SCF:Cunliffe, is he getting closer to the light?


Today we had another round in the gladiatorial contest between Bill English, Finance Minister and David Cunliffe, his Labour Shadow. Well we would have, but Mr English was not there, so that nice Mr Joyce came up to bat for him as substitute. Mr Cunliffe’s attempt to hold the question over until Mr english was available was denied by The Speaker.

The prime thrust of David Cunliffe’s focus for today was:

Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Did Treasury evaluate the net effect on South Canterbury Finance’s position of the February 2010 acquisition of Helicopters (NZ) Ltd and Scales Corporation shares, including the effect of the transaction on the recoverability or impairment of South Canterbury Finance’s $75 million loan to its parent company, Southbury Group Ltd?

Now I think we may be getting to some meat on the bone, so to speak. Yet, will there be sufficient gnawing to bring out the marrow (new information)

The video is here:-

To my mind the approach to the question answer was interesting. The response was around how Treasury took the view that the question they were interested in was that if there was no impact on the position of SCF vis-a-vis Treasury. this leaves open whether in fact there were impacts on others.

Mr Cunliffe became somewhat frustrated by the straight bat presented by Mr Joyce, worthy of Geoff Boycott stonewalling in his heyday, at least as far as frustrating Mr Cunliffe was concerned. this perhaps led to the effective closing down by The Speaker of the issue today.

At the end I am not sure that Mr Cunliffe was on the right track re timeline. He might have been better focusing on the transaction re the acquisition of Scales and Helicopters NZ. Others have pointed out that as part of that deal SCF passed cash to Southbury.This at a time when SCF needed to raise cash.

Given the reference to valuation reports in the responses to the questions from Mr Cunliffe, it is to be hoped that these reports will be amongst those released in due course pursuant to Mr English’s undertaking of yesterday.

Anyway we have another round to look forward to at the next question time, when perhaps more information may come to light.

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One response to “SCF:Cunliffe, is he getting closer to the light?

  1. ‘Treasury’s view of the transaction was that at worst it made no difference to the Crown. It boosted the equity in South Canterbury Finance, but lessened the equity in Southbury by an equal amount. That view has proven to be correct, and I do not believe the cost to taxpayers was impacted by this transaction.’

    This is an extraordinary admission! Basically what they’re saying is that they approved a major transaction that resulted in the company’s accounts becoming a work of fiction. Given that the company had done its dough in its own accounts to 31 Dec 2009, as prepared in Feb 2010, at this time therefore, the transaction being making no difference, the company had still done its dough and was finished and should have been put into receivership, as its chances of recovery were eliminated as at this time (if there had been any doubt previously). This meant that allowing the company to trade on after this time was only increasing the Crown’s cost. The fact that, after the event they confirmed that the transaction did not in fact help, is also a admission that the transaction’s expected effect was not positive, and a major win in putting the Treasury and English in a bad light!

    If you go back to August 2009, the Crown formed the view that the company would probably fail, and created a large provision accordingly. Come Feb 2010, the company basically had failed, as it was in gross breach of its trust deed, and the Helicopters NZ transaction, as the government assessed at the time, could not remedy the gross breach. Not only that, they had 6 months of getting more information and working out what to do with the problem identified in August 2009, so it was no surprise in Feb 2010. So Feb 2010 was really the time that the problem was confirmed and the hope of it being able to avoid the cost became fanciful and irrational.

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