An investor in an Allan Hubbard company at the centre of a Serious Fraud Office probe has defended the business and called him a "genius".

Hilary Muir of Geraldine, who has money in troubled Aorangi Securities, is happy with her investment and praised the South Canterbury Finance owner for the way he was handling the difficult situation.

She was commenting after a report from statutory managers said Aorangi's investors' money was at risk, some loans were made without security and warning that people should not expect any return of capital or interest in the short term.

Muir said all was well until the Government froze the business. She had doubled her money with Hubbard over 12 years and had complete confidence in him.

Aorangi, with assets of $132 million, was repaying investors above prevailing interest rates and had made "dependable" quarterly returns until the state's moves, she said.

Aorangi is one of nine Hubbard entities frozen after the sudden move on June 20 by Commerce Minister Simon Power to appoint Grant Thornton statutory managers to that business and seven associated charitable trusts after a Securities Commission recommendation.

Last week, Grant Thornton froze a ninth entity, Hubbard Management Funds, in which some Aorangi investors also have money. Allan and Jean Hubbard are themselves in statutory management, too.

Hilary Muir said the strength of Hubbard's character was shown by his reaction. "He is using some of the funds released to him and his wife on a weekly basis by the statutory managers to support some elderly clients who rely on the monthly interest for food, etc," she said.

She criticised the initial investigation, particularly Grant Thornton comments about inadequate paperwork.

"I believe a travesty of justice has occurred as the information necessary for this report amounts to a paper trail, and an audit of books would achieve the same purpose.

"An injustice here is hugely apparent as Mr Hubbard would have furnished all requested information. To call in the SFO is to doubt his character and integrity - a mistake.

"Records are available; non-electronic calculations are not against the law. Some Generation 'X-ers', half the age of the Hubbards, would be flabbergasted that the entities under question could have been recorded by hand in the first instance.

"Clients are not, and have not been, complaining of any lack of information, unavailable monies or unfair treatment - not until now under statutory management by Grant Thornton do clients find their payments unavailable to them for the first time in Allan Hubbard's history," Muir said.

"A mention regarding positive financial results during the last year, and earlier, is not included in this report. We read of what seems to be lacking but do not find a positive comment regarding success of the business to date.

"Several points regarding this report ring hollow, especially in relation to the impact on the Hubbards' livelihood. Some means of support could have been initiated prior to this cruel injunction. What is new in this report is the financial capability of Allan Hubbard. Who in New Zealand matches his abilities and who judges a genius?" she asked.

"Investors are not puppets waiting for government-appointed managers to act. Rather, we are immensely annoyed at how they have acted."

Grant Thornton said Aorangi's money was loaned to the Hubbards and other parties. "A large number of related-party loans associated with Mr and Mrs Hubbards' farming and other business interests and recently formed charitable trusts are shown in Aorangi records.

"Some investors, who believed their investments were secured over land, may not, in fact, have this security. The level of investment in [including loans to] businesses associated with Mr and Mrs Hubbard without registered security is of concern.

"Most of these investments are in or to farm businesses that have loans from banks secured by a mortgage over the assets of the farm.

"This could mean, in the case of direct investments in those farm businesses, that Aorangi would only be paid after the creditors of those businesses were fully paid. There may, therefore, be a risk in certain circumstances that Aorangi does not recover all the money due to it," the statutory managers' report said.

Adam Feeley, SFO chief executive, said investigations were "progressing well and with appropriate speed".

"Having done significant financial analysis, with the assistance of the statutory managers Grant Thornton, we will be interviewing investors over the next couple of weeks.

"We will be in a better position to assess next steps after this work."

DONATION DETAILS DUE TODAY

Details of a new donation scheme to help the Hubbards and their investors are due today.

People Power, the lobby group backing them, said John Funnell from Taupo and Ian Tullock from Gore were in the process of forming the Hubbard Trust Fund.

"Donations will be used to assist Jean and Allan Hubbard, investors in Aorangi Securities, and the other Hubbard-controlled organisations under statutory management," People Power said. "Many of the investors have their life savings in Aorangi and are facing financial hardship as a result of their interest payments being frozen.

"Mr Hubbard has been using his weekly allowance from the statutory manager in an attempt to assist these investors. Details will be released on Tuesday."

AORANGI SECURITIES
* Contributory mortgage company begun 1974.
* Later became a finance company.
* Has 400 Canterbury and Otago investors.
* Large number of related-party loans.
* Total assets of $132 million.
* Investors put in $96 million.
* Owned by Forresters Nominee company.
* Forresters owned by Timaru's Allan Hubbard.
* $106 million went to his entities.
* Investments found to be "at risk".
* Many made with no registered security.
* Investors warned to prepare for worst .
* Frozen by statutory managers, June 20.

Source: Grant Thornton report, July 12