Editorial: Courts should protect public not just victim

Mark Hotchin Photo / Brett Phibbs

Opinion

New Zealand courts of law have a shameful record of name suppression but few cases have been worse than the protection given Hanover Finance directors Mark Hotchin and Kerry Finnigan when they had invested their own money in a "Ponzi" scheme.

The pair were taken in by the scam that offered returns too good to be true and applied for name suppression when they provided evidence for the prosecution of the fraudsters in the Rotorua District Court in 2004.

That was four years before Hanover Finance collapsed owing 16,500 investors about $500 million.

Public knowledge of their "Looney Tunes" personal investment, as their lawyer called it, could have been useful to anyone contemplating investment in Hanover over the following years, but it could not be mentioned until yesterday when the Herald succeeded in an application to have the suppression lifted.

We know the information would have been noted by investors in Hanover because that was precisely the reason given by Messrs Hotchin and Finnigan for wanting their names suppressed.

Mr Hotchin said by affidavit that public knowledge of his investment in the scheme would have resulted in "concern over the investment strategies adopted within the Hanover organisation because of the loss of credibility and damage to my reputation."

He raised the possibility of a run on Hanover's funds, the possible collapse of the group with the loss of 600 jobs and stress in the company's commercial relationships that could have caused his fellow shareholder, Eric Watson, to request Mr Hotchin's resignation.

Judge James Weir accepted those reasons when he granted the suppression orders and offered another reason in law: there was no identified person who could specifically benefit by publication of their names.

Little more than four years later, of course, we could identify a good number of the 16,500 people who could have benefited from the information the judge had suppressed.

Under the protection he had given the Hanover directors, the company ran advertisements often featuring newsreader Richard Long and claiming for itself a record of "prudent" lending decisions, "careful" growth strategies, "dependable" returns, "reliability and trust".

Mr Hotchin, co-owner of the company until its collapse, and Mr Finnigan, chief executive of Hanover until he moved to the same role at Strategic Finance, which also collapsed in 2008, between them invested more than $680,000 of their money for returns that were, or should have been, unbelievable.

Issues of name suppression normally involve offenders, not victims, but when a court is asked to suppress somebody's folly because it would reflect on the person's professional credibility the court has other potential victims to consider.

It should not be necessary to identify particular beneficiaries of publication. The benefits of public information are often unpredictable, general and immeasurable.

Courts cannot foresee circumstances in which any detail of a case may become more important to the public interest. That is one of the reasons justice is supposed to be open and suppression orders are not supposed to be given without "compelling" reasons for special circumstances.

That principle has been established by guiding judgments obtained by news services over the past 15 years. Yet it is still too often honoured in the breach.

Judge Weir acknowledged it but invoked the Victims Rights Act to protect the Hanover pair's "dignity and privacy". Those who trusted their judgment in subsequent years had a right to weigh their personal performance against the company's promotions. Justice left them in the dark.