Q+A Panel Discussion 2

Hosted By Greg Boyed

GREG BOYED
First of all, Fran, Hanover - it’s rolling along. What do you make of this morning’s announcement from Sean Hughes?

FRAN O’SULLIVAN
Well, it was pretty predictable, because it was foreshadowed in December. And again, you know, it was this period of time, 2007/2008 prospectus, in the market which Sean Hughes says in the view of FMA was misleading and untrue. I think one of the interesting issues about all of this is this has been forecast for some time. At the end of 2010 the then Securities Commission told everyone in a big hiss and a roar that December that they were going to look at filing criminal charges in the new year. And then it kind of morphed on and the FMA inherited the case. One thing that worries me a little bit about this is that we have four eminent people who’ve been in the dock and have criminal charges now against them through what could be very similar stuff, in that the judge Robert Dobson basically said he found them honest but that they did put material into the market that was untrue. Now, the big question is why is one set of directors not facing similar stuff, given that the period was the same in that period of December through to early, you know, 2007 through to 2008. And that has not yet been adequately explained by the FMA.

GREG Mike, what do you make of Lombard? There’s only so much we can obviously talk about lest we lose everything with Hanover, but as far as Lombard is concerned, what do you make of the findings?

MIKE WILLIAMS
Well, I think it’s what Fran just said. I think it’s at least unfair that four directors including Sir Douglas Graham and Bill Jeffries had criminal charges and the next lot of Hanover directors it’s only civil. The penalties are vastly different, and whereas the Lombard directors’ liberty was at risk, the Hanover directors, it’s only their property that’s at risk. So I think that needs to be addressed. And what we’ve seen is a, you know, financial regulations swerving all over the place and not settling down. Let’s hope what your guest said earlier is that we do have a settled period where there are clear rules, because that clearly was not going on.

GREG The fact of the matter, though, their freedom isn’t at risk, they’re not in prison, and so as far as investors are concerned, they must have gotten off very very lightly.

RAYMOND Yes, I think this is an important point. And again, it’s the blurring of line between political elite and the business/financial elite. These people have to be accountable. Many people invested their money because there were two ministers of justice, former ministers of justice, who were standing there as honourable citizens, and people invested their money thinking that everything was going to be all right. And it’s a real assault on New Zealanders’ sense of fair play when the cards fall down and they lose everything. I think people will be relieved to see some civil action being taken however narrowly in the period that he said, 2007-2008. But I do think that they will be looking for further retribution, particularly given the extravagant lifestyles being lived by people like Mark Hotchin and Eric Watson. That really is an assault on the sense of egalitarianism and fair play that New Zealanders still believe in.

FRAN I think what we’re seeing, though, is, I mean, let’s face it, there is a financial conduct bill sitting in front of parliament where, basically, what the Lombard directors have been found guilty of won’t be treated as a crime in the same way. In other words, they never set out to deceive, and the judge was clear about that, but by putting untrue statements into the market, because, you know, under the mechanism by which they were charged, they were still found guilty. So I think that whole issue of motivation, it’s very interesting, and I think some day the book will be written which looks at how various sets of people are being treated differently. But the Hanover one also involves powerful names - Tipene O’Regan, of course, Greg Muir and others - and this is probably the last major cab off the rank, apart from Strategic Finance, which no one did anything about, because, you know, Jock Hobbs was such an icon in his life.

GREG Very very quickly, if we can. Sir Doug Graham - should the knighthood go?

RAYMOND Well, you’re asking a republican. I didn’t believe that an imperial honour should be reinstated, so I’m not going to take a view on this. I mean, it was something that it was acknowledged that he did in his political career. I don’t think it matters one way or another, quite frankly.

MIKE This is another difficult decision for the prime minister to make in the next four weeks, because that goes to the heart of National Party factionalism as well.

ends

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