“The claim that the statutory managers are responsible for a loss of value of $40 million is simply incorrect and the real position has been made clear in our Reports to investors.
“Despite several meetings with the Investor Liaison Group to answer their questions and confirmation from them that they understood what we were talking about when we met, they clearly do not understand the situation otherwise they would not be making these unfounded claims that will upset other investors whom they do not represent.
“The facts are that, as at March 2010, the fair value of the identified assets of HMF was $60m not the $83m reflected on Mr Hubbard’s statements to investors. He had over stated the value of the Fund by $23m. This value is after recognition of a loss of over $4m on an investment in Southbury Group, a company controlled by Mr Hubbard.
“Since that date a further cash shortage of $6.5 million has been identified after another related party transaction was investigated. Additionally, a further $7 million of assets are being claimed by financiers and the Hubbard family.
“These factors total over $36m and were totally outside of our control.
“The remaining $4 million (taking the total to $40m) represents a variety of market movements and costs over the period.
“The distribution of the Funds to investors is not straightforward. Whichever distribution option was adopted, one group of HMF investors was going to be disadvantaged over others.
“Where the right method is not clear, the process is for the Statutory Managers to file an application in the Courts suggesting one of the possible methods be applied in order that other Counsel can argue before a Judge, the merits of another method. The Court makes the decision.
“We made submissions to the High Court for a determination on the Personal Investment Plan (PIP) while we ensured other lawyers submitted alternative methods that advantaged the investors they represented. Ultimately, the PIP method was not favoured by the Court and an alternative method is now being worked through under the guidance of the High Court.
“For those investors who would be disadvantaged under the methodology adopted by the court, we advised that should they wish to appeal the ruling, they may want to seek independent legal advice. We then provided details of several lawyers independent of the other legal teams, one of whom was familiar with the PIP methodology, having previously worked for the law firm representing the Statutory Managers. Investors chose which lawyer if any, they wanted representing them. This was a responsible approach given we could not be part of any appeal.
“The figures on likely returns to investors referred to by the Investor Liaison Group in their complaint to the Minister were in fact requested by them late last year. With these figures investors could be informed and understand the impacts of the PIP and pooling approaches to the distribution of the funds in advance of the court hearing last May.
“We made it clear these figures were provisional, and came with a number of caveats noting that they were, at best indicative as there were a number of claims by others, and the investments were subject to market movements. To this extent only are they inaccurate as they depend on future uncertain events.
“It is only when all investments are realised that final figures will be made available. This may take considerable time as the nature of some investments is long term. Our intention was to provide the best available information to investors in an attempt to provide transparency as to the possible impacts of a court hearing.
The Investor Liaison Group complained about the fees for the work on HMF. The fees for unwinding HMF are updated and provided in each Statutory Managers’ report to investors. For the sake of transparency we requested that they are reviewed by an independent reviewer appointed by the Ministry and include legal and associated fees as well as our own fees. We note that Mr Hubbard also charged fees.
“As the Statutory Managers we understand that the time to unwind the Fund and return capital to investors is causing difficulties for some. However, as Statutory Managers, we operate with integrity and have a duty to act in the best interests of all HMF investors. We are committed to returning as much of their capital back to them as we can, as soon as we can and we will,”concluded the Statutory Managers.
Michael Dunlop
Acumen Republic
M +64 (0)275 747 587
D +64 (0)4 494 5142
E mdunlop@acumenrepublic.com