Hotchin slams FMA over civil case

Former Hanover boss Mark Hotchin has strongly criticised the Financial Markets Authority over its civil proceedings against him and the other former directors of the finance company.

Friday, August 3rd 2012, 9:05AM

by Niko Kloeten

He and former directors Tipene O'Regan, Greg Muir and Bruce Gordon, and promoters Eric Watson and Dennis Broit filed statements of defence in the High Court at Auckland this week.

In a rare move for Hotchin, he issued a press statement yesterday afternoon saying each of the statements "is detailed and comprehensive, is supported by independent expert advice and opinion, and rejects strongly the allegations make in the FMA's proceedings.

"The directors believe that the FMA is relying on incorrect information in a forensic accountant's report that the FMA refuses to release to the directors. This is resulting in an ill-conceived and expensive piece of litigation.

Hotchin said the directors had "fully cooperated" with all regulatory investigations include a three-year investigation by the FMA, and its predecessor the Securities Commission, a related investigation by the Commerce Commission which concluded in 2009, and some inquiries from the Registrar of Companies.

"It should be clear to the FMA that the facts of this case are completely different from other finance companies that have come before the Courts, and the directors are confident they will not be found liable."

He said the Hanover group operated with a "high level of corporate governance" and the Hanover companies had in place "sound processes and internal controls which were audited by reputable and competent auditors who at all material times produced favourable and unqualified audit reports."

The FMA would need to prove that any loss or damage to investors "was a result of the specific statements and not intervening events such as the GFC, deterioration in New Zealand property markets, the Hanover debt restructure or the Allied Farmers transaction.

"The FMA's case is ill conceived and will be vigorously defended."

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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