What were SCF bosses thinking?

Des Hunt. Photo / Kenny Rodger

Questions need to be asked of the former management of failed company South Canterbury Finance, says the Shareholders Association.

Des Hunt, Shareholders Association corporate liaison director, said there was concern with activities in expanding the business and investing in areas known to be risky.

"The questions would be why were they still investing heavily in real estate - if that's true then one would want to question the governance and what were the directors and management doing," Hunt said.

"I can't imagine he [Allan Hubbard] was the one who was out there looking for all these various investments."

Sandy Maier, who in December was appointed as South Canterbury chief executive, this week said the company had ramped up its risky real estate loans after it signed up to the Government scheme that protected investors' money.

The finance company, which had nearly $2 billion of assets, is part of the Government's retail deposit guarantee scheme introduced in October 2008.

Former chief executive Lachie McLeod - a South Canterbury Finance shareholder through Southbury Group - could not be contacted yesterday for comment.

McLeod resigned, leaving the company in November 2009 with thanks from the board for his leadership during the previous six years.

In December 2009 came news of the retirement of chief financial officer Graeme Brown, who the company said had tabled his resignation several months earlier to pursue a new opportunity which he agreed to postpone until new management could be installed.

Hunt said it was obvious the property market was completely overheated.

There were lots of questions but the finger-pointing would probably come when all the facts had been gathered.

"One has to be concerned that they [the company] were out there taking on risky investments when the organisation was stretched in the first place. There's signs of some poor judgment but actually pointing the finger at which investments or why did they do certain things one needs to get a bit more information."