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Calling all those who had managed funds with insurance companies and the like in 2002 where some of the investments were in equities (including "balanced" funds) and who don't now have such a holding or have a reduced one. Chances are you suffered a loss because your funds manager bought into Tranz Rail by way of a secret "book build" transaction. We believe he would have been personally well paid for doing so because no one in their right mind would think that that was going to be a good investment. And the Trans Rail accounts were one big joke if they thought to have a look. The company sold the Auckland rail corridor and a half share of the long standing distance passenger train business and claimed the proceeds of these sales to be profit. These funds are charged huge fees for being "professionally managed" but we think the funds would do far better if they bought the office staff a dart board for selecting what to buy.

Anyway the Securities Commission has put blame on the vendors side of the plot and recovered about $27m of which about $20m has been paid back to the buyers presumably with the expectation that they do the proper thing with it. We say that it should go to the beneficial owners of the shares at the time that they suffered the substantial fall in price. We suggest that you approach companies concerned with a view to ensuring that you receive your fair share of the proceeds. It is not fair if the proceeds are simply paid into current funds.

We disagree completely with the Savings and Insurance Ombudsman who cliams that what the companies do with their share of the $20m is a "commercial decision" and therefore not challengable by the funds holder or by the ombudsman him/herself. We say the companies have an obligation to give the funds back to the people who incurred the losses and that is not a commercial decision in any way. It is a justice decision.

The other thing we wish to comment on at the moment is the "prosecution" of Ernst and Young by the Institute of Chartered Accountants following the complaint of the Securities Commission that the firm failed to disclose substandard declarations by Feltex Carpets Ltd following that company's profit downgrade around 2005. The National Business Review suggests (4 July) that the matter is still in the pipeline whereas the impression we had was that the matter never reached the Disciplinary Tribunal or that the tribunal heard the matter in secret as apparently it is entitled to do. It is probably a matter of who asks and they hope to forget about the complaint unless public opinion against that gets too strong.

Gordon Fulton is the partner who seems to be responsible for that audit, or has decided to carry the can for it anyway. He was appointed New Zealand chairman of Ernst and Young a while back, probably as a way of putting maximum pressure on the Institute. Jim Hoare still heads the Disciplinary committee we think. He was probably working for Fay Richwhite in 1990 when it through Capital Markets held a significant stake in the Bank of New Zealand. Ernst and Young issued an unqualified audit report for the bank despite the securities Commission later saying that the declared profit of $100m was overstated by $55m. The Accountant's Society did not do anything about that either. The same old network continues.

The Institute of CA has gone through some staff changes lately that we suspect are somewhat related this Feltex matter or similar cases. Gary Muriwai departed from the CEO job and Lorinda Kelly from the Professional Conduct secretaryship, about the end of 2007. They might have tried to introduced a little bit of impartiality to processes. The gall of some people. Institute President of a couple of years back, Keith Wedlock of Palmerston North came in as CEO for a six month stint and now has gone back to his practice. A new CEO is now in office but we cannot find his name on their web site. Yes its Terry Mclaughlin (use google) He has come from the audit dept of government. He previously had six years with Ernst and Young so will possibly be keen to get his old mates off the hook..

The Institute is apparently about to review its processes. We think it could be about to make a declaration along the lines of "we have got a little messed up but undertake to investigate and take disciplinary action on any bad accounting occurring from now on". "Always look forward" is their motto which sounds good but bad accounting can only be detected by looking back. The NBR questioned what was happening with this complaint despite getting a full page ad from Ernst and Young setting out new partners in this part of the world. That is most encouraging news.

The paper is now speculating whether a hearing set down for 28th July in Auckland could be about the Feltex auditors. It is set down for one day only apparently which would not be long enough for a defended hearing. We think it will not be because it includes a charge of misleading the Institute which is unnecessary if you are a reluctant prosecutor or a prosecutor under siege as the Institute would appear to be.

Well we are not so sure now because we have detected that Ernst and Young have been tinkering with the shareholdings of their limited liability companies. They have several of them but the only ones we have detected are those whose name starts with the word Ernst. It would appear that each partner of the firm has to be a shareholder of a registered company in order to get the limited liability or has had to at least. Finding this list of shareholders seems to be the only way of finding out who are the partners of the firm. Well in June 2008 a company which seemed to hold all the partners as shareholders had them all removed except for one. Perhaps they now operate under another company which is more difficult to find, or they have found or engineered a more anonymous way of getting around the limited liability issue. There might be another reason for changing the shareholdings other than hiding but we can't think of one. We have got the names off a public copy of the document which removes them. It won't necessarily be an up to date list of partners but should be reasonably so. We will publish these name at the bottom here while it is reasonably up to date. The small letter after their name indicates the population centre where their address is. We are not sure whether the newcomers in their recent big ad were easily led astray partners or employees or a mixture.

The Feltex auditing of which the Securities Commission has referred to the Institute is not a case of an auditor getting a bit lazy on it or a bad apple unfortunately getting into the barrel. Feltex was big news for its drastic profit and dividend downgrade and it was quite obvious that they needed to get their audited reporting right. The obvious action would be to send along an extra partner or two to make sure it was done correctly. But it seems like it was like the 1990 BNZ accounts when apparently an extra partner (Senior Technical partner ) was sent down to ensure that it was done wrong.

We think also the new Feltex director, accountant John "141cents per kg of milk" Hagen should also have been referred to the Institute by the Commission over the same Feltex matter. He had recently spent many years as chair of the government appointed Accounting Standards Review Board (a body formed to stop a 1990 BNZ affair from happening again) so nobody should have been more capable of getting the correct standards applied. He left that position with the ASRB so that the ex Senior Technical partner referred to above could assume it. A more ridiculous circus one cannot imagine.

Feltex seemed to be inferring that it had its finance arrangements with the ANZ bank back again, all the past was forgiven and forgotten by the bank, and it was back to normal again. But apparently the interest rates were not anything like what they had before. They were at a level which would only allow a few months for the company to be sold off to someone with a better credit rating.

ALLEN, Warren Douglas w ANDREW, Matthew James a Archer, Andrew Gordon a BALL, Alexander George a Blaikie, Geoffrey Mackay w BLAKELEY, Iain Wilson a Brotherton, Simon Guy a BUNYAN, Lloyd John a Carey, Richard Guyon Fuller c CHANDLER, Murray Gordon w CROSS, Robert Anthony w CROUDACE, Mark Andrew a De Freyne, Colin Stephen a DOOLAN, Joanna Mary a FREEMAN, Jonathan David a FULTON, Gordon a GOSS, Peter Roy w HANLEY, Matthew Patrick a HATRICK-SMITH, Roger Lanktree a HAYWARD, David Mountfort a HENRY, Marcus Peter w HODGE, John Eric c HOOPER, Jon Robert a HOWE, Timothy Sims c JACKSON, Wayne Richard a JONES, Susan Elizabeth a JUDGE, Alan Leslie w JUDGE, John Frederick a KNAPP, Graeme D'Arcy pn LOVEDAY, Mark James a MAY, Timothy Simon c MORGAN, Gareth James a MORROW, David Harold a O'CONNOR, Simon Raymond w PALMER, Benjamin D'Arcy a PARK, Paul Nathan James c PENROSE, Brent Richard w PRESCOTT-HAAR, Leslie Eden a RIDDLE, Craig Robert w ROBERTS, Jason Paul a SHAW, Catherine Anne w STANLEY, Michael Geoffrey a STEEDMAN, Susan a TAYLOR, Andrew James a TAYLOR, Grant James w TITTER, Harold Stephen a VAN DER BURGH, Randolph Edward w WALTON, Noel Allan c WHITE, Darren Anthony a WILLIAMS, Richard David Wilson a WYLIE, Duncan Stewart Hugh w ALLEN, Warren Douglas w ANDREW, Matthew James a Archer, Andrew Gordon a BALL, Alexander George a Blaikie, Geoffrey Mackay w BLAKELEY, Iain Wilson a Brotherton, Simon Guy a BUNYAN, Lloyd John a Carey, Richard Guyon Fuller c CHANDLER, Murray Gordon w CROSS, Robert Anthony w CROUDACE, Mark Andrew a De Freyne, Colin Stephen a DOOLAN, Joanna Mary a FREEMAN, Jonathan David a FULTON, Gordon a GOSS, Peter Roy w HANLEY, Matthew Patrick a HATRICK-SMITH, Roger Lanktree a HAYWARD, David Mountfort a HENRY, Marcus Peter w HODGE, John Eric c HOOPER, Jon Robert a HOWE, Timothy Sims c JACKSON, Wayne Richard a JONES, Susan Elizabeth a JUDGE, Alan Leslie w JUDGE, John Frederick a KNAPP, Graeme D'Arcy pn LOVEDAY, Mark James a MAY, Timothy Simon c MORGAN, Gareth James a MORROW, David Harold a O'CONNOR, Simon Raymond w PALMER, Benjamin D'Arcy a PARK, Paul Nathan James c PENROSE, Brent Richard w PRESCOTT-HAAR, Leslie Eden a RIDDLE, Craig Robert w ROBERTS, Jason Paul a SHAW, Catherine Anne w STANLEY, Michael Geoffrey a STEEDMAN, Susan a TAYLOR, Andrew James a TAYLOR, Grant James w TITTER, Harold Stephen a VAN DER BURGH, Randolph Edward w WALTON, Noel Allan c WHITE, Darren Anthony a WILLIAMS, Richard David Wilson a WYLIE, Duncan Stewart Hugh w

Well it seems that we can add another five now. These being Bruce Gemmell, Paige Cuthbert, Carey Wood, Spencer Smith and Bruce Loader who have jumped ship in Christchuch from KPMG in response to bait of $100,000 each from Ernst and Young according to news media reports. They seem to have told their clients and staff that there was a merger of the two firms but KPMG partners in other centers did not see it that way. Quite a circus it seems. They should be before the Disciplinary Tribunal for this too.

The other news seems to be that Elizabeth Hickey has resigned her IASB job and is back home to New Zealand. We would hope that another round of government appointed jobs is not in store for her.

And its anyone goes as far as members of a 10 strong task force to examine the operation of the country's capital markets is concerned. Chaired by an ex Fay Richwhite executive and includes the CEOs of Ernst and Young and First NZ Capital. We think they are more interested in draining the capital than building it up.

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