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March 2011 Edition ----

A summary of our evidence re the Feltex Carpets case is being maintained here.

Well sorry for the break but it is now full speed ahead, especially with our campaign to get the culprits of the 2004 Feltex IPO scam locked up.

We think we will need to form a political party. Pop Horific Scamz is the provisional name, It stands for "Prosecute Our Parliamentarian and Heinous Others who Raconteurly Robbed Investors with Feltex IPO to Cheat Subterfugal Conjured Athens Medals for New Zealand". We need 500 NZ members to register so that will be an early task. "Pop" perhaps isn't the ideal word but the sense is as in what one might do to a bubble or balloon. There isn't much left. And the subjects are mainly hot air which is appropriate.

But a few comments which are slightly off the subject. To skip over them click here. Firstly concerning the terrible Christchurch earthquake. Prediction of earthquakes is generally hard but there is a quite reliable rule that an aftershock one point lower on the Richter scale than the original quake will strike within a year of the original one. Now one point lower equates to only 10% so the uninformed reaction is that we sort of survived the first quake so we will endure the big aftershock OK. But as the experts knew and anyone who thought about it would have known the big aftershock is in the same general zone as the initial but will probably not be centred at the same surface location or depth. It is we think a fair bet that the big aftershock will be centred in an area where many of the other aftershocks have been centred.

Now let us apply this to Christchurch. Aafter the first, September 4 quake there were plenty of warnings about the big aftershock on Richter unit lower, for instance this one but no warning that although one point lower means 10% the strength the location could be anywhere that aftershocks are occurring which includes at a shallow depth under the Christchurch CBD and at a time when the CBD was in use. If this were to happen the consequences would be a great many times worse than the first (Sept 4) quake. Fortunately that did not happen exactly. The Feb 22 quake was several kilometres away from the CBD.

This artile is also relevant.

If we talk in terms of odds, a 30 km radius of the Darfield, centre of the original quake has an area of 3000 sq kilometre. The CBD has an area of say 5 sq km so the chances of a hit is one in a 600. Let us assume three grades of depth and the CBD is occupied for one third of the time. That makes chances of a bad hit 1 in 600*3*3=5000. But the "one point lower" phenomenon possibly only occurs with every second original quake so that made the chance of the worst consequential outcome is about 1 in 10000. The time frame for this to happen is about six months, no more than a year. If you adopt a year for this then one year in 10,000 years is about what we expect for such a disaster in this country so perhaps we have identified anything much by way of special risk to date.

However let us try to objectively bring in a few more considerations. Firstly the worst possible situation is not all we should have been worried about. The trouble is it is a trade-off. Where do we draw the line. If we say this "one point less" quake will be very bad if centred within 7 km of the CBD that is an area of 150 sq km compared with the 5 we have allowed for. That brings the odds down to one in 660 (10,000/30). And we have the feeling that the initial aftershocks were not evenly spread in a circle around Darfield. A segment in the direction Christchurch would seem to be getting more of them. If that was so the known odds reduce further, perhaps one in 200.

Put another way, aftershocks are mainly just an annoyance but if you get a big one in a delicate place they can cause trouble many times that of the initial quake.

The point we are trying to establish is that much of the CBD or many parts of it should not have been reoccupied for a period of 6 to 12 months after Sept 4 depending upon how soon the aftershocks went away. Certainly many buildings were condemned after Sept 4 but it should not have been left to that earthquake to judge what was occupiable in the new circumstances and what was not. Masonry and others construction might survive well up to a certain force but crumble to a heap of rubble should the force be any greater.

We want to know whether the sums like those above were done in mid Sept 2010 and when and how politicians, MPs and councillors, were told of them. We think the politicians might have decided to ignore the odds in their rush to get Christchurch up and running again and back to normal as far as possible. Politicians boss around the experts and the experts give in.

We think the Press should be in the Chch City buildings records office looking at the file of the CTV building and others. Was it known to be very marginal as far as quake proofing is concerned? We can understand that people with a passion for local television deciding to take a risk with low grade operational accommodation in order to make a station happen. Well that was sad but it is what sometimes happens when you follow your passion. Individuals perhaps should not be deprived of their freedom. We can also understand an entrepreneur deciding to set up English language school for foreign students in this most English of cities, and deciding on cheap, perhaps inner city, accommodation for the school to keep down costs. We had a whole host of such schools a decade or two ago but because the Governments of the day did not believe in regulating them to any degree our reputation faltered and so did the schools. We thought the lesson had been learnt and such schools now had to meet the same standards of safety, for instance, as State schools. We wonder if that was the case with the one or more schools in the CTV building, especially after Sept 4. We know of no casualties from 22 Feb at state education facilities, nor we think at any state institutions. Our care of foreign clients who come here is still not very good and we suffer for it.

Well one might say it has all happened now and there is no point in recriminations at this time. We disagree entirely. Chistchurch is at a crossroads but the minds of those who govern is not as open as it should be. These earthquake events are about to go away and the city should be safe again for another 200 years some would say, so lets get back to as things were as soon as possible. Well maybe. But it seems to be best to build on hard rock instead of sediment, not that Lyttleton and Cashmere bear witness to this. The top of Banks Peninsular might be a good option. High speed, high capacity road and railways going up there perhaps should be the first construction.

We now wish to change topic to a newsletter of the now prime minister John Key when he was opposition leader. It is his "Key Notes" newsletter No 21 of 27 October 2007. It should be noted that he chose the topic. It was not a case of him being confronted with something and feeling obliged to respond. It is still available at the time that this is written. It is only 160 words long. It is a comparison between NZ and Ireland. There would seem to be no particular reason for it except his observation that although the countries are similar in many ways Ireland was rich (then) and NZ was (and is) not. Just fifteen years earlier, he said, the two economies were on a par. He didn't say it directly but the clear impression was that NZ needed to do something in the nature of what Ireland had done. Well Ireland had a lot of fun over the 15 years of growth. Falling back down again wasn't so funny but it went by a lot faster. Was the 15 years of fun at the expense of the longer term we wonder. We rather think it was. This newsletter, with hindsight, gets no marks for economic understanding.

Its now time to get back on to the Feltex scam in earnest. The Public Service is getting run down because more and more public entities have had their heads appointed by the Government or Parliament. Its much harder to get crooks involved if it is the State Services Commissioner who does the appointing.

Our next incident concerns the non Public Service but Government entities of Radio New Zealand and the Broadcasting Standards Authority, and a Feltex Carpets Ltd director during the time of that company's "successful" offer (IPO) to sell all its shareholding for about $250m, one Joan Withers. Feltex's shareholding declined in value and became worthless little more that 2 years after the IPO. Ms Withers resigned from Feltex about one year after the IPO and after the first profit downgrade announcement which lopped about one third off the share price, and when a second downgrade announcement was pending.

On 28 October 2010 Ms Withers was appointed chair of Auckland International Airport at that Companies annual general meeting held on that date. A few shareholders at that meeting expressed disapproval at Ms Withers becoming chair because of her involvement in Feltex. Ms Withers in turn expressed her dismay at what had happened to Feltex and her anguish at having an association with such shareholder loss, but implied that she could have no responsibility for the loss by virtue of the fact she stated being "she left the company some 15 months before its liquidation".

We say the time before a liquidation that a director made have had some responsibility for the companies failure, without further information is in no way determinable. A company might lie in a useless state for many years after being stripped of its assets by a receiver before being liquidated. Similarly a company may be in the hands of a receiver for many years without any input from the directors, and it may take many years for a company to go into a receivership after a fatal mistake has been made by the directors. The statement that "she left the company some nine months before its liquidation" might be factually correct but it is of no real significance and is designed to mislead the masses who have limited commercial familiarity.

Radio New Zealand, we suspect under Government instruction, picked up on this statement of Ms Withers and without quoting her changed the word "liquidation" to "collapse". It reported that some at the meet questioned [MsWither's] suitability as she was a former director of Feltex "even although she left the failed carpet company 15 months before its collapse".

When approached the broadcaster claimed the timing of Feltex's demise was not material fact bearing on her appointment as chair of another companies board. Broadcasts only have to be accurate in relation to "material points of fact" although they are not allowed to be misleading. Well the first 18 words of the news item was about her becoming the new Airport chair. The remaining 74 words were about implications of her time at Feltex with only two of those 74 words "her suitability" also pertaining to the airport. We say the article was more about her connection with Feltex than anything else. Radio New Zealand also claimed that it was reasonable to refer to the time that a company goes into liquidation as its collapse, We dispute this utterly. Liquidation is just a tidy-up process to get companies which are no longer useful off the books in an orderly manner. A company collapses when it becomes no longer financially viable or that fact is conveyed to its owners or the public. A company could be stripped of it assets and exist in a useless state for 50 years before being liquidated.

In its decision advised on 28 February it says the focus of the item was Ms Wither's appointment as the new chair of Auckland Airport. We dispute this entirely. It had already been signalled in the news media that she was going to take on that role. 78% of the item was about Ms Withers involvement in Feltex Carpets and her stated attitude to what had happened there as well as the broadcaster's false inference that the timing of events meant that it was unlikely that she could have any responsibility for Feltex's demise. The focus was on what happened at Feltex. The first 18 words merely explain the context in which the matter has again become newsworthy. We also say that regardless of the focus of any item any unjustifiable defence of any person is not acceptable. This Radio New Zealand comment has misled readers and that is not acceptable under the BSA's Standard 5. We intend appealing the decision.

Of course after her time in Feltex Ms Withers became CEO of Fairfax NZ where she oversaw huge staff cuts. We believe any Fairfax staff member who might not go along with her version of events probably went down the road.

We have already referred to Ms Wither's solicitor, one Chris Darlow, writing to and making demands of us. We say such demanding action is not acceptable, especially coming form a solicitor. It would be easy for a person on receipt of such demands to think that they should give in to them.

This solicitor has assumed a place on the NZ Press Council, presumably as a way of stopping opposition to the Feltex scandal gaining traction.

Next Topic. We note with alarm that the counting of a "record low road toll" this year so far includes only one death in Canterbury for February. As I understand it several or many people lost their lives when building components crashed onto buses in Christchurch on Feb 22.

We cannot fathom out why these deaths have been left out of the count. They were killed by the roading environment. It seems that the transport agency have decided that the energy that causes the damage has to come from a moving vehicle. These bus patrons are every bit as dead as for instance those killed by the bad decision of a drunk driver. And they have died at a time when facilities for handling death were about to be overloaded.

It is important that all deaths from the road environment be counted. If you wish to compare the relative safety of bus passengers to taxi passengers or bus passengers to cyclists it is important that these most deadly Christchurch bus crashes be taken into account. The thing is bus patrons linger in these dangerous inner-city places as they wait for fellow passengers to board and alight and for the scheduled departure times to arrive. Taxi passengers and cyclists don't do that to the same degree. It is in or on their vehicle and away out of there. They or their driver are also more likely to see falling debris and swerve out of the way. Bus patrons are sitting (or standing) ducks. Taxi patrons and cyclists are more vulnerable to death at intersections and other places than are bus patrons and I venture to say every one of those deaths are counted. But not the bus deaths where bus patrons are vulnerable. I can just envisage your staff telling enquirers that bus deaths are virtually zero, which is not so.

An incident like that in Christchurch only happens there every 200 years or so. But deaths were multiple. I don't know how many there were. And lingering bus patrons are vulnerable in the same way in almost every city in the country so you can divide the 200 by 20 perhaps.

You cannot leave out "big lump" items because it will make comparisons between years less meaningful. You either fully count or you don't. You sometimes hear them say that the monthly trade figures were very good except that a frigate or something, perhaps a once in 10 years happening, was paid for that month. It is the same problem.

We note that the agency's analysis of road deaths includes "road features" or similar as a category of contributing factors. It estimates the proportion which this factor contributes to all deaths. These Christchurch deaths would seem to all fall 100% into that category so your estimate will be meaningless if these bus deaths are left out.

We also say that anyone who was killed waiting to catch a bus or car or was putting on their bicycle helmet should also be counted in the road toll. They too are victims of the roading system.

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