Ombudsman probes regulator over Botherway conflict

Simon Botherway. Photo / Dean Purcell

Supporters of South Canterbury businessman Allan Hubbard say the Ombudsmen's Office has told them it is investigating a possible conflict of interest involving Securities Commission member Simon Botherway.

In June, Hubbard's company Aorangi Securities, seven charitable trusts, Hubbard and his wife, Jean, were put into statutory management.

Last week, two further trusts established by Hubbard were put into statutory management, and yesterday the same action was taken with two more companies linked to Hubbard.

Hubbard was also the major shareholder in South Canterbury Finance (SCF) which went into receivership last month with taxpayers paying out $1.6 billion to investors under the retail deposit guarantee scheme.

SCF was not part of the statutory management order.

Late in June, after the first statutory management announcement, the commission said in a statement that Botherway had declared that he may have a potential interest in matters relating directly to company SCF because of previous business dealings between his brother and that company.

The commission said it was satisfied that Botherway did not have a conflict of interest in relation to Aorangi Securities, or Hubbard, or the charitable trusts that were the subject of the commission's recommendation for statutory management.

Paul Carruthers of the Stand by Hubbard Support Team today produced an email copy of a letter sent to him by Chief Ombudsman Beverley Wakem, dated September 1.

In the letter, Wakem said she had decided to investigate whether the commission's decision to make a recommendation to the Minister of Commerce may have been affected by any undisclosed potential conflict of interest on the part of Botherway.

"What I am proposing to investigate is the reasonableness of the commission's policies and procedures relating to the disclosure of actual and potential conflicts of interest, and the extent to which these procedures were followed in this case, having regard to the requirements of the Crown Entities Act 2004 and the Controller and Auditor-General's good practice guide on managing conflicts of interest," Wakem said.

She had written to commission chairman Jane Diplock asking for a report and all relevant information relating to the complaint from Carruthers and others.

Botherway is also the chairman of the Financial Markets Authority Establishment Board which is creating a new integrated financial markets regulator.

- NZPA