 million, unlike other finance companies.
Yet it failed to announce in mid-2009 that the funding line had been withdrawn by the BNZ.
Refusal to talk: Owner and driving force Allan Hubbard refused to talk in any substantial way to the media. This was also the case with Rod Petricevic, Mark Hotchin and others who did not like the scrutiny and awkward questions.
Money go-round deals: Early last year, Hubbard said he had injected a significant amount of equity into South Canterbury Finance. In fact, South Canterbury had "bought" a one third stake in Dairy Holdings from Hubbard's Southbury Holdings for an inflated price and then Hubbard injected the "money" back into South Canterbury in the form of equity.
No fresh cash was put into South Canterbury.
Replacement of auditors: It's astounding that a tiny Timaru accounting firm called Woodnorth Myers continued to be the auditor for South Canterbury throughout its meteoric rise.
Its replacement by Ernst and Young early this year and the subsequent rewriting of a set of unaudited accounts prepared by Hubbard was a sign the Government was concerned enough to put in the professionals.
Repeated broken promises: Hubbard promised time and again through 2009 that a capital injection from another party was just weeks away. The White Knight never came.
The ultimate sign of problems at South Canterbury is that Hubbard never seemed to take a holiday and worked from dawn until dusk.
As any fraud investigator knows, the first people to look for are those who never take a holiday.By Bernard Hickey