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Lare November 2010 Edition ----

We are not satisfied with either the recovery effort or the pronouncements made concerning Pike River. After the first explosion those in charge said they "did not know" whether all or any of those missing were still alive but they were not sending in anyone to investigate until they were satisfied that such an operation would be "100% safe".

Well 100% safe is perhaps a proper standard when there is not potentially live people to be rescued (although we don't think underground coal mining can be undertaken with such a criteria). Perhaps they had reason to believe that the possibility of survivors at that stage was most minimal but they did not say so. They had a duty to tell it as it was. But two people in the dangerous "gun barrel" access tunnel survived the first blast. The probability is that any rescuers in the tunnel would have survived the second blast as well. And the rescue attempt could have been completed on the Saturday.

Then 4 days later when there was a second similar blast they pronounced that there is no hope. Well if people could survive the first blast they could survive the second one as well. Any survivors up to the time of the second explosion were likely to be in safer positions than they were at the time of the first explosion.

We say the mine owners had a vested interest in adopting a "100% safe" and "pay full attention to mine gas analysis" philosophy after the explosion because that was the philosophy that should have been in place (we are not saying it wasn't) before the explosion. Vested interests generally can not be avoided, but they can and do cloud judgement and because of it we say the company should not have been heading the recovery planning.

We say "100% safe" is not a satisfactory mind-set for those required to consider rescues. Sure we don't want more victims but we would like everyone to be rescued. It is a trade-off. Safety has to be high for official rescuers but in any situation there are competent people who rationally are prepared to take on a high risk to personally attempt a rescue. We say such people have a right to make such an attempt and must not be prevented from doing so. Only one or two people needed to be "at risk" for a start when going to look for survivors. If some survivors were found then a few more could go in to bring them out.

The joint action by certain shareholders of Feltex carpets against certain directors. the promoters, vendor and lead brokers of the April 2005 Feltex IPO now have a 2 day hearing before them in the Christchurch High Court on 2nd and 3rd Dec 2010. It has to be decided whether there is enough evidence against the defendant and whether the plaintiffs will have to deposit funds to cover the defendants costs should an award of costs go against them. That seems to be a tall order for a two day hearing.

The case of these shareholders obviously implies that they believe that the Securities Commission's finding on the IPO was not correct. We say they need to spell out why it is not correct ie that the Government has been a party to the swindle in order to get funds to "buy" some Olympic Gold medals for the country from an organised cheating operation.. The Government appoints the members of the Securities Commission and with adequate rewards promised their appointees have obliged by saying that there was nothing significantly wrong with the IPO when there was plenty wrong with it. There have got to be highly plausible reasons and that is it.

The Pansy Wong case is we think another case resulting from Ernst and Young corruption. Ms Wong has formerly been an audit supervisor at that firm. It no doubt was there that she learnt the philosophy "if you can get away with it, be in". Ms Wong belongs to the Wellington branch of the institute and we did not expect that when we looked for evidence of her membership. We regret the error. We do not think that she should remain a member however.

We regret to record that the IFAC is continuing to associate itself with the long "serving" Ernst and Young partner Warren Allen by making him a vice president. Mr Allen is closely associated with the 1990 conspiracy whereby Ernst and Young as auditors agreed with the Government and other major shareholders for the declared 1990 profit of the Bank of New Zealand to be set at $100m when a true measure of the profit was close to zero. Mr Allen claims to have been seconded to the state owned Development Finance Corporation (DFC) in 1990 but he was in Ernst and Young's Wellington audit division in 1992 and 1993 when it would have been defending itself in hearings of the Securities Commission. He likes to pretend that the 274 page (plus extensive appendices) Securities Commission report into the matter vindicates his firm. Nothing could be further from the truth. He later told the Institute of Accountants that the Securities Commission found nothing inappropriate about the 1990 BNZ audit. This is absolute bunkum and he well knew it. He then went on to counter the international criticism and the cancelling of reciprocity of accounting membership by leading the Institute (or was it the Society) into introducing expensive continuing education requirements. Members who could not afford this were obliged to resign and so paid the high price for his firm's corrupt practices which by and large they had nothing to do with.

The Audit Partner for the 1990 BNZ audit, Peter Garty, has now been elevated to Chief Financial Officer at the Wellington City Council. We don't know why he is there but suspect that he is up to no good. The council is no doubt keen to keep its football team which plays in the Australian league. The owner of the club seems to be in financial difficulties and no doubt some of the councillors wish the council to provide some support. There is no doubt a lot of rules around that sort of thing and officials who have a liberal interpretation of such rules are no doubt needed if much such support is to be given.

Members of the NZ Society of Accountants can't be disciplined by the Society for any misbehaviour. That is because the Society was liquidated a year after the Institute took over and the Institute is not allowed to investigate what went on before it was formed. Ha Ha Ha. This is what the high profile accountants such as Mr Allen do after they have routed the system.

We wish to give an update of our extensive file of Ernst and Young corruption and will oblige as soon as possible.

However we need to give an update in the case of Joan Withers. She apparently is now chair of Mighty River, deputy chair of TVNZ, both SOEs, and now chair of listed company Auckland International Airport. We say all this is to protect her from getting into trouble over her role in the Feltex IPO.

Well at the AIAL meeting which she was appointed her chair she felt obliged to say something about her involvement in Feltex. According to the NZ Herald she said she resigned from the Feltex board in early June 2005 "which was approximately 15 months before the company went into liquidation". Well that we think is true but unfair. It implies that Feltex go into trouble only when it went into liquidation. What other relevance could the date of liquidation have to her resignation? The impression she was trying to give was that all was well when she resigned and she was shocked to learn 15 months later that Feltex had flopped. She said she resigned to take up this position at Fairfax, but did not say why she resigned from Feltex and not AIAL.

The state broadcaster Radio New Zealand picked up on this story but it "explained" that some at the meeting questioned her suitability (to be chairperson) "even though she left the failed carpet company [Feltex] 15 months before its collapse"' We say that statement is both untrue and unfair. The collapse if there was one was not at the point of liquidation. It was probably at the first profit downgrade when she was a director. We believe that this was deliberate attempt by the broadcaster to lessen her involvement in the eyes of the public

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