To Contact Us
To our page back through previous editions click here Index is in right hand column

July Edition

Evidence that the IT Anti Corruption Index has no Validity

A: Past Corruption which Recent Corrupt Events have Grown From.

Sir Ron Brierley was appointed Chairman of the largely state owned Bank of New Zealand by the incoming Labour Government around 1984. The bank lent liberally creating a considerable stock market bubble making a large crash in NZ with the international crash of November 1987. In 1987 Patsy Reddy was appointed chief legal advisor of Brierley Investments. A company called European Pacific was formed, registered in Luxemburg with Brierley Investments, the BNZ, and a Fay Richwhite controlled company each holding 28% of EP share capital. EP was party to a pretend insurance policy insuring BNZ debt which was formed at a cost to the bank of $1.5m. The Bank purchased two very large parcels of long term zero coupon bonds in March 1988. The idea was to misallocate between years the revenue from these bonds, in some cases calling the misallocated revenue “insurance proceeds”. In the end this procedure was not used in the Banks accounts as at 31.3.1988 when the solution was not to recognize loans as being bad. Matters came to a head because of a cash shortage midway through the 1989 year however. Sir Ron was deposed as a director of the Bank and Brierley Investments sold its EP shares. The bank was again in financial trouble for its March 1990 year and this time the “insurance” and bonds were used to overstate the Banks income by at least $60m. Elizabeth Hickey and Peter Garty of Ernst and Young were the Auditors concerned. Again cash deficiency meant the Bank had to be bailed out in its 1991 year. In 1992 Winston Peters revealed in Parliament the fake insurance but said it was used in the 1988 year. The Government appointed Securities Commission undertook to investigate and in May 1993 it produced a large report which acknowledged that the bond misallocations were invalid but effectively said that no-one was to blame. Prime Minister Bolger latched onto the no blame bit and nothing further happened except that the Bank was sold to an Australian bank. Elizabeth Hickey was on the Securities Commission at the time the report was released but this was not declared in the report. She remained on the Commission for total of 11 years. She was not on the 3 man quorum which “considered” the BNZ matter however. Clearly the Government had gone along with the attempted cover-up of bank losses including the Securities Commission report which covered up wrong-doing.

Patsy Reddy subsequently became a director of Telecom for 10 years including in 2003 when Telecom unjustifiably inflated its reported profits for the year (partially making up a shortfall) by getting its associated company Southern Cross Cables, which was as yet to make a profit, to pay it dividends of about $250m using borrowed money. Reddy of course has been appointed Governor General so that it will be no use complaining about corruption to that office.

B: In year 2000 the Accident Compensation Corporation bought shares in the company National Mail from investor Cliff Cook about 10 days before NM announced that it was going out of the mail business with the Corporation losing about 95% of the $500,000 or thereabouts it paid. The brokers Credit Suisse First Boston represented both parties to the deal one party under the name C S First Boston, the other under Credit Suisse F B. National Mail was attempting to compete with NZ Post in the NZ mail business. It had not reported for some time. Nicholas Bagnall of ACC said the purchase resulted from its confidence In Peter Fitzsimmonds who had been appointed a National Mail director a few months before the purchase. It would have known that Cook and Fitsimmonds were closely connected being the largest shareholder and chairman respectively in the listed company Metlifecare. It is not feasible to conclude that this was a genuine loss. It has been a trial willful leakage of public funds.

C: In the era 2000-2003 there was a so-called management buyout of the sharebroking business of the Suisse based international Credit Suisse First Boston in New Zealand. The new company was called First New Zealand Capital. Reference will be made to several New Zealanders employed by these two entities around this time. They include Frazer Whineray, Matt Whineray, Craig Foss, and Chris Liddell. D: In the Sydney Olympic games of the year 2000 New Zealand athletes did not win as well as the country had got used to. They won one gold and three silvers. A similar “embarrassment” was suffered by Australia at the 1984 Olympics when they got no gold medals. In particular they faced teasing from New Zealanders whose country had won eight gold medals. Responding to this widespread disappointment the Australian Government set up and lavishly funded an Institute of Sport for the training of athletes. The results for Australia at Olympics after 1984 were quite astounding suggesting that more than good training was involved. Eastern European nations and Western Germany had done very well with Olympic medals in the 1970s and the strong suspicion was that drugs were involved. Athletes had got caught out here and there. It can be suspected that Australia has been cheated and following the Sydney Olympics has allowed New Zealand to join its cheating regime. But clearly the cheating involves extensive bribery and ways of obtaining grubby funds to make the bribery payments have had to be devised. NZ has been at the top of the medals table for the summer Olympics since 2004. No doubt it has being paying corrupt Olympic officials to not genuinely test certain athletes for drug use. In London where NZ got to six “golds” it no doubt was succeeding its quota so it was said that Valarie Adams, a favourite for a gold late in the games had not been entered. This was resolved but nevertheless she did not win on the day.

E Feltex carpets, a NZ company became in some ways an Australian one when Feltex bought the Australian carpet manufacturing plant of Shaw Industries in year 2000. This plant had twice the production capacity of Feltex’s wool carpet factories in NZ. Feltex did not take over any of Shaw’s brands. With falling tariffs on carpet Shaw had obviously decided that it was cheaper to manufacture carpet from Australia from offshore and wanted to shelve off the considerable cost of properly closing down its Melbourne plant to someone else . Feltex had one private owner and with a name starting with the words “Credit Suisse” indicating that Credit Suisse were obviously mixed up in it.

Although Feltex’s market share was reducing by two percentage points per annum the prospectus projections for 2005 results assumed that there would be a 1 percentage point increase in market share with no valid justification. Similarly the prospectus on page 37 willfully miscalculated a growth in Australian carpet market size which the figures for the past 10 years predicted. The projected sales were grossly unsustainable and the 2005 projections were not met by a woeful margin and the company progressed into liquidation. The forecasted profit to 30 June 2004 (2 months after the “IPO”) was achieved by making a cash injection into the sales account of some of the “IPO” proceeds. This no doubt was done because the vendor would be required to pay back the money if this forecasted profit was not met. One can tell it was a cash injection because there was no corresponding cost of sales.

As part of the plan to get away with this and probably other robberies the jurisdiction of the British Privy Council legal division in NZ was dispensed with and a Supreme Court of NZ was formed. This Court had the right to consider happenings from 1 Jan 2004. The new structure of judges was high in female percentage and, it turns out, in general corruption.

Australia has provided plenty of assistance for the NZ Government sanctioned $250m “Feltex IPO” robbery of April 2004. For a start it provided two corrupt females in Jane Diplock and Keitha Dunstan. These two were in a four person all female quorum of the Securities Commission which declared that the Feltex IPO ” the IPO prospectus was “not misleading in any material particulars”. They did however find serious fault with Feltex’s annual accounts to 31 December 2005, probably to demonstrate that they had ability and give the impression that they were not soft on Feltex. Feltex had said in these accounts that the bulk of its debt was fixed for a year when in fact it was payable on a months notice. Some directors and senior staff went on trial for this falsehood in the Auckland district court. The trial lasted more than a month but the accused were acquitted. The female judge soon after became Chief District Court judge.

The two lead brokers of the Feltex IPO were Forsyth Barr and First NZ Capital, the latter being a then recent management buyout of the NZ broking business of Credit Suisse. Eion Edgar was chairman of Forsyth Barr (and still is). At the time of the “IPO” he was also chairman of the ACC Investment Committee one of the few institutions to “invest” in the “IPO”. It put in $9m. He was also chair of the NZ Olympic committee at that time. He mixes sport into his business activities extensively.

Joan Withers joined the board of Feltex Carpets just days before the “IPO” as the only female director. No doubt this was to attract the “Mum and Dad” investors who were said to be the predominant subscribers. She quit the company soon after it made its first profit downgrade announcement. She started her “career” in the broadcasting corporation where she no doubt pleased the politicians. When she left Feltex she was appointed CEO of Fairfax NZ by former sportsman David Kirk and immediately carried out an extensive purging of the staff of that media organization, no doubt to make sure they did not allude to the Feltex robbery etct. She currently chairs Mighty River Power which sponsors NZs highly “successful” rowing squad.

Lianne Dalziel resigned all her Cabinet portfolios including Minister of Commerce just two months before the Feltex IPO. It was suggested she had mental health problems but there seems to be no other evidence of her having such issues. Simon Power was also a senior Cabinet minister including Minister of Commerce and Justice when he all of a sudden gave politics away. Craig Foss served as Minister of Commerce for about 5 years. He had worked for Credit Suisse in the lead up to the Feltex IPO. He then got awarded a safe National party seat. But he has been pensioned off early.

The annual report of Feltex as at 30 June 2004 said overseas shareholders held less than 2% and did not list Australian company Hunter Hall as a major shareholder despite it being announced on 1 June 2004 that it had taken 9% of shares. It would seem this coy does as Aust Government secretly tells it in return for concessions. There was a need for it to be said that a private company had invested in Feltex to reduce suspicion.

When it became obvious that Feltex was failing, Tony Gavigan an ex Fay Richwhite executive was on hand to tell disillusioned shareholders he believed he could get some of their money back for them. He had previously done the same for shareholders of Southern Petroleum but with no success. About a third of the shareholders joined this joint action (Houghton v Saunders) case but the weak case put up has been lost in the High Court and Court of Appeal. The Supreme Court is now going to hear a version of case in July 2017. Judicial and other legal corruption is the cause. Prominent QCs have been used. Like the judges they improperly receive Government direction rather than striving for the people they represent.

We complained to Chartered Accountants Australia New Zealand about the evidence of a Australian “forensic” accountant Greg Meredith in the Houghton v Saunders case. This concerned page 37 of the prospectus. Feltex had used two only (that for 1993 and 2003) of the carpet market sizes in claiming that the size had grown an average of 1.7% compounding over that time. Meredith, in his evidence to the court “observed” that the calculated growth depended upon what starting point was used and advised the growth with several other starting years. These calculations also used just two of the sizes shown on the graph. He nevertheless contended that the 1% growth adopted was fair since most or all of his results exceeded 1%. He did not however use least squares analysis or any other method which took all the sizes in a range into account. This would have predicted a size for year 2005 3% below the 2003 size not 2% above it as Feltex had adopted. Gavigan contacted me asking me to withdraw my complaint saying he believed Meredith had done a fine job. The job has not been fine for the shareholders he is supposed to be representing so far. The Institute did not disagree with my argument but gave complex criteria for when they would intervene.

The Feltex IPO and related corruption will have resulted in many deaths. I know of three, namely the youths Paul Wilson and David Gaynor in 2011 and the coroner Ian Smith in 2014.

The Feltex scam utilized the “talents” of three professionals who had worked under the white South African regime where no doubt the production of deceptive accounts had been rife. Tim Saunders was chair of Feltex, Des Tolan was its Chief Financial Officer, and the late Kevin Simpkins was an adviser to the Securities Commission on the Feltex IPO. He became head of accounting standards.

In revealing that NZ’s high or top ranking on the anticorruption index has been bought from corrupt “Transparency International” officials I draw on connections from the National Mail and Feltex IPO scandals and people associated with Credit Suisse at that time.

Nicolas Bagnall, an ACC investment manager was in 2016 reported to be the highest paid public official, yet his name never appears in the ACC’s annual reports and I can find no summary of his qualifications and experience. I believe he is a brother of Andrew Bagnall who run Gulliver Travel and with Cliff Cook was purportedly involved in a scheme to buy Feltex Carpets before it collapsed completely. Nicholas would appear to have in 2015 been somewhat edged out of his top ACC manager role by Carl Blanchard who, as perhaps I would have guessed, was an employee of the Credit Suisse offshoot First NZ Capital for 16 years from 1999. ACC and the NZ Superannuation Fund appear to have similar sized investment portfolios and both claim exceptional earnings. They have auditors from the same firm, Ernst and Young whose partners also audited the BNZ in 1990 and Feltex Carpets in the 2004 era. My evidence for the Transparency International anticorruption index being basically fake and subject to how much countries are prepared to pay for a high score comes from evidence above that NZ does not warrant a high score and from an invalid declaration of a loss of $US150m by the NZ Superannuation Fund. On page 83 of it annual report to 30 June 2015 the Fund sets out a “case study” of a deposit placed with a major Portuguese Bank on 3 July 2014.

In substantiating this claim I follow the lives of brothers Matt and Fraser Whineray. They were brought up in Palmerston North and had uncles Sir Wilson Whineray and Sir Kenneth Keith. Matt got Commerce and Law degrees while Fraser got a chemical engineering degree followed by an MBA from Cambridge. Both brothers then “just happened” to be employed by what I say is the school of corrupt business, being Credit Suisse or its successor in New Zeeland, First NZ Capital, around the turn of the millennium. In 2008, the last year of the “reign” of Helen Clark it “just happened” that Fraser Whineray joined the SOE Mighty River Power while Matt joined the NZ Superannuation Fund as a guardian. We move forward to 1 May 2014 when Fraser was appointed CEO of Mighty River Power by its chair Joan Withers the woman who joined the Feltex Carpets board in 2004 just in time for its corrupt float and ditched the company about a year later when it started to founder. Mighty River sponsored the NZ rowing squad which was and is having incredible success in terms of wins. We think it likely that micro batteries motors and jet pumps have been inserted into the resin on the bottoms of boats. Fraser is an electric bike enthusiast. Then it “just happened” that seven week later on 17 June 2014 Matt Whineray was appointed the inaugural Chief Investment Officer of the NZ Superannuation Fund. We say this was part of a plan that was already hatched prior to Fraser’s appointment. By 3 July (2 weeks after Matt Whineray’s appointment) Goldman Sachs purported to have had arranged a loan by Oak Finance to the Portuguese bank Banco Espírito Santo (BES). It is not clear when the Fund gave Sachs the go-a-head to “invest” on its behalf but it would seem likely that teeing up or formalizing this purported highly unconventional deposit would be about Whineray’s first job. That is not acceptable behavior for a new investment chief. It is clear he, and probably his brother have been appointed, to facilitate the thieving of Superannuation funds for secret Government purposes.

In August 2014 it was announced that BES was defaulting on certain of its debt. Sachs and the Fund say that the Portuguese Reserve Bank guaranteed the Oak deposit and this is now purported to be part of a British based court case which no doubt is a ploy to prevent further discussion of the deposit. The “claim form” which purportedly sets out the basis of the court case has been released by the Fund. Of interest is the identity of the other purported depositors in this one bank (BES) through this Oak vehicle. Of a total “deposit” of $US613m the two largest “depositors” at $US150m are the NZ Super fund and Silver Point Luxembourg Platform S.a.r.l. which is a company with British investments. The third largest ($US111m) is TDC Pensionskasse, the superannuation fund of a prominent Danish telco. . There are a total of twelve purported investors, the remainder registered in alleged tax haven countries. It is clear that a large part of these “deposits” has in fact been paid to Transparency International officials to pay for high rankings on that organisation’s anticorruption index. Denmark and New Zealand currently top the index. Britain tops larger countries, say those over 20m population, on the index.

Chris Riddell who also employed by Credit Suisse around the turn of the millennium has since been CFO of some huge US companies. He is now working for President Trump but has been accused of breaching ethic rules in getting there. He has until recent times been chair of the NZ accounting software company Xero. Xero is about 10 years old and is yet to make a profit and it is doubtful if it will ever do so. Xero has received Government assistance but not by lending or gifting money directly to it. The assistance has been by way of buying Xero shares on the stockmarket creating an unjustified market bubble which like the Feltex IPO has taken in amateur investors. Xero has talked of “cracking” the US market but with little justification. The billionaire Peter Thiel, now a NZ citizen, has done very well at the expense of amateur investors in this improper action. The stock exchange is supposed to protect against market bubbles by requiring companies to explain if they can sudden increases in their share prices. If there is no good explanation those buyers who have triggered the rise can be prevented from selling until they can show that they have not made a fair profit. .

This is the latest we have uncovered but for more see http://www.justaccounting.co.nz/sp.htm

Advertising section

------------------------

Suitable Objectives

Register of Members

Members Forum - Topical
* open to all meantime:
 
Plenty of Opinion

Magazine Plans

Need an Accountant?
or Prepared to Change?

Users Forum
* have your say

Ready to Join?

Knowledge Tests
* being developed

What's Wrong with
the existing 
accounting body?

So called BNZ Audit
an extensive case study

 Visit our Advertising
page from 
Here