n office worker walks past an Australian Securities Exchange (ASX) window showing the main losses for the day in central Sydney July 23, 2012. Australian shares slumped 1.7 percent on Monday, the biggest one-day fall in seven weeks, as investors fled from
n office worker walks past an Australian Securities Exchange (ASX) window showing the main losses for the day in central Sydney July 23, 2012. Australian shares slumped 1.7 percent on Monday, the biggest one-day fall in seven weeks, as investors fled from riskier assets such as equities on renewed fears that Spain may be unable to dodge a costly bailout. Reuters

The Labour party In New Zealand has demanded an impartial probe into the allegations about New Zealand Hanover Finance scandal and its boss Mark Hotchin's alleged efforts to undermine a Serious Fraud Office investigation against him.

Raising the issue, David Parker MP, urged a thorough probe into the matter. Speaking in the Parliament, Parker claimed that some sources had told him that the SFO was warned about Hotchin's efforts to undermine its investigation into his possible criminal activity that led to the collapse of Hanover Finance in 2008. Parker said one of his sources allegedly told him that Hotchin "used underhand tactics to take out some of the potential witnesses against him in respect of his conduct in Hanover," reported TV Nz. Parker said he could not name the two sources or prove the hearsay allegations. But the MP told Parliament that the allegations are serious. They must be looked at seriously by the authorities, he said.

Loss To Investors

It may be recalled that the collapse of the financing firm was devastating. More than 16,000 Hanover investors lost $50 million. In April 2013, the SFO too announced its helplessness by saying it did not have enough evidence to prosecute Hotchin. When the campaign for the September election was in full swing, Judith Collins resigned as justice minister over a charge that she tried to undermine then SFO boss, Adam Feeley, while his office was investigating Mark Hotchin. The investigation on Collin's office by retired Judge Lester Chisholm has now exonerated Collins and said she never ran a campaign to undermine Feeley.

FMA Prefers Deal

Amidst the political heat waves, New Zealand's market watchdog has made clear that it would prefer to settle its civil action against six businessmen associated with Hanover Finance. Mark Hotchin, Eric Watson, Greg Muir, Bruce Gordon, Sir Tipene O'Regan and Dennis Broit were sued by the Financial Markets Authority for allegedly misleading investors with untrue statements in the finance company's prospectuses.

The case is set to go on to trial in July 2015 and may take 12 weeks in the High Court at Auckland. The FMA insists on a compensation for investors who put $35 million into Hanover Finance, Hanover Capital and United Finance between December 2007 and July 2008.

The scope of a settlement was raised in March when litigation between Hanover and its insurance broker was put off for encouraging discussions. FMA Chief Executive Rob Everett told New Zealand Herald that FMA wanted to settle the mater. He said, "you have a better chance of getting recovery for investors quickly and not spending taxpayer money and tie up in the courts, given the time lapse, we would always be keen to have the issue brought to a close sooner rather than later."