Promotion of Accounting Reform as the most effective Pathway to a Fairer Safer and more Prosperous Society. Comment and Support from all quarters is Sought to straighten out NZ's problem
November 2016 Edition
To peruse our extensive evidence that the Feltex IPO was a Government sanctioned robbery of hard working but modestly educated New Zealanders to raise funds to enable the country’s athletes to cheat Olympic gold medals click here.
We have submitted the following complaint to the Brosdcasting Standards Authority with respect to their standards on balance, accuracy and fairness.
I wish to formally complain about the episode of Nigel Latta broadcast on TV1 at 8:30pm on Tuesday 27 September 2016. I cannot find this episode on the channels replay facility to refresh my memory. The program was generally about the performance of the NZ economy and lamented that it is not performing as well as might be hoped for the average citizen and went on to show some success stories and some suggested strategies. My complain concerns a statement briefly but firmly made early in the program that there was no corruption inhibiting the performance of the economy. I say this statement is completely untrue and we have one of the most corrupt societies in the western world. I herewith set out evidence which proves this. It is not possible to analysing the economy without considering the extensive corruption contained within.
With the implementation of MMP the major parties have sought ways of staying in power. National and Labour announced they were consulting on matters of common interest but never announced any outcomes.
In 2003 working under this agreement with the National party the Government with the full knowledge of Helen Clark has sought to gain a third term in office by wilfully engaging Securities Commissioners and judges who are prepared to make decisions in specific cases as secretly instructed by the Government. The jurisdiction of the UK Privy Council was terminated and the courts restructured including a large number of female judges. I do not imply that females are more crooked but I do claim that it is and was far less acceptable to challenge the credentials of female appointees.
As well as the Government many professionals, professional organisations and the news media have/has allowed themselves to be corrupted to achieve Government ends so making of a most corrupt nation with a consequent very under-performing economy which Mr Latta alluded to with feeble suggestions as to its cause.
The Government initiated and aided robberies which I wish to concentrate on are the April 2004 Feltex Carpets IPO whereby a worthless company was “sold” to a vulnerable section of the investing public for $250m and a 2014 purported deposit in of $US150 in a major Portuguese bank by the New Zealand Superannuation Fund about a week before the bank was revealed as having failed. These robberies have been initiated to provide funds to purchase licences to cheat at summer Olympic games from corrupt Olympic officials. These particular robberies would cover the 2004 and 2016 Olympics. There will have been other robberies which cover the intervening summer Olympics. NZ had “outstanding” results at all these Olympics. In addition there have been “enabling” and associated robberies where individuals have pocketed the proceeds. NZ has followed and been assisted by Australia with regard to robberies for Olympic cheating. The Dick Smith IPO of last year was no doubt a robbery to pay for Australian medals which also have been “exceptional”. Both countries are clearly following the practices on eastern European countries and West Germany in the 1970s when these countries had ridiculously high medal counts. We are looked upon with scorn from elsewhere.
While I am sure you the broadcaster has a better knowledge of this corruption than I do I set out briefly the overwhelming evidence that it is occurring.
1 The Feltex IPO prospectus see http://www.justaccounting.co.nz/feltexpros.pdf emphasised the long term stability of Feltex with explaining that with the acquisition of the Melbourne plant of Shaw Industries the nature of Feltex had become very different. Feltex did not take over any of the carpet brands of Shaw. With falling tariffs Shaw had obviously decided that it had become cheaper to supply the Australian market by manufacturing outside the country. It no doubt had an agreement with the owner of Feltex to limit this competition until that owner sold Feltex.
2 Feltex was in the process of moving its head office to Australia but this was not disclosed in the prospectus which was only issued in New Zealand.
3 Feltex had been losing revenue at the rate of 5% p.a. due to falling market share but this was not disclosed in the prospectus. Feltex allowed for a 1% increase in market share in its projections for 2005 which equates to a 3% increase in its revenue attributed to increase in market share.
4 On page 91 of the prospectus Feltex claimed that the carpet market had grown by greater than an average of 1% over the previous 10 years and hence a 1% increase in Feltex’s sales due to increasing market share was allowed for in its projections. . On page 37 it purports to provide evidence of this market growth.. It shows a graph of the size of the Australian Carpet market for the 11 years 1993 to 2003. It claims that over this period the market grew by an average of 1.7% p.a. compounding. The size of only two of these years (ie 1993 and 2003) were taken into account in making this calculation and one of these was the least significant of the years on the graph and outside the 10 year time frame. Using least squares regression analysis on the sizes of the latest 10 years the size of the market in 2005 is predicted to be 3% less than the size for 2003 not 2% greater than 2003 which Feltex has allowed for in its projections.
5 Unjustified assumptions of market size and market share, being some 10% to 12% above that which was happened has caused Feltex to fail. Feltex paid its scheduled dividends so that the vendor would not be required to refund the subscriptions.
It is clear that immediately after the IPO concluded a cash injection has been made from the IPO proceeds into Feltex’s revenue account to keep Feltex’s revenue up to budget so the IPO proceeds would not have to be returned. This is because revenue increased without any corresponding increase in costs.
6 At the time of the Feltex IPO Eion Edgar was chair of Forsyth Barr, one of two lead brokers for the IPO. This issue was to be his swan-song and he retired as chair soon afterwards only to resume it when Feltex collapsed and has held the position ever since. He was also chairman of the Investment committee of the Accident Compensation Corporation at the time of the IPO. ACC was virtually (South Canterbury Finance another) the only NZ institution to subscribe to the IPO and put in $9m, presumably as a lead for amateur investors. Edgar was also chair of the NZ Olympic Committee at that time. Prior to the IPO he received a high NZ honour which he later converted to an knighthood. Edgar has made a career of mixing sport with business especially in the Otago area. In recent years he manipulated the market of Blis shares by selling some and reducing the price so that he would receive a greater allocation of shares in a conversion of preference shares.
7 Joan Withers became a director of Feltex Carpets, its only female director, just days before the Feltex IPO was launched. She quit the directorship about a year later just days after Feltex issued its first profit downturn notice, citing having got a job as Fairfax NZ CEO where she drastically purged the staff. She has since gone one to chair various Government related commercial organisations including Mighty River Power which sponsors NZ’s highly “successful” rowing squad. She cares not about having deserted Feltex in its hour of need of a good recovery plan. She is now a director of ANZ bank New Zealand despite this bank having held almost all the Feltex debt and reportedly being still out of pocket. Former All Black captain David Kirk appointed Withers as Fairfax NZ CEO and then took a place on the board of Forsyth Barr.
8 Extensive use was made of personnel experienced in the operation of the white South African Government. Tim Saunders was chair of Feltex, Des Tolan was its Chief Financial Officer and Kevin Simpkins was special advisor to the Securities Commission on its Feltex “investigation”. Simpkins died of a heart attack last year (2015), the strain of his crooked actions no doubt having got too much for him. Simkins received numerous awards over his high status career no doubt to keep up his invincibility. He does not seem to have been credited with any successful prosecutions. His South African career or when he came here is seldom mentioned.
9 Lianne Dalziel resigned all her ministerial posts including Minister of Commerce about 2 months before the launch of the Feltex IPO. The rumour was that she was having some mental health problems but there is no other evidence of this. Clearly she did want to be involved with the IPO. Former Christchurch mayor Garry Moore joined Forsyth Barr as its Christchurch branch manager in 2002 no doubt as part of a plan to shore up the ”prestige” of this crooked firm. He remains there. Radio New Zealand often have Moore as a panellist but never mention his employment.
10 The Australian “ethical investment” company Hunter Hall is alleged to have subscribed $39m, nearly 15% to the Feltex IPO making it by far the largest subscriber.. Feltex directors were said to have met Mr Hall of Hunter Hall in London to sew up the deal. However the Annual Report of Feltex Carpets for the year to 30 June does not list such a company among its 10 largest shareholders and gives the percentage of shares held overseas as 0.34%. It may be possible for these shares to have been held by a variety of nominee companies. It is likely this Hunter Hall contribution is another instance of help rendered by the Australian Government See http://www.justaccounting.co.nz/feltexannualreport2004.pdf
Australians Jane Diplock and Keitha Dunstan were appointed to the Securities Commission around 2003. A special “school” was set up in Victoria University for Dunstan to head. Diplock was appointed head of the commission and “served” ten years in that position. This Commission had a majority of females on its board around 2007. An all female quorum comprising these two Australians, Annabel Cotton and one other “investigated” the Feltex IPO prospectus around 2007. Its findings are in part IV of this report: http://www.justaccounting.co.nz/seccomfeltex2.rtf In paragraph 62(a) it tells of the 1% growth assumption and says it was said this growth was said (in the prospectus) to be below the average growth over the past 10 years but does not say that it had verified that claim. Similarly in 62(c) it does not say it that it had verified the feasibility of the strategies resulting in a 1% increase in market share.
12 The Finance house Credit Suisse has allowed its name to be used in connection with the vendors and promoters of the Feltex IPO. Its name at least was withdrawn from the NZ sharebroking scene prior to the IPO. It did not so withdraw in other countries. In year 2000 it represented both the ACC and businessman Cliff Cook (one representation under the name Credit Suisse F B and the other under the name C S First Boston) when ACC bought half a million of National Mail shares from Cook just days before National Mail announced it was quitting the mail business with the shares losing almost all their value. Cook was a close associate of Peter Fitzsimmonds who was on the National Mail board. The other lead broker of the IPO, First NZ Capital evolved fron Credit Suisse in some sort of management buyout. The 2014 leak from the NZ Superannuation fund of $US150m was arranged by Goldman Sachs and similar international “finance house” to Credit Suisse.
13 “Businessman” Tony Gavigan was on hand to offer Court redress to Feltex IPO subscribers as they realised they had lost capital. Gavigan is a former executive of Fay Richwhite who had been the subject of numerous enquiries into corrupt proceedings. His function has been to put up a weak case so that corrupt judges would have an easier task in dismissing the case against the Feltex IPO instigators. Gavigan’s case did not mention the overstatement of carpet market growth. By this turning on of legal services the aggrieved subscribers did not get the opportunity to put up a case for themselves. The Court of Appeal decision has just been released but few of the news media have mentioned it. Gavigan also but up a long drawn out case for shareholders in Southern Petroleum which has yielded them nothing.
14 NZ’s 2004 Olympic medals wins appeared to be very shoddy with few of the results forecast as possibilities. Sara Ulmer had to be held on her bike to recover, a most uncommon sight.
15 Such mammoth corruption could be expected to result in deaths and surely has. Paul Phillip Wison and David Patrick Gaynor have died young because they have not had the maturity to cope with the exposure to the corruption which they have come across at an early age. Paul’s mother was a marketing manager at Feltex at the time of the IPO who no doubt was made to go along with corrupt forecasts when Paul was 14. No doubt he has tried to tell school associates of what the Government was up to and met universal ridicule. David’s father Brian was a journalist whose job has been to severely criticize the Feltex IPO and similar proceedings without directly accusing anyone of corruption. Brian Gaynor severely criticised (late) businessman Craig Norgate in an article in mid 2010. David and a daughter of Norgate were in year 10 at Kings college. Verdict of fellow students would be that Brian Gaynor was in the wrong. In mid 2011 David was obliged to attend a function hosted by Norgate. Understandably he took booze and drugs before doing so and died as a consequence several hours later. The Coroner Ian Smith died “unexpectedly” a day or so after I emailed the Wellington coroners saying that a report into the death of Paul Wilson was long overdue. These coroners had refused to correspond with me concerning Paul’s death, no doubt under instruction. I since found out that the case had been allocated to Mr Smith. I believe the situation he was in disturbed him deeply. The replacement coroner was only prepared to go back 12 hours in considering events leading to Paul’s death. He too would not correspond with me. Perhaps these deaths in themselves have had little or no effect on the economy but they help highlight the extent of the corruption.
Television has a clear duty to clearly present this commercial and political corruption to the public. It has a clear duty not to go along with any presenter such as Mr Latta who claims that the economy is not badly affected by corruption.