By Kate Chapman of NZPA

Wellington, June 20 NZPA - Unsecured and undocumented loans by Aorangi Securities have resulted in it and its owners, South Canterbury millionaire financier Allan Hubbard and his wife, Margaret, being placed under statutory management.

The matter was also referred to the Serious Fraud Office (SFO) for possible breaches of the Crimes Act.

Commerce Minister Simon Power announced today Aorangi Securities, Mr and Mrs Hubbard and seven charitable trusts associated with the Timaru couple had been put into statutory management.

More than 400 investors and about $130 million were involved in Aorangi and the trusts.

Companies are put into statutory management to prevent fraud and reckless company management and to protect investors.

South Canterbury Finance, with which Mr Hubbard, 82, was closely associated, was not part of the statutory management order.

Mr Power put Aorangi into statutory management on the Securities Commission's recommendation and after consultation with senior government ministers in an emergency Cabinet meeting at 2pm today.

The Securities Commission recommendation came after "careful consideration" and followed weeks of consultations between the Companies Office and Mr Hubbard, Mr Power said.

The statutory management was effective from 3.30pm today.

The Securities Commission received a complaint from an Aorangi investor in February, he said.

Trevor Thornton and Richard Simpson, from Grant Thornton, were appointed statutory managers.

The decision to place Mr and Mrs Hubbard personally under statutory management was unusual but the couple were so closely related with the businesses that the statutory managers would not have been able to operate unless they were included, Mr Power said.

Three people were included in the statutory management order placed on International Investment Unit Trust in 2003.

Aorangi began life as a nominee or contributory mortgage company but transformed into a finance company.

Loans made by Aorangi were inadequately documented, unsecured and many were made contrary to investor instructions that deposits be lent to first registered mortgages.

The seven charitable trusts included in the statutory management were Te Tua, Otipua, Oxford, Regent, Morgan, Benmore and Wai-iti.

Mr and Mrs Hubbard were involved with Aorangi and the trusts as depositors, managers and borrowers.

"These decisions have been taken to protect investors and the matters are now in the hands of the statutory managers and the Serious Fraud Office," Mr Power said.

Mr Thornton and Mr Simpson were expected to be in touch with investors soon.

Mr Hubbard, South Canterbury Finance's president for life, recently stepped aside as one of the company's directors.

Landcorp director Bill Baylis was named South Canterbury's independent chairman to replace Mr Hubbard.

At the time, South Canterbury Finance's chief executive Sandy Maier said Mr Hubbard could sell some of his controlling shares.

In late May, rating agency Standard & Poor's lowered South Canterbury's long term credit rating by two notches to B plus.

The company had already been accepted for the Government's extended retail deposit scheme, which goes through to December 31, 2011.

Treasury's director of financial operations, Brian McCulloch, said South Canterbury's depositors remained covered by the deposit guarantee.