Hawkins banned from managing companies

Convicted fraudster Allan Hawkins has been banned from any management role in a company for eight years.

The order by district court judge Brooke Gibson was sought by the Commerce Commission, which had wanted 10-year bans for Allan Hawkins, pictured above, and his son Wayne, for their roles in running Budget Loans Ltd.

The company has been convicted twice for breaches of the Fair Trading Act (FTA) over the past decade.

Wayne Hawkins was banned from being a director or involved in the management of a company for a decade. Judge Gibson said the only reason Allan Hawkins was handed down a shorter ban was because he’s 78.

The judge said both of them were a “significant hazard to anyone dealing with any company they manage, control or are directors of”, in a decision cited by the regulator. He added:

“The public in general, and borrowers in particular, are entitled to be protected from the respondents.”

The commission sought the bans after the high-interest lenders they were involved in – Budget Loans and Evolution Finance – failed to pay reparations in 2018. The two companies were fined $720,000 that year after being convicted of 125 FTA breaches, and were ordered to pay refunds and reparations totalling $91,000.

In November, the court heard that in some cases Budget Loans had repossessed debtors’ property so extensively that people’s homes were left almost bare. In other cases, it repossessed items the company should have known were of low value before dumping them.

Judge Gibson said Budget Loans used “intimidatory tactics” in dealing with debtors and were “ruthless”. Both men were involved in daily operations and – even though they knew repossessions were illegal – they were “unconcerned and dismissive”.

Allan Hawkins was believed to be one of New Zealand’s richest men in the 1980s when his interests included Feltex, Fisher & Paykel and NZ Steel. In 1992, he was jailed after being found guilty of fraud and conspiracy as chairman and founder of investment firm Equiticorp.

Judge Gibson noted the “notoriety” Hawkins senior had already achieved in the 1990s and said little had changed since then. “Although not on the same scale, there was clear dishonesty and unscrupulous behaviour in dealing with debtors of Budget.”

View from the regulator

The Commerce Commission sought the banning orders, which have a maximum penalty of 10 years, under section 46c of the FTA following the Hawkins’ management of finance company Budget Loans. It sought to ban each director for the maximum period.

Judge Gibson’s written decision was issued on February 19. Wayne Hawkins did not appear in court to oppose the application. Allan Hawkins unsuccessfully opposed the application in a three-day hearing in Auckland District Court in November 2019.

For the commission, Mary-Anne Borrowdale, general counsel competition and consumer, says: “We pursued these bans because we think it’s necessary to protect the public from risks of further offending under the FTA.”

In May 2018, Budget Loans and Evolution Finance were fined $720,000 on 125 FTA charges, and ordered to pay reparations and emotional harm payments totalling $91,000.

“Those amounts haven’t been paid, except for one payment of about $139, and this sum was paid when a court seized the funds,” says Borrowdale. “Not only have borrowers not received reparations, payments continue to be collected.” 

It was the regulator’s first application for a banning order under the FTA, but it previously obtained banning orders under the Credit Contracts and Consumer Finance Act.

Background to the banning orders

Between 2009 to 2014, Budget Loans and Evolution Finance (together, Budget Loans) misrepresented its right to repossess goods, its right to recover interest and costs from borrowers, and amounts consumers were required to pay, says the commission.

Both companies purchased old loan books from a number of failed companies, including National Finance and Western Bay Finance. The majority of loans originated between 2001 and 2006.

Banning orders were made available to the district court in 2013 after an amendment to the FTA, but operate retrospectively so the 2010 offences provided a basis for the orders to be made.

The banning orders issued on February 19 were against Allan and Wayne Hawkins personally. Earlier convictions were against Budget Loans and Evolution Finance, and not against the Hawkins personally.

Timeline for legal action

July 2010: Budget Loans is fined nearly $31,000 on 34 FTA charges – for misleading representations about its right to recover certain costs from debtors.

December 2014: 125 charges are filed against Budget Loans and Evolution Finance at Auckland District Court.

July 2016: Both companies are convicted of 106 charges with 19 dismissed. The companies appeal conviction on all charges and the commission appeals against dismissal of the 19 charges.

April 2017: The High Court dismisses the companies’ appeal and upholds the regulator’s appeal.

November 2017: Budget Loans’ application to appeal to the Court of Appeal is dismissed.

May 2018: The companies are fined $720,000 on 125 charges in Auckland District Court, and ordered to pay reparation and emotional distress payments totalling $109,000. Judge Sharp describes their actions as “cynical and deliberate” offending, with the being “reprehensible” and “used as a direct means of coercion”.

February 2019: The companies’ appeal against sentence is thrown out. In the High Court at Auckland, Justice Moore states the offending is “among the most serious of its kind. There’s no comparable case involving such damaging, prolonged, focused, cynical, personal and economic conduct.”

February 2020: Management banning orders under the FTA are issued against Allan Hawkins for eight years, and Wayne Hawkins for 10 years.