To peruse our extensive evidence that the Feltex IPO was a Government sanctioned robbery of generally hard working but modestly educated New Zealanders to raise funds to enable the country’s athletes to cheat Olympic gold medals click here.
ODT’s recording of the death of "notable figure" Graham Crombie" on Thur 14 February 2019 is somewhat restrained in tone, but not nearly enough. Mr Crombie was president of the Institute of Chartered Accountants of NZ in 2008. This was the year when an all-female quorum of the Securities Commission, containing two Australian imports, falsely reported that the 2004 Feltex IPO was not misleading in any material particular. Nothing could be further from the truth but Mr Crombie just sat there and accepted it. He was more interested in his getting some key to freedom in the city of London that year. We don't know what the official cause of Mr Crombie's early death is but I highly suspect the strain of his huge indiscretions has got to him. Or perhaps he was threatening to confess and had to be bumped off.
Mr Crombie has died at age 55. The CEO at the Accountants Institute in 2012 and we think a committee member of the Institute in 2008, Craig Norgate died age 50 in 2015. Kevin Simpkins who was advisor to the Securities Commission in its “investigation” of the Feltex IPO died in October 2015 aged 57. Simpkins was trained under the white South African regime where we think he learned to bend things to suit the Government. He got high positions and accolades galore in NZ. And for the record Tony Dale CEO of the External Reporting Board also highly praised, died in April 2015 at age 55. The punishment can certainly be harsh in these jobs. It seems Kevin Simpkins was CEO of the External Reporting Board before Tony Dale but the current CEO will not have a premature death. The veteran accountant Warren Allen has slotted in.
The Feltex IPO had Crombie's fellow Dunedin accountant Eion Edgar as chair of the joint lead broker Forsyth Barr. Edgar was also chair of ACC investment committee which had thrown $9m into this "IPO" pot, and was chair of the NZ Olympic Committee, no doubt to co-ordinate the money raised (ie stole from largely hard working amateur investors trying to claw their way into the middle class) to buy licences to cheat the pathetic gold and silver medals at Athens. .
While the Prime Minister and Opposition leader had obviously sanctioned this scam it had abuse of basic accounting principles at the heart of it. On page 37 of the prospectus (to be found at www.justaccounting.co.nz/feltexpros.pdf is a graph( www.justaccounting.co.nz/feltexprosp37-2.jpg) showing the Australian carpet market size of the most recent 11 known years at the time of the IPO. A statement above the graph claimed that this market had grown by an average of 1.7% p.a. compounding. Only the sizes of two of the years (1993 and 2003) were used in this calculation and of all these years 1993 was the least significant year and outside the 10 year time frame. Least squares regression analysis of the sizes of the 10 years 1994 to 2003 shows growth of 0.33%. More importantly the average line does not pass through the actual 2003 size as Feltex "assume". By the least squares analysis the predicted 2005 size is 3% below the actual 2003 size not 2% above it as Feltex say at page 91 they have assumed for their projections of 2005 results. This 5% overstatement has resulted in a huge overstatement of the company's projected 2005 profits. But the possibility of the actual 2005 size falling somewhat below the average line should also be allowed for. Of the two biggest market sizes on the graph other than 2003 it can be noted that the size fell 9% from year 2000 to 2002 and 5% from 1995 to 1997. 2003 is between 2000 and 1995 in size so a fall of 7% was on the cards meaning the "growth" applied was 9% excessive. In the fake court case Houghton v Saunders put up by scam proponents pretending to be representing the interests of Feltex subscribers ( at the subscribers expense) an Australian "forensic" accountant, Greg Meredith, appearing for Houghton said of this p37 graph that he considered that 1993 might not have been the appropriate starting point and presented several growth figures using the sizes of several other starting years, each paired with the 2003. He said nothing about using all the 10 latest sizes in a calculation .Of course because 2003 is a large size if you draw a line between the size of any other year (other than 2000) and 2003 the line will point up high, but that means nothing. The Accountants Institute does not dispute this but refuses to take any action against Meredith. .
The market share of Feltex assumed for 2005 by Feltex in its projections is also wildly optimistic. The share had been falling by one or two percent in its 2002 and 2003 years. This is no surprise because had bought the Melbourne factory of Shaw Industries (increasing it productive capacity by about 200%) but it did not take over any of Shaw's brands. Shaw was free to import carpet into Australasia with reducing tariffs. Feltex assumed it would reverse the trend and increase its market share 1% in 2005. Houghton (officially representing many Feltex subscribers but effectively representing the scammers) challenged the 1% increase in share adopted but did not present any evidence as to the huge falls which had been happening. The crooked courts (set up in 2004 before the IPO) have to date claimed that the 1% increase assumed was reasonable. They have no said how big the increase would have to be before they considered it to be unreasonable. It is clear that cash injections have been made into Feltex's revenue accounts in the 2003 and 2004 years to "create" profits to allow the corrupt sale to take place.These injections would be financed from IPO proceeds, still leaving $100m or so for corrupt Olympic officials after everyone else has had a cut. The argument was made "who cares about sales its profits that count". .
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