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Peters Speech To Windsor Club

An address by the Rt Hon Winston Peters to the Windsor Club Breakfast Meeting, Wellington Club, 88 The Terrace, WELLINGTON
EMBARGOED: 7.30am Wednesday 1st September 1999

A recent television survey about the New Zealand political scene pointed to a crisis of leadership as the main issue facing the country this election.

This has come as no surprise to people close to the political scene.

We have created a system over the past fifteen years in which governments don’t govern – they hand the reins over to countless boards, consultants and contractors.

Ministries and Departments are set at arms’ length and beyond from Ministers, and bureaucrats and officials are given both unlimited power and unlimited incomes.

This situation has led to a breakdown in relationships between politicians and the community.

Political power has passed from the people to the officials, and the politicians do as they are told.

We do have a crisis of leadership, but is this crisis confined to politics?

Events daily show that there are serious leadership problems throughout our society, and one of the worst areas is the top of the business community.

It is commonly accepted throughout the Western world now that New Zealand is the last true home of the commercial “cowboys”.

By some strange set of reasoning, rules and regulations are regarded as the work of the devil, and that left to themselves, business and the “market” will cure all our economic and social ills.

What nonsense! The problem with that philosophy is that it lacks ethics – it does not take into account any of the effects on the vast majority of the population.

I would like today to read one of the most widely quoted statements of business ethics in the world.

It was created by a Rotarian called Herbert J Taylor in 1932, when he took charge of a company facing bankruptcy because of financial difficulties created by the Depression.

Taylor drew up a 24 word code of ethics for all employees to follow in their business and professional lives.

It was known as the 4-Way Test and it became the guide for sales, production, advertising and all relations with dealers and customers.

The survival of the company was credited to that simple philosophy.

It was this.

“Of the things we think, say or do:
1. Is it the Truth?
2. Is it Fair to all concerned?
3. Will it build goodwill and better friendships?
4. Will it be beneficial to all concerned?”

In 1989, Rotary International provided more specific guidelines for the high ethical standards it required from its members in businesses and professions.

I wont read all these but one of them says;

“Be fair to my employer, employees, associates, competitors, customers, the public and all those with whom I have a business or professional relationship.”

You will be given a copy of this declaration and a copy of a recent article in the New Zealand Herald. I challenge you to make them match.

The reason that I am doing this is to suggest that the time for the business community to take a collective stand over ethics and standards is long overdue.

This community complains about the lack of leadership in the country.

It is time for some in the business community to show some leadership themselves and they could start by cleaning up their own act and setting an example to the rest of the community.

For the past fifteen years New Zealanders have watched the commercial activities of our so-called business leaders with increasing cynicism.

How can we control crime when our business leaders use tactics that at best can be described as unethical and at worst classified as illegal.

Regrettably crime does pay in this country, and the ordinary people know it.

Sometimes people get caught, like the former auditor–general convicted of fraud, the Equiticorp boss Allan Hawkins, and Ray Smith who lost the gold bullion.

We can add the odd lawyer or accountant to that list as well, but many people are never even questioned about their dubious practices.

To put it bluntly – there are too many business people in this country whose practices are a disgrace, and would not be tolerated in other countries.

We have become an “economy society,” one without ethics or beliefs in anything but a quick buck.

Corporates and their created media images are dictating our values.

Highly paid spin doctors create perceptions designed to reshape, obscure, and confuse any realities which might help people become more aware of what is happening.

The legal system, instead of being used to dispense justice, is used to block access to the Truth, and highly paid lawyers are used to circumvent or subvert the law.

This has been my experience with some of the business elite of this country during the Winebox affair.

This started when I tabled in Parliament a winebox full of papers which outlined various dubious transactions in the Cook Islands tax haven.

It was very complicated – but to put it in simple terms – a group of rich and powerful business leaders decided that they should not be bound by the same set of rules that the rest of society is obliged to follow.

In one case for example, they set up complex systems under which the Cook Islands government was paid to issue tax receipts.

These companies then claimed on these tax receipts back in New Zealand.

The one that the High Court judgment was given on recently was the Magnum case.

We concentrated on only the one case in Court actions because it was a clear EXAMPLE, on the face of the documents, of the transactions that had taken place.

In the Magnum case, the Cook Islands government issued tax receipts for two million dollars in return for a payment of fifty thousand dollars.

The High Court said the Winebox Commissioner got it wrong when he said that this was not fraud.

This Magnum case was only one of dozens of such transactions involving vast sums of money.

These business people took hundreds of millions of dollars off the New Zealand people through sham tax schemes and fake corporate schemes and nobody took action against them or their companies.

The standard of business ethics (or more properly the lack thereof) in New Zealand became very obvious during the course of this marathon winebox affair.

Legal bills of millions of dollars were run up as these business leaders hired top counsel to stifle the Commission of Inquiry.

Why, if everything was above board, did they spend tens of millions of dollars in these court cases?

Refer to Brian Gaynor’s article, NZ Herald 28 August 1999, “Winebox Winners and Losers” dealing with just five transactions, the background of which is to be found in the Cook Islands.

In those five transactions, the combined loss of minority shareholders was $277 million while the Fay, Richwhite interests made a profit of $509 million.

If we are wrong of course you would expect to see a reply from Fay, Richwhite pointing out our error.

The silence is deafening.

Back when I started the Winebox campaign, in 1992, I challenged Michael Fay to a debate in the Auckland Town Hall and I am still waiting for a reply.

In the meantime, I have had to put up with a whole lot of people in this country who did not know the issue, putting up an insipid defence for him.

Some of these people, want the verdict of history to be that of the loser. They have certainly lost this argument.

All through this case, the political and business Establishment, with a few notable exceptions, sprang to the defence of the corporate tax dodgers and accused me of anything and everything.

Who, witnessing a bank robbery, is accused of wasting taxpayers’ money when police are hunting down bank robbers?

There is a saying that justice delayed is justice denied, and in this case the justice has certainly been delayed by the Winebox Commissioner getting the law wrong.

However, in this case, justice need not be denied.

All it needs is for officialdom to act and collect the outstanding taxes.

Just because companies have been wound up does not mean that the individuals involved cannot be called to account.

If we just forget about the tax money that is owed as a result of the Winebox transactions, we are sending a signal to the world that if you want to set up a company and come and plunder New Zealand and not pay your lawful taxes – we won’t stop you.

This is why the due taxes have to be paid – and this is why the Winebox case won’t go away.

These cases are an affront to all decent New Zealanders and they have to be cleaned up.

As a result of the Winebox case, more than $140 million has been reassessed, but there are still huge sums outstanding.

Across the Tasman, the Tax people believe that tax clawed back from the corporate clients of the Cook Islands might top $1.5billion.

In Japan, the tax officials believe that tax revenue just from the so-called ‘JIF’ deals alone was almost $200 million New Zealand dollars.

In New Zealand it has been estimated that half a billion is outstanding from the Cook Islands transactions.

The legal system and the tax laws are capable of dealing to these cases.

The time has come for the money to be paid.

It is only fair that we all work and pay our taxes by the same rules.

That is one of the major problems with our country.

This Winebox case would not have dragged on for so long if there had been more commitment to the laws of the land and some calls for accountability from the business community.

Too many business leaders have turned a blind eye to the questionable tactics used to thwart public scrutiny.

We have an organisation of business and commercial interests in this country known as the Business Roundtable, and some of its members are extremists.

Even the name is a contradiction in terms. The legendary Roundtable created by King Arthur in Camelot was, of course, a symbol of comradeship, justice, loyalty, honour and chivalry.

Many of the present day Roundtable membership represent the reverse.

They uphold the “ new values” of big business interests which have pulled the strings of their puppet governments for the past fifteen years.

These values, or lack of them, have also afflicted the public service. Once it was led by people with ethics and honour – people who had the interests of democracy at heart.

Now, too many are like some of the roughriders in our business community – in for a quick buck.

Take the Lotteries Commission boss for example; he gets four hundred thousand dollars a year for organising a raffle once a week.

Even the lady who runs WINZ gets only $250 thousand – give or take almost forty thousand in bonuses.

Remember the former auditor-general who was jailed for fraud?

Look at the example set by these leaders.

Is it any wonder that many people at the bottom of the heap are angry and resentful.

This is the effect of central Government adopting some of the practices and ethics of the business community.

It’s time for a clean up.

New Zealand First will be moving to give more protection to minority shareholders in company takeovers, we will review parts of the Commerce Act relating to restrictive trading practices and we will suggest to business leaders that they hang a copy of the old Rotary Code of Ethics in their boardrooms and offices.

We need people who will at times, turn their attention from making a profit, to helping make New Zealand a better place.

It is time to create more good corporate citizens who will set examples to the rest of the community through their enterprise and ethics.

It is time for them to stand up and be counted.


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