Air NZ Shows Government Not Fit To Regulate
ACT Commerce Spokesman Stephen Franks says the Government's bungling over Air New Zealand goes further than just rewarding two foreign shareholders with extended control and a half billion dollar taxpayer soft loan. "The government has also connived in breaching market disclosure rules," he says.
"The Air New Zealand share price movements are dramatic evidence of market uncertainty. The most critical question is: What is Air New Zealand's exposure to Ansett Australia? Can it be legally forced to pay creditors of Ansett Australia? Could it simply withdraw the letter of comfort? Who was to be comforted by it?
"It is a further insult that instead of answering these questions the directors tell us that they have 'cast iron' legal opinions that they personally are not liable for Ansett. Who cares except them?
"What all New Zealanders need to know is whether Air New Zealand can be forced legally to throw good money after bad. The Government must know. Surely even ministers completely inexperienced in commerce would not have promised $550 million in loans without knowing whether it could be simply sucked out to Australia. They must have tied it to keeping Air New Zealand flying in New Zealand. But we don't know for sure.
"Was that deliberate? The Government, the Market Surveillance Panel and Air New Zealand directors are in continuing breach of duties. To have the Australian Securities Commission investigating our inadequate disclosure piles national disgrace on disgrace.
"I have been asking the vital questions of the Government since before the so-called rescue package was announced. Where is the Market Surveillance Panel? They have more than adequate powers to force the information from Air New Zealand into the market . They can send in investigators to seize papers if need be.
"And it is not just share investors who deserve to know. Every New Zealander considering prepayment for an airfare, or wondering about the value of their air points, is entitled to know whether belligerent Australian unionists and politicians and passengers will be the only beneficiaries of any fresh New Zealand money.
"Consumer Affairs Minister the Rt Hon Jim Anderton and ineffectual Commerce Minister Paul Swain should have insisted on clear public information from their dithering colleagues a month ago. It is no excuse that Finance Minister Cullen was already in the Brierley/Singapore Airlines camp getting the short term rush that comes using other people's money to rescue something.
"I attach a fresh list of urgent questions for the Government."
CRITICAL QUESTIONS ABOUT AIR NZ:
Why did the Government agree to leave $550 million with a company under the control of shareholders who have just presided over losing $2 billion in shareholder value?
What about the kind of disclosure and explanation contemplated by the Fiscal Responsibility Act for appropriations?
What can Brierley Investments and Singapore Airlines offer Air New Zealand now, when the chairman says they are part of the problem? Haven't they done more than enough already?
Why is so little vital detail available for the New Zealanders who are funding this risk investment?
Does the Government tie it to "keeping the planes flying"? No prudent receiver could risk the liability that would flow from not continuing to generate the profits of Air New Zealand's healthy business so why rescue SIA and BIL when it is the staff, passengers and operating business that could need the cash?
Why was the package not announced as preparation to ensure that a statutory manager has the funds to keep flying if and when the shareholders lose their equity?
Is the debt to be subordinated? Is the debt to be secured?
Are there any conversion options or other rights to enable the Crown to recoup something of the upside it is giving the shareholders, from the money it is risking?
Have Air New Zealand's other creditors and bankers agreed to waive enforcement or acceleration rights?
What will "due diligence" be looking for now? After the months of looking the Government has already done, on what preconditions can the government decline to throw further good money are bad?
What happens to the package if the Air New Zealand shareholders fail to pass the constitution amendments?
What happens to the package if Air New Zealand shareholders are willing to pass only some of them and not others?
Do the guaranteed director appointment powers of Brierley and Singapore Airlines exhaust their votes on director matters, ensuring other shareholders can at least influence the election of the remaining three?
Are any director slots reserved for election only by New Zealand shareholders?
How well insulated is New Zealand from Australian attempts to seize Air New Zealand assets if it does fly in receivership or statutory management?