HUBBARD SUPPORTERS GROUP AGAINST BUSINESS DESK
Kerry Grass, on behalf of the Hubbard Supporters group, complained about a Business Desk article of January 14, 2013 regarding a report on the statutory management of the well-known South Canterbury business man Allan Hubbard and his wife Jean.
The complaint was not upheld on the casting vote of the Chairman, the Council being evenly split four against and four for upholding the complaint. The protocol is that the Chairman does not exercise his casting vote to uphold a complaint.
In June 2010 the business affairs of Mr Hubbard, his wife Jean, Aorangi Securities and seven associated charitable trusts were placed into statutory management by the government.
In September 2010, under the Government's Retail Deposit Guarantee Scheme, the government paid out $1.775 billion, taking control of South Canterbury Finance’s assets – one of the Hubbards’ business entities and, until earlier that year, a company chaired by Mr Hubbard.
In May 2011 the Registrar of Companies commissioned an independent assessment of the progress of statutory management of the Hubbards, and an assessment of the risks and considerations relevant to terminating it.
On 11 May 2011, Allan and Jean Hubbard filed judicial review proceedings in the Timaru High Court to challenge the decision to place them into statutory management.
In June 2011 the Serious Fraud Office laid fifty charges against Allan Hubbard under sections 220, 242 and 260 of the Crimes Act in relation to the affairs of Aorangi Securities Ltd and Hubbard Management Funds.
On 2 September 2011 Mr Hubbard died in a motor vehicle accident and a week later the Timaru District Court made an order permanently staying the prosecutions against Mr Hubbard.
On November 13 2011 Jean Hubbard was removed from statutory management after the Registrar of Companies reported that it was no longer necessary.
Anderson Pardington report
In July 2011 the report into the Hubbard’s statutory management was tabled with the Registrar of Companies by its authors Sir John Anderson and Rod Pardington however it was not released publicly. Following media appeals to the Ombudsman it was released in February 2012 with significant parts redacted.
BusinessDesk reporter Paul McBeth further inquired of paragraph 8.4.1 in which the word “misleading” was handwritten above a redacted sentence. Some months later a decision was made to release the specific section of the report to Mr McBeth: the redacted section read: “misleading representations to investors”.
In January 2013 BusinessDesk reported on the disclosed section. The report was headlined “Hubbard misled investors, says suppressed report” and stated that the Anderson-Pardington report had concluded Allan Hubbard misled investors in his tangled affairs…” (Press Council italics).
Kerry Grass, for the Hubbard Support Group, complained that the use of the words “concluded” and “conclusion” in the report were out of context with the original report, were materially inaccurate and would have led readers to form the view that Allan Hubbard had misled investors. The complainant argued that Allan Hubbard had vigorously denied the allegation, had defended his position publicly and was, at the time of his death, pursuing a judicial review to challenge the grounds of his statutory management.
The complainant relies heavily on Section 1.2 of the Anderson-Pardington report in which the authors stated that in relation to the two events which followed their appointment (i.e. the judicial review proceedings and the laying of charges by the Serious Fraud Office) their report was carried out independently of, and without reference to, either of those events.
“We have not taken either of these matters into account in the conclusions we have reached.
‘We realise that we will have considered matters which will also be the subject of one or both of these proceedings. To avoid any misunderstandings, we emphasise that we have not reached any findings on such matters.”
Pattrick Smellie, responding for BusinessDesk, disagreed with the complainant’s view that this meant the report had reached no conclusions regarding misleading information to investors. Anderson and Pardington had identified misleading statements to investors as being a fact influencing their recommendation in regard to the statutory management of Hubbard’s affairs and that this was instanced several times in their report.
He said the complaint turned on the use of the world conclusion citing paragraph 1.2 to argue that Anderson and Pardington said they had not reached any finding on such matters. He rejected this view and argued that this refers to the judicial review proceedings and the Serious Fraud Office charges - meaning the authors did not wish to be seen to pass judgements on matters that were to be dealt with in other forums. He cites paragraph 8.4.1, titled Matters influencing our consideration of risk…” which contains the formerly redacted phrase “misleading representations to investors”. It follows then, argued Mr Smellie, that the authors must have concluded this to be among the matters influencing their consideration.
The complaint relied heavily on the context of the words concluded and conclusions arguing that the Anderson-Pardington report came to no conclusions that investors were misled, in their decision to recommend the continuation of statutory management for both Allan Hubbard and his wife Jean.
BusinessDesk argued that the authors must have concluded “misleading representation to investors” had occurred and that such matters influenced their consideration.
It is not accepted that the words concluded and conclusions can ONLY relate to the judicial review proceedings and the Serious Fraud Office charges. The authors of the report were asked to come to a conclusion regarding the progress of, and risks of terminating, statutory management of the Hubbards. In order to make a recommendation, they were required to draw conclusions from the information provided. They recommended statutory management continue and their report contains many references to inadequate record keeping among the Hubbard’s companies, confusion over true ownership of assets and of the risks posed by the lack of clear, accurate information regarding assets and liabilities. More specifically,
Section 8.4.1, titled Matters influencing our consideration of risk…” contains the formerly redacted phrase “misleading representations to investors”.
Four members of the Press Council believed the Anderson-Pardington report's reference to "misleading representations to investors" was not intended to be a conclusive finding but an allegation that the authors had listed among reasons to leave the Hubbards' affairs under statutory management. The members considered Business Desk's report was inaccurate in its headline and introductory paragraph, and noted that further down its story the previously redacted statement was correctly called a "claim" not a conclusion.
The complaint was not upheld on the casting vote of the Chairman.
Those members voting to not uphold the complaint were Barry Paterson, Kate Coughlan, Sandy Gill and Penny Harding.
Those members voting to uphold the complaint were John Roughan, Chris Darlow, Peter Fa’afiu and Pip Bruce Ferguson
Liz Brown took no part in the consideration of this complaint.