Hanover civil case imminent

NZ Herald

26 Mar, 2012 04:30 PM3 mins to read

Eric Watson. Photo / Richard Robinson

Civil proceedings are expected to be laid in the Hanover case as early as this week - but Eric Watson says they will "lack substance" and will be defended.

Mr Watson confirmed to the Herald yesterday that he expected a decision shortly on charges laid by the Financial Markets Authority.

"While I have not had any direct contact with the FMA regarding when they will deliver a decision, I understand that the FMA may issue civil proceedings in the near future.

"If this does in fact occur, it will be after a detailed investigation by the Commerce Commission, the Serious Fraud Office, the Securities Commission and then the FMA that began almost three years ago and concluded that there was no case for criminal charges."

He said the FMA concluded that there was no deliberate intention on the part of the directors of Hanover to mislead investors and that "while civil charges may follow, they [FMA] had a preference to settle rather than go through a lengthy legal process".

"If the civil proceedings go ahead it is important to note that they will relate specifically to a prospectus registered in December 2007 [withdrawn in July 2008], which the FMA have suggested raised approximately $30 million from a few hundred investors.

"These investment funds were not lost by Hanover Finance, which was one of the few finance companies in New Zealand to avoid receivership during the global economic recession.

"Regardless of this, as a shareholder, I am confident that any civil proceedings filed against the directors and promoters in respect of the prospectus will lack substance and will be successfully defended."

The FMA announced last December that it planned to file civil proceedings against the directors and promoters of Hanover Finance, Hanover Capital and United Finance. An FMA spokesman said yesterday that he could not comment on when a decision was due.

FMA chief executive Sean Hughes has refused to name who was in the authority's sights but said the proceedings would relate to Hanover's offer documents from December 2007.

"All the advertising and promotional material painted a far rosier picture of the true state of affairs than was the case," Mr Hughes said late last year.

Directors who signed the prospectuses of Hanover Finance, Hanover Capital and United Finance in December 2007 include Mark Hotchin, Sir Tipene O'Regan, Greg Muir and Bruce Gordon.