SCF management team in mass exodus

An investor group is accusing South Canterbury Finance of recklessly taking advantage of the Government guarantee scheme. Photo / Dean Purcell

Only one out of seven directors and senior managers South Canterbury Finance listed in an October 20, 2009, prospectus had not resigned by the time the company collapsed this week.

Directors Robert White and Stuart Nattrass had both resigned earlier on August 27, 2009, while Arthur Baylis and Stuart McLachlan were appointed on October 20 but not listed on the prospectus of that date.

Investor advocacy group EUFA (Exposing Unacceptable Financial Activities) spokesman Gray Eatwell said it was becoming apparent the company took advantage of the Government guarantee to be speculative.

"I think all parties that were involved will have to take some responsibility ... because clearly there was a change in company policy to become probably quite reckless in their lending on the back of the public," said Eatwell.

The Weekend Herald was knocking on doors in Timaru yesterday but former chief executive Lachie McLeod was out on his tractor and former director Edward Sullivan away in Wellington.

Sandy Maier, who was made chief executive in December, says he met the former chief executive only once.

It was difficult to know why so many of the management team had left but, in hindsight, it was probably linked to the discovery in December that millions of dollars of loans were not able to be collected, Maier said.

"Accountability would be one factor, some would say time for a change and some would have been stressed out."

Maier said he was not put in charge to investigate what had gone wrong with the lending, only to recapitalise and raise money for the business.

"The last thing I had time to do was to go back and find out what went wrong. There is now plenty of time to look back and ask questions. My job was to dance as quickly as I could and do triage."

Maier said if he had seen any signs of fraud or unusual activity within the company he would have reported it to the authorities.

"There were a couple of things we looked at pretty closely. The accountants had to be consulted. But they resulted in significant disclosures." he said. "There wasn't a stage where we had to call the sheriff."

When the Government announced on June 20 that Allan Hubbard and his business interests were being placed into statutory management and investigated by the Serious Fraud Office, Maier said he felt reassured that an independent group had looked at South Canterbury and decided it did not need investigating.

"Something could have been found then but it wasn't.'

SFO chief executive Adam Feeley said he was not aware of any plans to extend the investigation of Hubbard's business interests to South Canterbury Finance.

"There is nothing to date which we are aware of," he said yesterday.