The Serious Fraud Office has launched an active investigation into Hanover Finance, after preliminary enquiries found reasonable grounds to "believe that fraud had been committed."
The investigation in the failed finance company, which effectively sold its loan book last year by convincing investors to swap debentures for shares in Allied Farmers in a bid to stave off liquidation, was triggered after a Securities Commission report and complaints from several parties, including Allied, the SFO said in a statement.
The focus of the investigation will be on dividend payments and other transactions made immediately before the announcement of a moratorium proposal and the transfer of asset to Allied Farmers.
SFO chief executive Adam Feeley said the regulator had begun issuing notices last week under section nine of the SFO Act to over 30 individuals, and would require them to attend interviews and produce relevant documents.
"Given the volume of notices which are now being issued, it was inevitable that our investigation would now become a matter of public knowledge," said Feeley. "We are focusing on some very particular transactions, and specific individuals within Hanover management and their board."
The investigation comes after the war of words between the two companies reached fever pitch last week, when Hanover set its lawyers on Allied after it refused to pay the last $5 million related to the debt-for-equity swap, having accused Hanover of breaching the terms of their deal.
Earlier this month, Allied's Matarangi Beach Estates was put in receivership by HSBC after the finance company turned down an offer to sell the assets back to Hanover principles Mark Hotchin and Eric Watson at a discount.
Feeley said the scale of the task required the SFO to bring in additional external resources to ensure that it is carried out with the "utmost professionalism and urgency," but that a ruling would take some time.
"In addition to the large internal team, and collaboration with the Securities Commission and Registrar of Companies, we have engaged a number of New Zealand's senior legal counsel and leading forensic accountant to assist us," Feeley said.
Shares in Allied were unchanged this morning at 2.1 cents, and have declined 80% in value so far this year.
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