More Thoughts on SCF and other matters

I have been giving further thought to some of the issues re SCF. There has been additional information coming to light such as the articles in last Friday’s NBR and today’s article in the Sunday Star Times by Greg Ninness – The Bank of Allan.

Then there is the situation at Allied Farmers, which seems to be going from bad to worse with talk of legal action re the Hanover deal.

As if those two matters were not enough I saw in Saturday’s Dominion Post an editorial on what appears to be some rather poor governance practices at Capital & Coast District Health Board, especially when you go and read the related material.

Quite a lot to read and digest. So I will comment in due course.

One quick thought though. If I remember my UK company law correctly, in situations such as SCF and Allied Farmers, the old Department of Trade & Industry would appoint inspectors, usually an eminent commercial ‘silk’  and a leading senior accountant to look into what happened. Why do we not do that here?

Failing that, I would have thought that given the massive wealth destruction over the last several years, occasioned by the many finance company failure that there were strong grounds for a Commission of Inquiry with the powers to compel evidence etc. In fact given the huge public interest in this matter, that such a Commission of Inquiry would be the sensible thing to do. It would probably be better than an inspection, as suggested above. Furthermore, it seems to me that it would be wise for such a Commission of Inquiry to be led by suitable candidate from perhaps the UK, Canada or Australia, as a means of getting appropriate perspective on the matter and reducing potential for conflicts of interest.


2 responses to “More Thoughts on SCF and other matters

  1. Horace the Grump

    On your first point – it is likely that the MED already has inspectors inside Allied Farmers – the Trustee for the capital bond holders referred the company to the Companies Office last week under the Corporations (Investigation and Management) Act 1989. On SCF, well Treasury had Korda Mentha all over this company for months so I’m not sure what else could have been learnt about the company…

    On your second point – well maybe, but the horse has rather bolted. A number of finance company directors are up on criminal charges, although the courts seem to be working on an extreme go-slow when it comes to actually getting these things before a Judge… Also the most likely culprit in a number of the latter collapses (the ones under the Crown Guarantee) are most likely due to the collapse in demand and pricing for land and property outside of residential housing. In other words its the continued collapse of the property market that has undone these finance companies rather than directors acting badly as is the case in some of the earlier collapses.

    • Thanks for your comment.

      In the UK the appointment of inspectors is usually made public and their reports are published. I cannot recall any suggestion that KordaMentha’s advice has been published. In addition the purpose of the inspection is to seek to establish what went wrong, rather than advise an interested party eg Treassury on any particular course of action.

      Regarding a Commission of Inquiry, I would disagree that the horse has bolted. I envisage an Inquiry charged with looking at what went wrong across the gamut of issues, including for example any non-performance by Securities Commission and Commerce Commission.

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