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August-September 2013 Edition 9th take

First though we have some snippets.

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The fuss and carry on at the NZ Parliament is about trying to give the impression that there is a healthy conflict between the press and the Government. Nothing is further from the truth as the press fails to expose the Feltex IPO scandal. We have failed to mention to date that first substantive hearing in the class action being taken against certain parties involved with the 2004 Feltex IPO is to be held in the Wellington High Court starting on the 10th (or perhaps 14th ) of March 2014. The judge was also appointed at the same time and he is Justice Robert Dobson. The Christchurch judge Christine French would seem to have been lined up for this job but pleasingly we thought she would seem to have chickened out. We now see that she was appointed to the Court of Appeal a year ago but that does not change our suspicion. Preliminary hearings have been held in Christchurch perhaps because that is where Justice French has resided. But the appellant’s now solicitor resides there also and the representative shareholder is a southislander. But we nevertheless think stirrings including perhaps those of ourselves have brought this judge to her senses. There has got to be a judge who will not put blame on the Government or main opposition party from those influential party’s point of view. But we think that is going to be hard to deliver upon.

We tried a little research on Justice Dobson and came up with this site http://www.courtsofnz.govt.nz/from/speeches-and-papers At the bottom of this page are listed four speeches made at the first sitting of NZ’s supreme court on July 1st 2004, some 2 months after the Feltex IPO. We think the date from which this new court has jurisdiction would be a little bit before the IPO so the IPO can not be considered in London. It makes sense. We have not bothered to read the speeches but the people who delivered them are of some interest to us. One is from the unnamed Attorney-General. We took a glance at this one. It talked about our right as a country to make our own mistakes, just as a child falls over many times learning to walk. We think this forward looking Government had prearranged a series of “mistakes” to be made if necessary. Anyway, another such speech was made by the new Chief Justice as one might expect. This chief was in a photo of a whole lot of female leaders in all walks of life which had been put together by the Clark regime. It all dissipated quite quickly except for the Chief Justice who has license to rule for some years yet. The cost of expediency can be high. Mr Chris Darlow also gave a speech. Mr Darlow was Joan Wither’s (Feltex’s only female director who “served” from the time of the IPO to the start of the company’s outward collapse) solicitor and he has had the cheek to try and tell us that Ms Withers is a thoroughly honourable individual. He did not look to see what evidence we had to the contrary. Mr Darlow sits on the NZ Press Council representing newspaper readers. What readers voted him in we would like to know. And the fourth person to deliver a speech was Robert Dobson QC who we assume is now a judge and has been given this Feltex action to hear.

Well the message we are suggesting is that there is an inner core of legal people monitoring the Feltex robbery to see that none of the culprits get into trouble. Judge Doogue clearly did this in the MED v Feeney case where she ruled that company directors could employ the company’s auditors to prepare the company’s accounts on the director’s behalf. Effectively then only one set of accounting expertise, that of the auditors, has been used. It is twice as easy for one set of expertise to be corrupt as it is for two sets of expertise to so be. That is why we used to have auditors who were independent of those who prepare the accounts. Now following Judge Doogue’s promotion earning ruling it presumably does not apply. Judge Doogue promptly became the Chief District Court judge following this ruling which was not appealed. The idea of independent auditing has been rubbished to the public. David Ross seemed not to have any auditors and the people who dealt with him didn’t seem to care. Even the FMA seems not to be saying the investors in Ross Asset Management should first have insisted on seeing and verifying a recent audit report for the firm. Auditing is being treated with contempt.

Sean Hughes has quit as director of the Financial Markets authority. He has expressed a “heartfelt” apology to investors who have been let down by a sad procession of failures by market participants and officials. We agree investors have been so let down. But if Mr Hughes was so upset about it there was a lot more he could have done. He knew that the great majority of these failures were caused by the willful Feltex IPO robbery and the closing down or subverting of monitoring authorities so that virtually nobody got into trouble from the IPO. Many others have observed what was going on and thought that they too could take advantage of authorities turning a blind eye or just not seeing. But Mr Hughes is following strong but invalid instructions given to him not to accuse or take action against select inactive officials. Indeed he and his board do not believe in transparency. They have taken off line the history of Securities Commission rulings and reports which the Securities Commission had set up. They want the Securities Commission to be seen as a thing of the past without saying why and with restricting of the public’s ability to investigate why. There is no place for such half hearted criticism. Mr Hughes needs to explain exactly what went on to cause these failures and that involves explaining that the National and Labour parties gave the go-ahead to rob amateur investors of $250m to raise funds via the Feltex IPO to “win” top Olympic medals for the country.

We note that Helen Clark is in the country at the moment. She is rallying support to try and protect herself we think. This would be a good time for an arrest. However the tide seems to have not quite turned yet. But the Labour leader David Shearer has resigned. There would seem to have been some quid pro quo relationship between Clark and Shearer. He came from the United Nations at the same time she went there. She seemed to set him up with an electorate and pathway to the leadership even although he would seem to have had little political experience or ambition. Perhaps the caucus is learning.

Some comment on current politics is now called for. The Dominion Posts first reaction to the Shearer resignation was to say that Shearers deputy was the leading contender to replace. Radio New Zealand was not so up front about suggesting the replacement but thought David Cunliffe had the upper hand. It said Mr Cunliffe was popular with the public but not with the caucus where he lost decisively to Shearer about 20 months ago. Well the public in general probably does not know of and has little to fear from the Feltex IPO scandal. It is probably better to stay in opposition than have a heightened risk of going to jail as far as many caucus members are concerned. The scandal continues to have a terrible effect on the way the country is governed and this will continue until the matter comes to a head.

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On Monday 12th August 2013 the Finance Minister made two new appointments, Jonathon Ross and Bridget Liddell, to the Reserve Bank board. They are of course to help protect prime culprits, which includes senior members of the Labour and National political parties, from being prosecuted for the 2004 Feltex IPO robbery. And no doubt as a reward for “services rendered”. Bell Gully were listed in the Feltex IPO prospectus as the sole legal advisors to the corrupt Feltex offer. Bell Gully’s web site at that time said that independent experts (unnamed) had rated Mr Jonathon Ross as a world expert in securatisation. And Ms Liddell was in the lead-up to the Fetex IPO, an equity analyst with CS First Boston. That of course is a convenient name for Credit Suisse First Boston, offshoots of which were “vendor” and “promoter” respectively in Feltex IPO robbery. In something of a trial run for the Feltex robbery the ACC paid half a million for dud National Mail stock a few days before National Mail announce that it was quitting the mail business. There is no way ACC could genuinely believe this “investment” was worth the risk. National Mail, trying to break into a natural monopoly, had not reported for some time. It would have known that the vendor of the shares, Cliff Cook, was a close business associate of a National Mail director Peter Fitzsimmonds. Mr Cook’s broker for this transaction was CS First Boston while ACC chose for its broker on this occasion Credit Suisse F B, or perhaps it was the other way around. The “Feltex IPO” robbery was obviously designed to raise funds to allow NZ athletes to cheat gold and silver medals at the Athens and perhaps subsequent Olympics games. Anyone who thinks these medal hauls were genuine needs their head read. At the time of this “IPO” Eion Edgar was chairman of Forsythe Barr, a lead broker for Feltex, chair of the Investment Committee of the ACC which put $9m into Feltex, virtually the only institute to put in anything, chair of the NZ Olympic committee, and recipient of a high NZ honour which he eventually converted into a knighthood. Edgar was recently guilty of selling a few ordinary shares in the company Bliss which reduced the price so that he could receive far more such shares in a conversion of preference shares.

Now Ms Liddell might just happen to have been working for Credit Suisse and knew nothing about the pending IPO. It’s a bit hard to believe though. Like Mr Ross she has apparently big international appointments but we think is at a loose end currently. We can find nothing about why Mr Ross left Bell Gully. The name Ross would seem to be all that fashionable in the commercial sphere. David Ross has instigated considerable fraud as head of Ross Asset Management. We think some solicitors must have been in on the Act however. Then the crook Elizabeth Hickey, the NZICA chair who as auditor ignored and covered up the false BNZ $100m profit in 1990, is married we think to an M J Ross. Not that being married to a crook is necessarily an offence. It’s a bit dicey though. Dame Margret Bazley had a crooked husband. She married him at about age 25. He did quite a variety of criminal jobs during the time of their union. After they divorced he seemed to go straight. She was on the panel which selected the present State Services Commissioner. The thing about being on a panel like that is you have to have exceptional judgment of people, don’t you. Our apologies to all the honest Rosses (surname?) involved in NZ commerce. The National Party got down to 27% of the vote under Mr English’s leadership with Michele Boag as chairperson because of her association the Fay Richwhite which was associated with similar scandals to the Feltex IPO a decade earlier including the false BNZ $100m profit.

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The recent infant milk, scandal is also very much related to the Feltex IPO robbery instigated by the National and Labour parties.. The only accountant on the Fonterra board seems to be David Jackson. He is ex Ernst and Young the Feltex and BNZ auditors. He has hung out on the Accountants Institute board probably with Craig Norgate. He was on the Securities Commission when it said it could find nothing significantly wrong with the Feltex IPO. Then while on the Commission, the Commission charged him with a quite serious offence of failing to observe continuous discloser as a director of the company Nuplex. But he got off that by way of Nuplex being found guilty and fined. But that seemed not to affect his Fonterra position and non-disclosure is near the heart of this latest scandal. The cover-up culture is bringing us to our knees. The major newspapers need to expose the Feltex IPO, its purpose, and who was responsible for it. We ask Fonterra shareholders “why do you have this controversial character on your board?”

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We hold the NZ Press Council as being the body most responsible for the failure to disclose the terrible Feltex IPO robbery by leaders of the National and Labour parties with the assistance of others and of the disgusting use that these funds have been put to. This council fails to discuss the clear evidence of crime contained in that IPO prospectus and the subsequent cover-ups and consequences which have made the crime most obvious. The Councils attitude is that it does not want to know. It wants only to discuss and determine interesting little issues over a cup of tea. On no occasion has it even came back to us seeking further information. It says we are vexatious in making continued complaints about its failure. .

It is particularly disgusting that the Press Council will not seek justice for the son of a journalist, David Gaynor, who has died solely because of this IPO being crooked and the aftermath, and so seek to insure that such an event will not happen again. His father wrote this “business ethics a million miles away” article highly critical of Craig Norgate in May 2010 and other articles critical of the Feltex IPO and the Securities Commission going to sleep over it (but not revealing its true cause and the prime culprits) and the rest of the press obeyed Government instruction and gave him no support. Naturally David has been highly ridiculed by his big business parented fellow school pupils because nobody was supporting his father with respect to this apparent huge public rift. Mr Norgate might not have been directly associated with the Feltex IPO but he obviously knew about the Securities Commission having been “put to sleep” and he was cashing in on it. No doubt David’s father gave David a lecture about not involving himself in his father’s business and David was left on his own out in the cold. He would be jeered about his father’s criticism of the heroic Mr Norgate. It was all so relevant to these kids because many of them were brought up in the business world and children of both Gaynor and Norgate were there in the same year at their school. They would be encouraged to take an interest in business affairs. We are sure they change the school of children whose father belongs to a rival gang from other pupils there but there was not such respite for David. Naturally he experimented with illicit drugs. Then a year or so later he got invited to a do hosted by Mr Norgate at the Accountants Institute where Mr Norgate was on the board. No doubt he was taunted with jibes like “it’s a million miles do you think you can get there?” He planned in advance to take booze and drugs before this event and killed himself a few hours after it, falsely blaming being caught with drugs for his demise. The Government appointed Chief Coroner refused to entertain the possibility that there was any link to the Feltex IPO or any other illicit business practice.

Prior to David’s death we had advised the Coroners of the connection with the Feltex IPO of Paul Phillip Wilson who died at Easter 2010 from reckless behavior involving a motor vehicle conversion and crash. Paul’s mother was Feltex’s long standing marketing manager who obviously had to be “converted” into going along with a ridiculously high projection of the company’s sales for it 2005 year prior to the April 2004 IPO. This would be a terrible moral dilemma for the household which would continue as the company progressively failed and obviously has rubbed off on Paul in a terrible but understandable way. He has come to Wellington to try and make a life on his own but could not as he died a few weeks later. There has been no coroner’s hearing in this case yet as far as we know. They can’t say he had no problems like they did with David. Like the Press Council they don’t like our submissions. We don’t like the fact that there is a need for them either but issues, no matter how great, have to be faced.

We implore the Press Council to do its duty. Its preamble says “An independent press plays a vital role in a democracy”. Let us have one. At present the press is ruled by the Government be it Labour or National led.

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We have come across a list of “directors” of the Treasury department. Like the Reserve Bank directors this is a jobs for the loyal boys and girls role. We had forgotten about this phenomenon if we ever knew of it. These are presumably advisors to the department head, the Secretary. We are concerned to see the name Joan Withers on the list. Ms Withers clearly made herself a last minute director of Feltex Carpets Ltd having no regard for its financial state, to haul in and rob the funds of female and “couple” amateur investors, to gain favours in high places as was and is her business. She quit the company as soon as it got into obvious strife. We can see nothing of discipline, strategic capability, or performance accountability in that. These are the qualities which the Treasury claims the directors bring to its organization. Ms Withers does not exhibit private sector or any other behaviour that is needed in the public service. If she really wanted the Fairfax job she could have quit the Auckland Airport board rather Feltex where by her stated view of the situation there was a clear and desperate need for capable directors. There is no place for fine weather directors only on this or any other board. And robbers must invariably have a time in jail.

Withers job at Fairfax “just happened” to include extensively purging the total staff of the quite exclusive assumably private news organisation, and any staff member with a tendency to perhaps expose her corrupt activities no doubt went down the road. David Kirk gave her the job and he got a seat on the Forsyth Barr board in return.

How David Kirk got his job in Fairfax is no doubt explained by the Australian influence to allow NZ to cheat Olympic medals just as they, the Australians, had been. We now note that Ms Withers is leaving the Auckland Airport board and joining the board of ANZ Bank. This Bank of course held the $100m debt of Feltex Carpets. We suppose Ms Withers is there to make sure they don’t say anything to disadvantage her in her upcoming defense of action by certain Feltex shareholders. We were in the courtroom when an ex-employee of ANZ “explained” the bank’s dealings with Feltex in the case MED V Feeney. It was being treated as a typical arms length relationship between a bank and its client but the relationship seemed a little bit too nice and ANZ was obviously in the know about the state backed scheme to rob amateur investors. It had to know that the net worth of Feltex was near nothing and hence the IPO was a robbery.

This ex employee explained that ANZ had grave concerns for its loans to Feltex in 2002, and had a report produced. These fears were abated somewhat when Feltex raised a debenture for $50m. The debenture was repaid from the almost $250m raised in the IPO robbery. Obviously the robbery was cemented when the debenture was raised which would probably be about when Eion Edgar joined the ACC board in September 2002. The crises for the bank arose again in March 2005 when the first dividend was paid since acquiring the Australian plant of Shaws in 2000. This was a sizable dividend consistent with the “prospectus” “projection” of $17m.

It is unclear whether Ms Withers is currently on the Treasury board or off it because of her involvement with Mighty River Power. No on and off dates are mentioned. It is sort of decided in retrospect we suspect. That seems to be the way of the Government these days. It is so strange that the bank has selected a director who helped set up such a troublesome client for it in Feltex. She came in for the IPO and when trouble raised its head she was gone. The Australian banks of course had a field day after that IPO as finance companies one after the other folded and the only apparently reliable place for one’s funds was a bank. ANZ have picked up $1b profit in NZ in their latest year we think. All thanks to Ms Withers we suppose.

Ms Withers is also ostensibly working for the Tindall Foundation in its charitable work. That is a great cover up activity. Who could possibly criticize that? Well us. Sir Stephen Tindall the settler of the trust gave a 20 minute or so interview on this philanthropic work on National Radio a few months back. The only names he mentioned in that time were Bill Gates, John Key, and Joan Withers. National Radio were also using Ms Withers as its “business ethics” expert on its “afternoons” program. Perhaps she is still on the list. It reminds us of a film of we think a true story of the Germans secretly sending a countryman with American lingo into one of their POW camps in WW2, to report on what was going on. He immediately lobbied and got himself appointed as the camp security officer.

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A project we have considered is standing for the mayoralty for both the Wellington and Christchurch city councils. We have not got there but this will not stop us criticizing the prime contenders. It took us 6 weeks to discover that Peter Garty is no longer Chief Financial Officer at the WCC. He resigned in mid June 2013 and was gone by the end of July. Politicians should still be held accountable for his appointment there we think however. Mr Garty willfully sanctioned the false $100m profit declared by the majority state owned Bank of New Zealand in 1990 by signing the audit report on behalf of Ernst and Young. The “mistakes” the audit work papers purport to show are not credible. They were and are a willful action. The content of the 1993 Securities Commission that nobody acted unprofessionally with respect to these accounts and there audit is also not credible. Mr Garty was not fit to hold this Wellington City Council position. The chief contenders for mayor, Morrison and Wade-Brown seemed unconcerned with this situation. It seems that some years back Mr Garty was the Chief Financial Officer of the finance company St Lawrence while Mr Morrison was comparing a program on Radio Sport which was sponsored by St Lawrence. We think Mr Garty has got the city council job through this connection. We think the council has probably mixed up sport with business, particularly with respect to the football team which has been playing in the Australian competition. The team is no doubt good for the city but it needs to have been financed by legitimate means at all times. We believe Mr Serepisos knew his empire was going to collapse before he established the club so effectively it was financed by bad debts.

With respect to Christchurch City Council the prime mayoral contender is the sometime Minister of Commerce Lianne Dalziel. She has also been the Minister of the ACC. She left or was removed from the ACC job in on 15 August 2002. Eion Edgar was appointed as a member of the ACC board and chair of its investment committee in September 2002. We believe this was an early step in the buildup to the Feltex IPO robbery of April/May 2004 which the Labour and National parties were a party to. Excuse the pun. Ms Dalziel it seems wanted no part in that scam which perhaps says something for her. She then became Minister of Commerce and Minister of Justice on the said 15 August 2002 and held these posts until 21 February 2004 when we suspect with the robbery looming she found the posts too hot to handle. Her duty was to spill the beans not take a back seat. She took light duties as a cabinet minister from then until 19 October 2005 when she regained Commerce and took on Small Business and Women’s Affairs. She remained with the Commerce portfolio until her party was voted out of office in November 2008.

Jane Diplock, Annabel Cotton, and Joanna Perry,3 of the Feltex 4, the quorum who “investigated” the Feltex IPO, were on board the Commission when Ms Dalziel took office the first time as the annual report of 2002 shows. Note the Commission got increased powers that year. And it was voted on to the executive committee of the International Organisation of Securities Commissions. Elizabeth Hickey who effected the fake 1990 BNZ profit as Ernst and Young’s Senior Technical officer and Peter Garty’s supervisor to see that the “insurance policy” (and no doubt the ”notes”) was/were treated correctly, was in her eleventh and final year of her first term on the Commission in 2002 as can be seen at page nine. Joanna Perry also eventually completed eleven years. Both eventually got MBEs or the equivalent, Perry for accounting services. They lacked confidence to give the same to Hickey so photographed her with the Silver Ferns and gave her the award for netball. She is of course the current (2013) chair of the Institute of Chartered Accountants of NZ.

We will skip a year and take a look at the 2004 annual report of the NZ Securities Commission. Lianne Dalziel was Commerce minister for more than half the period covered in this report. Incidentally it can be seen that the barrister Michael Webb retired from the Commission having reached the magical maximum tenure of eleven years. They no doubt could not offend Ms Hickey by allowing anyone else to go longer. But the main point is that during Ms Dalziel’s reign two more female commissioners were appointed bringing the gender ratio to 6:4 in favour of women. One of those appointed was another Australian, Keitha Dunstan. Indeed we have found the appointments announcement now and it was 7 July 2003. She was the “founding” and we think only director of this Wellington University centre which no doubt was set up to justify her being here. “Founding” gives the impression she started it up and it would be there long after she had gone. Not so we think. She is now at Bond University on the Gold Coast which we think is run by corporations. We claim the actual purpose was to facilitate the Feltex IPO robbery which occurred during this 2004 year of the Commission.

We go now to the Securities Commission’s 2007 year. Dalziel has been back as minister for some time now while Diplock has had three years also chairing the international federation and of course it is all a piece of cake to her with a smile a mile long. The gender split is now 50:50 with long serving Ernst and Young partner David Jackson on board to no doubt keep an eye on things in Ms Hickeys place. On page 10 we are told the commission reviewed (note past tense) the 2004 prospectus of Feltex Carpets limited and found no breaches of securities law and no evidence that the prospectus was misleading. We have lost the brief one page report concerned but it went on to say that no further action would be taken. The correct action of the commerce minister upon this finding would have been to sack the commissioners, at least those on the quorum that produced the report.

We move on to the 2008 report which is unashamably in the pink. Investors are at the heart of the commission’s work it says. Well stealing from them may be. We learn on page 7 that the commission completed its inquiry (in 1993 it was an enqiry they had) into the Feltex IPO. Yes they put out a further three pages of propaganda to be found here starting at paragraph 52 . In mid 2006 they say they have completed their investigation into the Feltex IPO and that no further action will be taken then they say they have completed their investigation into the IPO in the 2008 year. Someone had obviously told them that their one page effort was not all that credible. But their three page effort was a whole lot less so. It carries on about assumptions being reasonable but it did not calculate changes in the companies market share in its recent history to know whether its assumption of a 1% p.a. increase in sales due to increase in market share was reasonable or not. It would have concluded that Feltex was losing sales at the rate of 5% p.a. due to falling market share for the past two known years and a change to 1% growth was unreasonable. It knew Shaws, which had retained its brands, knew that manufacture outside Australasia for non-wool carpet was more profitable and that is why it had moved. Ms Dalziel also would know this well.

We finish this segment with a look at the 2009 annual report of the Securities commission. Ms Dalzial was commerce minister for only part of this year but while she was there in July 2008 she brought back the 1990 crook Elizabeth Hickey on to the Commission in contravention of the 11 year maximum convention. The following is the text of the announcement. Ms Hickey’s second tenure did not last all that long. Her fellow ex Ernst and Young commission member got charged by the commission with failure to keep the market informed with respect to a company, Nuplex, Mr Jackson was a director of. This probably caused Mr Jackson to step down. Ms Hickey followed a short time later. But Mr Jackson’s problems were somehow transferred to the company and he somehow got off scott free. He was by this stage also on the Fonterra board where we think he still is. We hope he was not providing cover-up skills. Also in July 2008 NZ Herald journalist Brian Gaynor wrote Ms Dalziel this open letter. This is about a Capital Markets Development task force she had established which was going to take a long time to report back. No doubt she was buying time so that the Feltex IPO would not get caught up in anything. We will be adding to this soon.