Tuesday, June 22, 2010

Power, power-lust and where the real power lies [updated]

buffetwarren-100x129There are people around who think that real political power lies not with governments, but with corporates and rich businessmen.

Think again.

When a Warren Buffett declines an “invitation” to come to Washington to “share his thoughts on a variety of financial matters,” a minor, mid-level bureaucrat can demonstrate to the third richest man in the world and head of the powerhouseedelbergwendym-100x114 Berkshire Hathaway corporation who’s really the boss in that relationship. A click of the fingers, the issuance of a subpoena, and a piece of paper beginning with the words “YOU ARE HEREBY COMMANDED” is thereby delivered to his door by the police.

Turns out the gun really does trump the dollar, at least when it comes to making threats.

Simon PowerThe latest local example is Simon Power-Lust’s peremptory ministerial decision to invade the businesses of the South Island’s richest man, Allan Hubbard, and his wife—and to place they themselves under “statutory management.”  As Mark Hubbard (no relation) explains,
_Quote Allan Hubbard's company Aorangi, and seven underlying charitable trusts, would not have needed a prospectus … but have regardless become the subject of a probe by the Serious Fraud Office, and they, along with Allan and his wife, are now under statutory management by the Nanny State. Aorangi never solicited for funds from the public, it was simply Hubbard's business associates and friends who had traveled with him over the last thirty years, most of whom he has made rich men. Unfortunately, it seems to have allowed a snake in, who has turned on him for who knows what personal vendetta, or trying to make up for losses he/she was not prepared to stand (after the event).
   “As Aorangi did not need a prospectus, these were investment transactions between consenting adults: the government had no right to be involved here: none.
Allan Hubbard. Photo / The Listener    “This is an historic day. Not because we drew 1-1 with Italy, but for the first time we have seen that a politician, and a bunch of no-hoper parasite bureaucrats can decide to take, to all extents and purposes, your life according to their whim. One second he’s the richest man in the South Island, the next (due to the ruthless intrusion of the State), because all of his private bank accounts are frozen, he can't even buy a pie at the local dairy.”
So where does the real power lie?

UPDATE: "Oh, but the finance industry couldn't be unregulated!" It isn't.
    "Financial services [in the States] have long been subject to detailed regulation by multiple agencies. In his book on the financial crisis, Jimmy Stewart is Dead, Boston University Professor Laurence Kotlikoff counts over 115 regulatory agencies for financial services. If more hands in the pot helped, financial services would be in fine shape. Few believe such is the case."
We don't have all the regulatory agencies here in EnZed, but  we do have all the regulations.

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20 Comments:

Anonymous Sean Fitzpatrick said...

One word - bastards.

6/22/2010 11:07:00 am  
Anonymous Maria said...

Hubbard is a remarkable man. Even more remarkable is the incredible respect and loyalty that South Islanders have him and his family.

That a govt official can punish a man for not comforming to the government's preferred way of working...I have no words to describe my disgust.

6/22/2010 11:27:00 am  
Anonymous Mark Hubbard said...

This all boils down, it would appear, to Allan Hubbard not investing a single investors money 'according to instructions'. I question that in respect of this particular company.

What instructions? There was no prospectus - to give any such instructions - because there didn't need to be a prospectus. This company was either publicly soliciting for funds or it was not, and why would it? That's what SCF was for.

Though it's all over. Mr Hubbard, an honourable man used to doing business on a handshake, is going to get utterly brutalised by the bureaucrats for not doing things 'their way', and being loose with the paperwork.

All this from the complaint of single investor across 407 investors, and thirty years.

It's a day of shame for the country, and a day of fear that the State has this shock and awe power to run roughshod over transactions between so many hundreds of consenting adults going about their business without the initiation of force or fraud.

6/22/2010 11:58:00 am  
Blogger Kiwiwit said...

Yes, it goes to show that we haven't come that far from feudal times and our lives and freedom are very much subject to the whim of our leaders who ultimately rely on the power of a gun to persuade us rather than the power of their arguments.

6/22/2010 12:07:00 pm  
Blogger Ruth said...

It's rather amusing how those on the Right who have been calling for SecCom and others to protect Joe Bloggs from every dumb punt he makes (to quote someone elsewhere "Carrion creatures wheeling above, depositing their dung") are now calling foul because of this!

It's like they never wanted govt to do this to a kindly old man - just folk they don't like - eg a ginga like Weldon or a poseur like Hotchin. Not Hubbard, he's nice.

As someone else said "Brother, you asked for it!"

6/22/2010 12:38:00 pm  
Anonymous Mark Hubbard said...

My final word on the matter:

Government appointed statutory manger Trevor Thornton said ...the couple would not go without. "What we anticipate is ensuring that he and his wife can live with dignity." ... He would not comment on how much Hubbard and his wife would need to live with dignity. "I have no idea what their needs are."

6/22/2010 02:19:00 pm  
Blogger Cactus Kate said...

Ruth

A case has been made here by PC and Mark Hubbard that rules are being applied that Hubbard doesn't even have to obey.

It would be ironic (read - very damaging)if the one time Seccomm actually acted in such a harsh manner against an individual, they picked the wrong bloke. That's really the point here.

6/22/2010 04:45:00 pm  
Blogger Ruth said...

If you are "in the know" as you seem to think you are CK, then you will be aware that Diplock wants to be seen to be doing "something" because of media pressure.

You, along with others on the Right, called for her to be empowered and called for media criticism, instead of leaving her be to ineffectually travel the world and imagine she is one of the "beautiful people".


I have said before, and PC has agreed with me, that Diplock, along with the folk at the Commerce Commission are the most powerful and dangerous people in this country.

You are now reaping what you have sown so don't try to wriggle out of it.

6/22/2010 05:05:00 pm  
Anonymous Mark Hubbard said...

While I'm on a roll, the Police Statist s are really pushing their Big Brother agenda now.

Jesus, I'm starting to think back on Aunty Helen and Uncle Michael with some nostalgia now. It might be just my black mood of late, but I really am starting to hear the plod of jackboots on flesh now.

6/22/2010 05:22:00 pm  
Anonymous Mark Hubbard said...

Never use 'now' three times in a paragraph. It's just silly.

6/22/2010 05:24:00 pm  
Blogger Shane Pleasance said...

Absolutely right, Mark. I knew what I was getting with the Labour lot - there were fewer hidden agendas. The enemy was obvious. These vacuous oafs are altogether a different shade of red, however exercising an occasional jackboot with their perceived fascist support.
I really do feel the electric fences of my grazing field closing in on me.

6/22/2010 07:34:00 pm  
Anonymous Pro-Capitalist said...

I do agree with Ruth here. When the govt moved to nationalize (err! regulate) NZX (a private company), the libertarians had been quiet on that. Now, it seems that each and everyone Libz here, wants to strangle Simon Power. Where was the outrage from the Libz brigades against the govt nationalizing the NZX? None!

6/22/2010 07:40:00 pm  
Blogger Cactus Kate said...

Ruth

Snarking again as usual.

If you read my post you will find I haven't "wriggled" out of anything. One has to wait for the investigation to see the result.

It will either be Diplock's finest hour or it will be the instant end of her. Either way it is a huge call to target Hubbard when there are easier hits around.

To suggest Diplock was merely responding to public pressure is simplistic. The woman hasn't been moved for years into action.

Mark Hubbard here has presented the case for Hubbard and his business and PC's view matches that it wasn't a public offering. That is the issue we are discussing here, some such as Maria are very supportive of Hubbard.

I don't know if you've been through a regulatory investigation either yourself or with clients but no one, least of all those investigated is given the luxury of knowing what the hell is going on.

The business is shagged regardless at the point of announcing the investigation even if those investigated are perfectly innocent.

If Diplock is wrong, she's ruined this man's business and if she's right then the public perception of the finance industry will plummet as Hubbard was deemed to be a good guy.

Either way, no one is winning.

6/23/2010 02:33:00 am  
Blogger Ruth said...

So tell me, why is she moving? More to come out yet, but Hubbard is most definitely honest.

The rest of it is neither here nor there, because Diplock's office should not exist, neither should the Commerce Commission. Anyone sensible would have been calling for them both to shut up shop, as libertarians have been for years. Maybe now a few more people will listen.

6/23/2010 08:25:00 am  
Anonymous Mark Hubbard said...

Allan Hubbard has now been banned from his offices, which he'll take very badly.

Today's front page Timaru Herald report is interesting:

http://www.stuff.co.nz/timaru-herald/news/3842684/Office-ban-cruel-blow

It includes this, quote:


Prof Henaghan said he did not believe the statutory order was personal to Mr Hubbard, but was taken because of the troubles that had hit other finance companies.

"They are taking it as a precautionary action. They don't want to take any risks, just in case."

Mr Power said he made the order of statutory management on the recommendation of the Securities Commission.

It was made on the basis of one complaint about Aorangi Securities, which has 400 investors.


If Power and Diplock have actually done this on a 'maybe', then they're going to have a real vested interest in finding something that sticks.

But again, as Ruth said, the State simply shouldn't have these huge powers - of which this act is an abuse. Aorangi didn't need a prospectus, and I don't understand how the authorities get around that fact.

It's as interesting as it is alarming (and sick).

6/23/2010 09:18:00 am  
Anonymous Julian said...

@Pro-Capitalist "Where was the outrage from the Libz brigades against the govt nationalizing the NZX? None"

Do you know what a libertarian (and the Libz) advocate?

Let me quote the Libz policy

"A Libertarianz government will separate state and business - there must be no partnership between the dollar and the gun."

On other words, libertarians (and Libz) oppose, in principle, any nationalisation/regulation of the NZX (a private company). Where have any of us advocated a position that contradicts this separation of state and business? Who else, other than the Libz, has been out there advocating such a principled defence of the free market and capitalism?

Julian

6/23/2010 09:22:00 am  
Blogger PC said...

"...Diplock's office should not exist, neither should the Commerce Commission..."

That's it right there. No-one will win while you have an organisation dedicated to "enforcing" competition while creating regulatory barriers to new competitors, and talking about business integrity while engaging only in acts of random destructiveness like this one.

No surprise, I guess, that it was Roger Douglas who created the Communist Commission.

6/23/2010 09:25:00 am  
Blogger twr said...

For the record, I have spoken with someone who does understand these matters, and there is apparently a very grey area around what is constituted offering securities to the public, which will be the sticking point here.

Not that he should have to, but it it may be hard for Hubbard to argue that he has 400 or so close friends who were investing in these structures. Clearly at least one of them isn't such a good friend after all.

So, he may be technically in breach of the rules, but it's interesting to wonder exactly what the grey-suits are trying to achieve here by climbing all over him.

From what I can see, all they have managed to do is to damage confidence in SCF, which could then easily end up triggering a payment under the government guarantee.

Still, it's all someone else's money, so why should they care?

6/23/2010 09:48:00 am  
Anonymous Stephen Smith said...

PC, this is exactly why I say all my fellow South Islanders should vote Libertarian. After all, North Island Politicians tend to stuff things up :-) Seriously, I worked in Timaru for many years and I can testify that Hubbard is held in very high regard.

6/23/2010 11:22:00 am  
Blogger Ruth said...

Quote from Feeley yesterday ...

"We have reasonable belief an offence may have been committed but that is quite different from saying there is a case to be answered and charges to be laid. If anything, that belief couldn't be further from the truth."

Hopefully this will backfire badly on govt agencies, and those who kept calling on Diplock to "do something".

6/25/2010 07:52:00 am  

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