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April 2011 Edition ----

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

It is now 5th of April 2911 and a further blowout in the South Canterbury Finance deficit is announced. We don't know much of the ins and outs of this case except there seems to be criminal mismanagement of the Government Guarantee scheme for deposits in large institutions which was put in place in 2008. We have little problem with the guarantee applying to then existing borrowing by those institutions. Possibly that would be enough to provide the financial stability which was the objective of the guarantees. If not there needed to be a limit to growth the deposits. There needed to be a door keeper so that only deposits stamped by the doorkeeper, so that deposits could only grow by say 3% p.a., would received the guarantee. What happened we think was everybody was financing their hair brained dreams by putting their funds through SCF.

We cannot have this situation where people are allowed to make drafting "mistakes" for their mates to exploit.

There is a significant link between SCF and Feltex Carpets in that SCF put $3m into the Feltex IPO and was virtually the only company to make such a contribution. This could be influence of Government influence over SCF at that time. Or it could just be a case of Allan helping his friend Eion of his old home town with some finance for his project of the day.

But apart from this link the Feltex IPO was an invitation to rob by crooked financial means.

It is time to bade farewell to a very crooked institution. We are referring to the New Zealand Securities Commission. Its chairperson we hope is off back across the Tasman. Its the best place in the meantime until hopefully she is subpoenaed back to dwell forever in another NZ institution. Hopefully the 19th century one that is not now seen fit for normal prisoners.

Her major crime we know about is the Feltex IPO and her Institution's report of 25 August 2006 giving this robbery a clean bill of health. Obviously she has been involved with former Prime Minister Helen Clark and many others engineering the crime. Her actions like those of many others will have been very subtle, just a firm nod at the right time. But it is nevertheless most wicked.

We don't know how many cohorts that she had on the Commission but it must be several if not the lot. The working of the Securities Commission are very obscure. It no doubt uses small secret quorums when it wishes to do evil deeds.

This Feltex IPO crime was of course effected with the help of a lot of evil accountants. At the helm was one Eion, now Sir Eion Edgar. He has got the Government to give him a top award, make him chair of the NZ Olympic Committee for a spell, put him on the Accident Compensation Corporation, and make him chair of its Investment Committee, and have the Securities Commission give an exemption to an Feltex IPO concealing where the doe went and purport to give a clean bill of health to this IPO if and when the company failed. He and his company joined forces with Credit Suisse, a well known international cheat, to put the deal together. Scott St John another registered accountant has been long serving as the Chief Executive of First NZ Capital which is a staff buy-out of Credit Suisse. CS no doubt wanted to officially exit NZ to try and limit their exposure to this crime . St John is on the establishment board for the Capital Markets Authority, not a good sign at all.

Then of course there are the auditors, long term crooked servants of governments, Ernst and Young. They get a little bit of a clear run because they do not have to say that an company making an IPO will perform as the promotors claim it will. But they have a clear obligation to have nothing to do with it when they know it is just one big robbery. They split their responsibility for Feltex between their Australian and NZ offices saying Feltex wanted to be seen as an NZ company even although it was operating from Melbourne. It should not have allowed the company to deceive in this manner. It tried to promote Gorgon Fulton to its NZ chairman to try and shake off his perceived responsibility. When everyone else was wondering when the bank would sell up Feltex and the bank could have done so Mr Fulton claims to have thought Feltex was too powerful for that.

Well the motive behind the whole megacrime was to make the country "feel good about itself" though some of it citizens winning gold and silver Olympic medals and so vote the Labour Government back for a third term in Office. They must not get away with this.

We wish to condemn the decision in case No 2010/167 of the Broadcasting Standards Authority.

The decision can be accessed here .

It concerns a news item of Radio New Zealand following the Annual General Meeting of Auckland International Airport in October 2010. The item isn't very long. Here it is:

1] A news item during Morning Report, broadcast on Radio New Zealand National on the morning of 29 October 2010, reported that Auckland International Airport had a new company chairperson.

The reporter stated: The airport's longstanding chairman Tony Frankham is standing down, and will be replaced by independent director Joan Withers. But some at the meeting questioned her suitability - as she was a former director of Feltex -even though she left the failed carpet company 15 months before its collapse. Joan Withers told investors that even though she's been cleared of any wrongdoing, the failure still troubles her.

[2] Ms Withers then commented: There is not a day that goes by that I don't think about the Feltex situation and the Feltex experience, because being involved in a company, for whatever reason where shareholder value is lost, is deeply disturbing to any director worth his or her salt.

(end of item)

The complaint is about the clause "even though she left the failed carpet company 15 months before its collapse". Ms Withers was a director of Feltex when it made its first profit downgrade announcement following the IPO. This announcement reduced the share price from $1.50 to under $1.00. We say if there was a collapse that was it. The inference that she was long gone when the company collapsed is absolutely false. The NZ Herald reported that Ms Withers said that she had resigned 15 months before the company went into liquidation which is true but irrelevant and misleading. Radio New Zealand said "collapse" and "liquidation" were near enough to the same thing. This is not so . A company can lie idle stripped of all its assets for many years before it it liquidated.

We now examine the Authorities reasons for not upholding the complaint. Here it is.

Standard 5 (accuracy)

[13] [The complainant] argued that the reporter's statement in the news item, "even though she left the failed carpet company 15 months before its collapse" was inaccurate. In our view, the timing of Feltex's collapse relative to Ms Withers' departure from the company, was not material to the focus of the item, which was her appointment as the new chair of Auckland International Airport.

[14] In any case, we do not consider that the statement was inaccurate or that listeners would have been misled, particularly as comment from Ms Withers about the demise of Feltex was included in the item, in which she stated that she thought about it daily, and found it "deeply disturbing" that she was "involved in a company... where shareholder value [was] lost".

[15] Accordingly, we decline to uphold the Standard 5 complaint.

end of extract

What's wrong with that? Well near everything. Here it goes:

1 We wish to first concentrate on paragraph (13) in the Authority's determination and make the following points.

A news or radio item need not focus on just one item. For example at the annual meeting of an airline company they might announce the closing of a certain air route and a dramatic change in the airlines profitability. Both announcements might be important but people interested one of these items might have no interest in the other and vice versa. They are likely to go into the one news item because they were announced at the same time and place and were handled by the one reporter. This link would probably have very low news significance but would be disclosed to hold the two items together. It is only right and proper that all components of such a news segment be accurately reported.

Even if a news item has one focus, statements that don't really belong there can be very significant and could cause widespread pandemonium or whatever, and the validity of any statements deserves to scrutinised regardless of how remote the subject might be from the main theme of the item. Eg an item could go like this. "In this 10 minute time slot we are going to tell you all about growing roses but, by the way, Mr A killed Mr B. The first thing that needs to be considered in rose growing is ...". Now if Mr A did no such thing we say it needs to be possible for people affected to have redress. We do not know how the BSA quorum could think otherwise. The answer of course is they don't and are just trying to cover up. Such items could frequently be put in such inappropriate places for very significant reasons by people who have limited authority.

In this particular case the focus of the news item was claims that Ms Withers tenure as a director of Feltex Carpets made her unsuitable for holding the post of chair of Auckland Airport. The clause complained about casts doubt on the validity of the claims that she was unsuitable and as such is completely within the "is she or isn't she" focus of the item.

(d) We dispute entirely the claim that the focus of the item was on Ms Withers attaining the position of chairperson of Auckland Airport for the following two reasons.

A It had already been announced, on 26 August 2010 or perhaps a day earlier that Ms Withers had been appointed chairperson, to take effect in October. This was widely reported in the news media and we are sure Radio New Zealand would have broadcast the item. The fact that she was to become the chair was not news at the time of the meeting.

She might have become chairperson at the meeting or at the conclusion of the meeting and that might have been news but the reporter concerned did not report this. At least not to the radio listeners. The main news reader might have been instructed to tell listeners that. The transcript starts off by saying that they were told this but doesn't say exactly what was said. The opening gambit apparently said the Airport had a chairperson but the reporter said Ms Withers "was taking over". Had she or hadn't she? The unrehearsed thing that appears to have happened is that under general business or whenever several shareholders have seen fit to voice their concern about Ms Withers being seen fit to be chairperson because of her association with Feltex Carpets and Ms Withers has responded to this. The opening sentence of the reporters commentary was preliminary information to the task of explaining what the expressed concern, the real news, was all about. The Airport shareholders who expressed concern were presumably there and prepared because they had read or heard the earlier announcement that Ms Withers had been appointed the chair.

B The reporter's narrative is 62 words long. Only 16 of those words, 26%, relate to Ms Withers becoming chairperson. Ms Withers recorded comments say nothing about her becoming the new chair. The first 16 words are most helpful in explaining the expressed concern but the remainder of the item is not in anyway helpful in explaining Ms Wither's appointment. The overwhelming majority of the content is about the shareholder concerns and (mainly) Ms Withers response to them, and that must surely make the concerns of the Airport shareholders the focus of the item.

Interestingly Ms Wither's narrative is 44 words long, making 106 words for the two. Let us subtract the first 16 words which are neutral, that leaves 90 words. Of these 19 words are about concern at Ms Withers becoming the chair ( But some at the meeting questioned her suitability - as she was a former director of Feltex - failed carpet company) and the other 70 words are disputing the validity of that concern. It is a case of drowning out the opposition.

2 We now wish to concentrate on paragraph (14) of the Authority's determination. There was a clear inference in the phrase complained of that the timing of Ms Withers involvement in Feltex made it unlikely that any poor directorship on her part could have contributed to Feltex's demise or that any happenings when she was at Feltex could have resulted in her now being unsuitable to be chair of the Airport. Surely listeners have been given the impression that these timing considerations make these Airport shareholder concerns unjustified. The inference was made by the reporter who should be impartial and is not a quote from Ms Withers who might be less impartial. The first profit downgrade which reduced the Feltex share price by a third was made while she was still a director and a second downgrade was made or pending at the time she left. A better case could be made that she came into Feltex to late to have contributed to its demise than that she left it too early as the reporter has implied. We can see no reason why the reporter's false inference should not be accepted by rank and file listeners who do not have a detailed knowledge of the Feltex case. The Authority has not given a reason why it does not accept the complainant's reasoning that the statement complained about was inaccurate and listeners would be mislead, except for its reference to Ms Withers statement which we will now discuss.

The statement of Ms Withers is exactly the approach which anyone would expect a director who has been associated with a failure such as Feltex to take. This is whether they are a completely innocent director or they engineered the downfall for their own purposes or anywhere in between. Any director worth their salt would be disturbed and any director not worth their salt would say that they were disturbed. We think the Authority is saying that Ms Withers statement somehow makes it so obvious that she is suitable to be the chair that not only any allegation of wrongdoing at Feltex must be wrong and any circumstance that leaves the door open as to whether she might have done wrong is also nonexistent. We cannot agree with this in the slightest. The world is full of confidence tricksters as far as fine speeches go. The recorded statement of Ms Withers contributes absolutely nothing to any consideration of her guilt or innocence. Perhaps some of the Airport shareholders also expressed concern that Ms Withers had expressed no concern about the plight of Feltex shareholders and that is the reason for the comments but the news item does not say this.

It should also be borne in mind that her experiences at Feltex can make her unsuitable to be the Airport chair even although she might be completely innocent of all wrongdoing. Indeed her phrase "deeply disturbing" suggests the possibility that she might have incurred a significant degree of physiological disturbance. This can easily come about when one is closely associated with a horrific event, no matter how innocently. The possibility of this could be a very valid reason why she should not be the Airport chairperson as well.

We say paragraphs (13) and (14) of the authorities ruling are invalid for the above reasons and hence the complaint concerning Standard 5 should be upheld.

With regard to paragraph (16) we say the authority would easily have been able to see unfairness in the statement complained of and should not require everything to be spelt out to them. It should only be necessary for complainants to draw attention to an item. The Authority's expertise should then take over. The phrase complained about is obviously unfair to the 800 or thereabouts Feltex shareholders who are taking civil action against Ms Withers and others and are seeking financiers and other Feltex shareholders to join them in this pursuit. The untrue inference that Ms Withers is probably innocent serves to reduce the level of such support. It is also unfair to me and many others who consider that justice has not yet been done with respect to the Feltex saga. Hence the complaint concerning Standard 6 should also be upheld.

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