Calls for action to be taken against Hanover Finance’s directors

There are calls for legal action to be taken against the directors of Hanover Finance, two of New Zealand’s richest men.

The Commerce Commission is now investigating whether the company misled investors with its advertising and promotional material.24 hours ago the finance company froze repayments to its more than 16,000 investors.

The Advertising Standards Authority called their ad "grossly misleading" for saying they were ‘able to withstand any conditions.’Hanover Finance has not been able to withstand the current economic conditions and many were caught by surprise when it froze repayments yesterday, including the voice and face of the company.

Former TVNZ newsreader Richard Long says he hopes it was not just him who influenced people to invest their money in the company.

“I would have hoped that nobody invested in anything because i recommended them my background is in news I was juts there to draw attention to the product,” says Long.

A "product" that one investor, who doesn't want his surname known, put his family's life savings in.“We only have one part time wage coming in, and the interest from Hanover is part of our annual salary,” he says.Many believe Hanover was too focused on loans to property developers.

90 percent of loans were made to just 17 companies - many associated with Hanover owners, Eric Watson and Mark Hotchin.“So you only need one small development to fall over with one developer and you start a domino effect,” says Bruce Sheppard from the Shareholders Association.

Now, if the owners aren't prepared to inject their own cash into the company, the next best thing for bond holders is receivership.

The pair has paid themselves tens of millions in dividends over the years. The spokeswoman for "exposing unacceptable financial advice" says they need to be held accountable.“I think at this point in time their needs to be an investigation from the state, not from the investors the investors don't have the resources to investigate this,” says Suzanne

Nobody from the company was prepared to speak on camera saying they are focused on coming up with a restructure plan. Long says he went in with "his eyes open and has confidence in the company and management they are doing the prudent thing.”