The Hotchins are on holiday in Hawaii and the newspapers are feasting on their oppulent lifestyle. Their disconnect from ordinary New Zealanders is positively Gatsbyian

The white on black headline and the giant pull quote made it look more like a British red-top tabloid than a quality broadsheet, but the Sunday Star Times' front page had an element of old-school journalism about it that would have impressed Tom Wolfe or even F. Scott Fitzgerald.

"Inside Hotchin's Hawaiian hideaway", the banner screamed. The by-line belonged to Jonathan Marhsall, New Zealand's tackiest, hackiest hack. He'd been sent all the way to Honolulu to "door-stop" the Hotchins. The poor old Herald on Sunday had a similiar report, but was limited to phone calls and quoting comments on Facebook by the Hotchins' (presumed) trainer.

So what was the guts of the story? That the man who co-owned Hanover Finance and convinced 16,000 New Zealanders to back investments that have since turned to dust is living it up in Hawaii. While his investors have lost life savings (or got Allied Farmers shares currently worth mere cents), he's on a three month holiday in a $43,000 per month rented home, playing tennis every day and learning to surf.

Such stories have always sold newspapers; they've always captured the public's imagination and channelled their anger. The sad thing is that these days the stories are written like advertising copy, rather than reportage. Imagine how a Fitzgerald or Wolfe might have told the story of excess, greed and disconnect. Sigh.

If you really want to understand what's going on here, read The Great Gadsby or The Beautiful and the Damned or Bonfire of the Vanities.

On the other hand, the good thing is that these stories are still being told, because they capture the financial zeitgeist and they tell the story of what extreme wealth does to a person.

Marshall's trip to Hawaii elicited a single quote, and that from Mark Hotchin's wife, Amanda. But what a quote!

"We don't have to justify where we get our money or what it's spent on, to anyone. I don't care what anyone says".

The psychology and sociology of that comment could keep university students in essay topics for years. But let me offer a few thoughts...

It shows how money divides people, how extreme wealth skews a person's sense of reality,community and compassion (and tens of millions counts as extreme wealth in a world where it's estimated that almost half of all people live on less than a dollar a day). There's no sense of obligation to others in Mrs Hotchin's words, no empathy, no understanding that her husband's business relied on the collective faith and cash of thousands of investors. That quote says 'Bugger John Donne; actually some men are islands, and luxury resort islands at that'.

"We don't have to justify where we get our money or what it's spent on, to anyone..."

That's something that could never be said in a village; something that could never be said if Mrs Hotchin had sat with those who lost their life savings and heard their griefs and woes. They are the words of someone who has got used to living in a bubble of privilege. They are pitiful words that show no pity.

Further, it claims a powerlessness that says "shit happens". Or as Hotchin himself has said, "it's a different world". Hey, what can one man do when the world changes? Not my fault, just bad luck, eh? Never mind.

There is another side to this story, however; there's a defence for the Hotchins and it's two-fold: First, any investment involves risk and sometimes money is lost. Second, he is just one of around 200 finance company directors who failed their investors. So why pick on him? I can't help but feel a little sorry for someone who has actually fronted up to media and investors.

Until, that is, I remember how he spoke of his "passion" to return 100 cents in the dollar to those who had lost their money with him. That was, it seems, a fickle and temparary ardour.

Boy oh boy, what a quote. It will stick. But at the end of the day, it's false, incorrect.

Mrs Hotchin, ultimately you do have to justify your money to yourself and, with a Securities Commission investigation continuing, you may yet have to justify your spending to the courts. Even after the luxury holiday with its private beaches, six bathrooms and tennis lessons, there is always a day of reckoning.

 

Comments (15)

by stuart munro on May 16, 2010
stuart munro

If we had a government worthy of the name, it would explore legislation to ensure that fraudster's holidays come second to repaying their victims.

But we do not.

by Craig Ranapia on May 17, 2010
Craig Ranapia

Of course, you could say exactly the same thing about Peter Jackson and Fran Walsh -- but nobody every does.

Mark Hotchin doesn't have to "justify his money" anymore than Peter Jackson does.  But he might just find himself having to justify his business practices in a court of law -- just like everyone else.

 

 

by Craig Ranapia on May 17, 2010
Craig Ranapia

And would it unduly bitchy to note that the media landscape isn't exactly short of executives and proprietors who've cheerfully written themselves lavish compensation packages while putting thousands out on the street?

by Claire Browning on May 17, 2010
Claire Browning

If we had a government worthy of the name, it would explore legislation to ensure that fraudster's holidays come second to repaying their victims. But we do not.

Sorry to ruin your day, Stuart, by dismantling the hyperbole with a fact or two. You mean legislation like gosh, I don’t know, the Sentencing Act perhaps?

So – assuming there was an offence, and a conviction, because we have that thing called the rule of law – and, therefore, "victims" in the technical legal sense – a court may impose a sentence of reparation in these circumstances, which would include fraud, or other offending (my emphasis), as opposed to incompetence, ignorance, greed, bad luck ...

In fact, there’s a presumption in favour of reparation. A court lawfully entitled to do so must impose it, unless satisfied that the sentence would result in undue hardship for the offender or the dependants of the offender, or that any other special circumstances would make it inappropriate. If a court does not impose a sentence of reparation in a case where it is lawfully entitled to do so, it must give reasons for not doing so.

A sentence of reparation may be imposed on its own, or with any kind of sentence (eg, whether imprisonment or fine).

If the court imposes on an offender a sentence of reparation and a sentence of a fine, the reparation takes priority.

Financial means (hardship) and response of the offender, such as any offer to make amends, are considerations for the court. Conversely, you might expect them to be aggravating factors, if the means are large and the remorse non-existent.

by stuart munro on May 17, 2010
stuart munro

@ Claire - theoretically, yes.

But in practice, the events surrounding Blue Chip & its co-founder Mark Bryers, and related frauds or near frauds, rarely repay anything substantial to their victims, or visit sentences of credible severity on the perpetrators.

Nor are such persons detected in a timely fashion, like those who built the notorious leaky homes, property fraudsters are usually long gone by the time the wails of their victims reach 'heaven'. And the money goes even quicker than they do.

The letter of the law, and the outcome in practice, rarely match perfectly.

But property fraudsters, unlike murderers, may be pressed to make reparations. Somehow they do not often seem to be.

by Claire Browning on May 17, 2010
Claire Browning

Stuart, yes. However - reflexively or otherwise - you seemed to be wanting to sheet this home to the government, and to be calling for legislation.

Beyond a review of securities law, to ensure requirements are robust, offences comprehensive, and penalties adequate - which, I assume, would be part of Simon Power's "wider review" - I'm not sure what your "government worthy of the name" can or ought to do. The legislation you called for already exists, provided an offence exists. Of course, in practice, if the offending is relatively low culpability and the consequences very large, a court may well find that reparation wouldn't serve the interests of justice, but that's a different problem. Are you as scandalised about the judiciary as you are about our politicians?

Also, Tim's post was as much about the moral obligation as any legal one; and since you think all MPs are immoral, I find it odd for you, of all people, to be calling on their aid ...

by stuart munro on May 17, 2010
stuart munro

I'm not especially impressed by the judiciary - but then Confucius writes that it is the nature of criminality to create unsatisfactory results - and the judiciary's responsibilities are more complex than parliaments, nor are they directly accountable to any dissatisfied citizen, as MPs are in a democracy.

Whether I think MPs are immoral or not, they pretend to work for me. I should like them to pretend a little harder. When MPs have made restitution for all the damage that they have done me, and put NZ on a path to recovery in a number of different spheres, I will treat them with the respect they presently think they are due.

I'm not calling for their aid - they've never done any good to anybody that I ever heard of. I'm just asking for them to make a more credible farce of doing their jobs.

 

by william blake on May 17, 2010
william blake

Brian Gaynors column from the NZ Herald seems to be sensible

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1064...

and J.Key wants NZ to be the financial hub of the Pacific Rim?

by Tim Watkin on May 18, 2010
Tim Watkin

Stuart, Bryers is due to be sentenced this week, so we'll see what the courts have to say to him soon.

William, we simply don't have the regulations in NZ for us to be a financial hub. This is my take for TVNZ, I think I forgot to re-publish it here: http://tvnz.co.nz/q-and-a-news/nz-not-good-enough-super-hub-3482302

The govt. says it's looking to change tax laws, it's a long way from fixing the regulation problem.

by william blake on May 18, 2010
william blake

If that 'regulatory desert' that Jane Diplock refers to in any way resembles Monument Valley in Arizona, then perhaps J.Key will be styling himself as the Wyatt Erp of the market, in the not too distant future.

by stuart munro on May 18, 2010
stuart munro

Fine Tim - but one needn't be a legal or policy wonk to understand the deficiencies in NZ's financial regulations.You only have to look at the scoundrels walking free.

A full and fully enforced regulatory regime would probably not be enough to restore NZ to economic rectitude in any case. The anomalous lack of a capital gains tax on property makes us a haven for fraudsters and speculators - and persona that oughta be non grata, like the Vorovsky Mir.

by Tim Watkin on May 18, 2010
Tim Watkin

William, I don't see Key as a sherrif kind guy. He's more the saloon keeper-type, perhaps? Really, he's comfortable riding the markets, I suspect. It's Simon Power who's got the job of planting a few cacti in that desert... even turning it green if he's got the will, but I suspect our markets will remain relatively dry places.

Stuart, I agree with you on that one. A CGT on property at least would fire a few shots in the air and corral those investors. (Sorry, I'll stop the cowboy metaphors now). We are radical in not having one.

by stuart munro on May 20, 2010
stuart munro

Bryers - no prison & fines in the $50,000 range, perhaps as many as 30, but more likely a total less than 1/2 a mill. Pretty light for frauds entailing losses to investors of around 80 million. Doesn't attend court & will not be listed bankrupt in Australia. Just one of the many benefits of globalisation.

In Australia, no doubt, he'll be an entrepreneur and an investor.

In this country the gallows is chiefly remarkable for the number of persons who escape it.  - Bierce

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