Should the Government bail out SCF?
August 30th, 2010 at 8:10 am by David FarrarBernard Hickey is one of the few voices arguing that the Government should allow South Canterbury Finance to go into receivership:
But now the government faces an urgent decision between putting South Canterbury into receivership now, or putting in yet more taxpayers money in the hope it can survive and then thrive past the end of the government guarantee.
The choice is a difficult one. The immediate pain from a receivership would be substantial.
Receivership would trigger a payout to investors under the government guarantee of around NZ$1.7 billion. Some believe that shock to the government’s finances would be enough to trigger a review of New Zealand’s sovereign credit rating downgrade by Standard and Poor’s and/or Moody’s.
I don’t believe it would be enough to justify a rating review, but if it did that would immediately increase wholesale interest rates, which would eventually flow through to the entire economy. There is also the fallout on the South Island rural economy.
Any receiver would force through sales of farms, property developments and small businesses, many of whom are not paying the interest on the loans received from South Canterbury Finance. Dairy farm prices in the South Island could potentially take a big hit. Some believe this could send a new chill through the South Island that eventually cost jobs and stunt any recovery of economic growth. That’s because the Australian-owned banks are unlikely to step in to take over the loans.
This is the potential cost of letting it fail. It may be quite huge. It’s easy to just say “let them fail”, but that will mean a large payout by the Government, and a hit to the South Island economy.
South Canterbury Finance does not have a future beyond the end of the Deposit Guarantee. To have such a future, it would need to substantially increase its credit rating, find a new funder and convince already sceptical investors to go naked in backing the finance company without a deposit guarantee. They will also have to do it without their talisman Allan Hubbard, who will be long gone as owner and maestro.
At some point New Zealand’s dairy farming sector, particularly in the South Island, will have to reduce its debt.
When that happens it will be painful.
But as many investors in finance companies such as Strategic, St Laurence, Hanover and Dominion would attest, giving finance companies more time to ‘work it out’ and wait for the ‘market to bounce back’ is often worse than pulling the plug immediately. The New Zealand government faces a bail out decision in the same way Hanover Finance investors did 8 months ago and 12 months before that.
This is the crucial test – can SCF survive in the future if bailed out. Some compare it to Air NZ, which has thrived after a bail out. But there is a major difference between deciding to fly on an airline, or lend money to a finance company.
David Hillary also argues SCF should not be bailed out:
SCF is not a successful business, and it does not have a successful ‘good bank’ to salvage. The damage to SCF’s brand is total, SCF has been selling its best loans, and encouraging its best customers to re-finance elsewhere for probably a year now, leaving it with few good assets left. Its asset origination and management systems and personnel are the problem, and it is what needs to be closed down, not saved. …
SCF’s governance, leadership, culture and practices have been and are so bad that the company’s problems are pervasive, and this means that its liquidation value is likely to be higher than trying to keep it as a going concern.
Whatever the Government decides is going to be pretty unpopular.
August 30th, 2010 at 8:22 am
Not PC blog has been arguing against (for many years) government bailouts. Let capitalism takes its course. You’re allowed to rise and fall on your own. It is simple as that.
Vote:August 30th, 2010 at 8:25 am
David, I think you’ll find that both Cactus Kate and I have opposed and continue to oppose a gummint bail out.
Your second correspondent put it succinctly.
“SCF’s governance, leadership, culture and practices have been and are so bad that the company’s problems are pervasive, and this means that its liquidation value is likely to be higher than trying to keep it as a going concern.”
However, there seems to be much contradiction in the various commentaries. ON the one hand you have Hickey talking about $1.7 billion in guarantee and on the other you have Hillary saying that over the last year many good loans have been refinanced elsewhere.
I doubt very much anyone outside the Securities Commission and the statutory managers really has much of a clue as to the true position.
The only thing that is clear is that the people campaigning for ‘Hands of Hubbard’ are stark raving bonkers.
Vote:August 30th, 2010 at 8:28 am
Why receivership DPF and not statutory management?
Vote:August 30th, 2010 at 8:48 am
The tragedy is we are in a position where the taxpayer, as opposed to SCF feckless lenders, is on the hook here.
Vote:August 30th, 2010 at 8:48 am
Actually I don’t think Bernard is one of the few voices – there are quite a few, including Brian Gaynor, who pointed out this morning that the government had stepped in and bailed out only two companies before, Air New Zealand and the BNZ, both of which are considerably larger and more strategically important businesses than South Canterbury Finance.
The line from Federated Farmers and some others that receivership would result in some sort of economic armageddon for the South Island economy is absurd. SCF’s relationship with the South Island economy would be worth a tiny fraction of the whole. Receivership doesn’t mean the assets disappear. The financial arrangements simply get unwound in an orderly manner. That might mean some people lose businesses, but if they’d been able to pay their debts then we wouldn’t be in this pickle, would we?
The government bailing out this turkey – albeit a reasonably large turkey – would set an appalling precedent. Too big to fail? Not even close.
Vote:August 30th, 2010 at 8:51 am
No Bailout. We are a broke country borrowing $250MPW. Leaky homes, govt garentees for dodgy business models. Enough is enough. We the poor tax payer cannot afford this. Sink or swim on your own petard, don’t rely on the taxpayer.
Vote:August 30th, 2010 at 9:24 am
Capitalism used to be about the ability to fail. In crony capitalism you can’t fail. Time for National to show what kind of capitalism we have here. We are already borrowing to maintain our living standard, and spending the money of your kids is a sign of insanity. So I won’t be surprised when National does another socialist-lite accounting trick.
Vote:August 30th, 2010 at 9:25 am
Adolf et al. The Gummint can’t just pull the plug on the Deposit Guarantee Scheme into which qualifying finance companies and banks have been paying substantial premiums. It isn’t an open-ended bailout as some simple fools would describe, it is a commercial guarantee.
For the Gummint to fail in its backing of the scheme our sovereign rating would take a much much bigger hit. It is also the province of simple. ignorant fools to try and conflate SCF with Blue Chip etc. Those companies would never have qualified for the DGS so it does not compute.
Cast your minds back 18 months/2 years when there was enormous confusion and uncertainty about what might be going to happen. The newly elected government earned large dollops of praise for creating the DGS and for not bending to the trendies to try and out spend the depression we were in. It gave enormous confidence to the investing public and forstalled a number of collapses by pre-empting runs on finance company deposits.
Vote:August 30th, 2010 at 9:27 am
I want to give my money to Alan Hubbard because he’s a nice guy.
Yeah Right.
The sign of a good business person, is someone who can run a business in both good and bad times. THe stupid SCF investors were greedily chasing high returns off the back of non-sustainable dairy farm price increases.
Ah yes, but the investors will now get what they deserve for being headless chooks right? But no, the governmnet feels sorry for them and is going to give them my money
Vote:August 30th, 2010 at 9:36 am
Jeez, to those saying “no bailout!”, FFS the Govt has already bailed SCF out via the guarantee! So we are already obliged to bail them out it’s a just a question of how best the Govt can recover at least some money. Pretty simple scenario, but with complex options.
Vote:August 30th, 2010 at 9:37 am
@queenstfarmer : While you’re right, I think most are disagreeing with the guarantee in the first place.
Vote:August 30th, 2010 at 9:40 am
I am yet to see any guarantee anywhere in the world that doesn’t have weasel words.
They would be something along the line of if things are materially different from when the guarantee was given and that the scheme was entered into based upon false information then the guarantee would be null and void….I would bet that this is the case here. The government would be well within its rights to say that SCF didn’t declare its position properly and had it done so then it would never had got the guarantee.
Vote:August 30th, 2010 at 9:41 am
David said…
The Gummint can’t just pull the plug on the Deposit Guarantee Scheme
David, my argument is not about bailing them out now because it looked like that the government’s hands are both tied (legally – I assume), but I argue on who advised the government to approve such Deposit Guarantee Scheme in the first place? Socialize losses/failures (ie, get taxpayer bailouts), but privatize profits, this is a contradiction.
Vote:August 30th, 2010 at 9:43 am
No bailout. If required to do anything by prior agreement, do the bare minimum. Don’t encourage moral hazard.
Vote:August 30th, 2010 at 9:47 am
“Should the Government bail out SCF?”
No, tough luck.
Vote:August 30th, 2010 at 9:47 am
I understand the ‘Guarantee’ was making an overall profit up until now. Of course the Guarantee must be honoured otherwise the Government would indeed be Labour Like….Maybe the Chinese people who want to buy Crafer would be interested in taking equity in SCF.
Vote:August 30th, 2010 at 9:48 am
Bloody Keynsian economics distorting the economy again. The government thought it was on to a winner with recieving hundreds of millions in premiums from finance companies – it’s all different now that they might have to pay out.
Vote:August 30th, 2010 at 9:49 am
Should we also look at what we consider to be true “inflation” when setting interest rates. The housing bubble (and dairy farm bubble) showed what happens when interest rates are artificially kept low by ignoring the effect of inflation of housing and property asset prices. By accounting for housing and land prices in the inflation stats the reserve bank would set interest rates accordingly to suppress the market developing a bubble. What say those who know more about this than me?
It seems the government needs to protect its deposits guarantee scheme from greedy investors and managers in the likes of SCF, and controlling the interest rates appropriately seems a good means to do this.
Vote:August 30th, 2010 at 10:02 am
The government thought it was on to a winner with recieving hundreds of millions in premiums from finance companies
It thought it was on to a winner when it implemented the scheme. THe idea was not to make money out of the scheme.
Vote:August 30th, 2010 at 10:03 am
I would take Blubber Boy seriously if he were not running his own little SCF scam on the taxpayer via the benefit system. Haul yourself off the couch, earn yourself an honest living, then come back and tell us how to run things.
Vote:August 30th, 2010 at 10:03 am
So maxvp, if you are on the pension, trying to have your savings earn the rate of inflation is “greedy”. What simple-minded ignorant, envious, sloganeering,socialist tripe. These are not investors looking for double-digit super-earnings you twat. Try putting away your green tinged lenses and look at it for what it is rather than show your sadly ignorant bias.
Mind you it is probably a good discussion topic down in the welfare office queue. “greedy bastards…” ……. “deserve all they get” ….. “serves the rich pricks right”…… “bet they never got their hands dirty in their lives” …… “oh my turn, hic, gimme some more handouts, hic, I’m entitled to special assistance, the dog is starving, hic, I need new tyres on the Calais, the kids have no shoes .. hic … “
Vote:August 30th, 2010 at 10:03 am
Whether the workers bail out SCF or it is allowed to fail, the net effect will be the same…
A substantial loss in capital asset values. It either happens quickly or slowly.
And on top of that the rural part of the South Island that holds all these loans always has a holier than thou approach to most everything in NZ. You know, rural people look down their noses at non-rural. Rural people are more astute with their money and businesses. Rural people don’t really like “supporting” non-rural NZ.
Well, let the “backbone” of NZ show how strong its backbone really is. Or is it just supported with false paper money as it always decries of others.
chickens and roosts
Vote:August 30th, 2010 at 10:13 am
Lipo – For SCF it makes little difference. A receiver would be appointed by the trustees who act on behalf of the secured debenture holders ie the ordinary investors. It seems SCF is a reasonably self contained entity. With Alan Hubbard’s other investment vehicles, there are horrid tie-up’s between Alan’s personal finances and those of trusts. It might be that because of the way it was set up, any receiver might be acting in Alan’s interests rather than investors’ interests eg if Alan had lent the vehicles money with a higher ‘priority’ than other investors (I am not saying he did in this instance). Hence an initial investigation after an investor whistle blowed indicated problems beyond what a receivership could resolve, and so statutory management was indicated. Governments are extremely reluctant to pull the statutory management lever.
Another thing – Alan is complaining that the statutory Management was touching on him and his wife personally. Well, if he paid money from one of his investment vehicles, then what does he expect. As for his claim of offering a solution to the problem, this solution would no doubt be the subject of a Tui billboard.
Vote:August 30th, 2010 at 10:18 am
The more I hear about this outfit, the more I’m inclined to think Whaleoil may be right.
Has anyone stopped to wonder how on EARTH an outfit with such parlous governance and management was able to persuade the Reserve Bank, Treasury and Uncle Tom Cobley’s officials that it was worthy of a gummint guarantee?
Vote:August 30th, 2010 at 10:21 am
mavxp,
By accounting for housing and land prices in the inflation stats the reserve bank would set interest rates accordingly to suppress the market developing a bubble
The Consumer Price index already does. You have to keep in mind that the CPI is not a cost-of-living-for-an-individual index. It’s designed to measure the changing prices that consumers, in total aggregate, face when dealing with other sectors of the economy.
If you buy a new house or piece of land from a developer or builder, that’s in the CPI already. If I sell my house to you, there is a net-zero impact on consumers. What you pay is what I receive, minus the transactions costs with lawyers and RE agents. Those transactions costs are already included in the CPI too.
Vote:August 30th, 2010 at 10:28 am
No bailout, and no economic armageddon either. The ignorant are confusing a potential write down in the value of farms and economic earnings. The farms will continue to produce and Fonterra will continue to export so income is not affected. The debt owing may be more than the asset is worth and this will trigger a “one off” adjustment where the irresponsible lenders and borrowers will take a loss and new buyers could come in at a more realistic Asset price. Unfortunately these will probably be foreigners.
Vote:August 30th, 2010 at 10:38 am
Exactly grumpy, the very point I was trying to make earlier, but which you succeeded in doing far better than I did. Receivership will not mean economic armageddon.
Vote:August 30th, 2010 at 10:42 am
Thanks Auberon, Federated Farmers are a bunch of morons pretending to be businessmen – they aren’t. They are the sort of idiot, full of themselves as “land owning gentry” who by their thicko brand of business, have borrowed above the earning capacity of their land and by that the true asset value. The dairy farmers are about to get a dose of economic reality.
Vote:August 30th, 2010 at 10:46 am
Christ, this was bound to fucking happen, some of us wanted the cards to fall as they would when the shit it the fan, but no, corporate welfare was fucking needed for some.
I hope none of you right wing types whining that a TAXPAYER bailout is needed say a fucking word about solo mums in future .
Jeez, it was funny, those who were whining that banks etc needed to guaranteed, rather than letting normal business practice run it’s course, lend on over priced bloody farms, too bloody bad if the loans go bad and investors lose their money.
Vote:August 30th, 2010 at 10:49 am
I don’t know about Federated Farmers, you could be right, but certainly most actual farmers, and farming itself, are still the backbone of this country.
Sadly, the same is true for vast numbers of non-farmers. At least (most) farmers are primary producers and bring in the majority of NZ’s export receipts.
Vote:August 30th, 2010 at 10:50 am
vto Love what you said after listening to years of Southerners sneering at latte drinkers in Auckland – or Dorkland as they always so wittily say.
Vote:August 30th, 2010 at 10:57 am
queenstreetfarmer, you are correct as far as most “primary producers” go. Our traditional beef and sheep farmers (and old dairy farmers) were good businessmen and ran a conservative operation. However, the type of outfit financed by SCF are the worst of both worlds, pretending to be farmers but with the most atrocious livestock welfare practices, speculating with the hard earned savings of gullible investors, relying on a ready supply of already depleted Canterbury groundwater, while living in cities like Auckland, swilling lattes in Ponsinby.
Vote:August 30th, 2010 at 11:23 am
The question, IMHO, is solely how can the Government minimise losses to taxpayers?
The bailout of Air NZ was similarly criticised, and I was among the many who thought it was crazy, but the Government has made on the deal.
It’s now been trapped by the guarantee scheme that was forced on NZ by banks which said money would otherwise surge out of NZ to Australia and other countries which were implementing similar guarantees. It looks the only viable option for the Government would be to be at least part of a consortium to buy into distressed SCF and trade down losses over the next few years, or even perhaps turn a modest profit.
Re BeaB’s SI-aimed barbs at 10.50:
What some southerners will be asking is if a bail-out for Auckland-based Air NZ, why not for SCF? They will be asking why didn’t the SFO and the Government pounce as hard on latte-land’s Hotchin and Co as they have on Hubbard? They may even be asking if Auckland-oriented politicians are just clearing the way for a Chinese buy up of farm land to placate the big Asian party donors in Auckland? They may be asking how Natural Dairy boosting, SCF lambasting Hickey seems to be getting the inside leaks from Government-bureaucratic sources? They may be asking is he an observer or part of the team?
Re Grumpy at 10.40, you’re mostly right but the point now is not to save farmers caught by jumping into the dairy bubble at late stage, or banks, but to save taxpayers.
Vote:August 30th, 2010 at 11:25 am
Has anyone checked to see how much by way of fees SCF has paid to the gummint thus far for its guarantee? If the figure happens to be substantial then it shouldn’t be too hard to ‘sell’ politically the wisdom of letting it fall over so that new investors can pick up the assets. Don’t forget the real assets will keep on producing so there’s no real economic deprivation in the real sense.
Just a whole gang of dosy investors and stupid borrowers who will lose their shirts and start all over again, repeating their foolishness in twenty years time.
Vote:August 30th, 2010 at 11:27 am
Adrian Orr visibly choked when Guyon Espiner asked him what his opinion was on the SCF bailout on Q & A on Sunday morning TV1.Adrian quickly snorted no comment but unfortunately he went red before the next question was asked which gave the show away.Bill English was equally evasive on the same show, and Prime Minister John Key is also citing commercial sensitivity in not commenting but you don’t have to be a brain surgeon to know where the money is coming from, i.e. The NZ Superannuation Fund is going to be the source for the capital injection to maintain SCF liquidity in the short term although there could be an existing exposure that means that Bill English won’t be getting anywhere what he wants in the bailout.
Vote:The best deal anyone can get on the table is one where the Govt buys debt and equity but has a plan to divest itself of those assets in the medium term unless an Australian institutional investor is interested in picking up some of the action.
This will be only a temporary fix but will stave off a collapse and a writedown on NZ’s S & P Rating.
August 30th, 2010 at 11:33 am
The Grant Thornton report issued on 27th August was awfully short on detail except for one piece;
Vote:“Aorangi Investments lent money at 10% to Te Tua Charitable Trust. Te Tua Charitable Trust then lent those funds interest free to young sharemilkers”
Anybody who got more than 40% in fourth form bookkeeping could see that this was not on.
Mr Allan Hubbard pulled the wool over my eyes, and the eyes of thousands of others.
August 30th, 2010 at 11:35 am
Geez KevinH @ 11.27am, I hope not the NZ Superannuation Scheme. However, the Govt as a Venture Capitalist might do the trick, if we have to cover the secured creditors anyway perhaps buy Hubbard’s shares for $1 pay the debt and hock off the farms or get Landcorp to operate them alongside the Crafar farms. Might be a good investment for the Super Fund.
Vote:August 30th, 2010 at 11:35 am
Adolf F. posted at 11.25:
Of course greed for high interest lured in many SCF investors. But many others were put in by financial advisers etc, who rated SCF highly. I’m sure that many SCF investors would have stayed a mile away if they had known that the ex-banker chief executive Hubbard appointed had lent heavily to ACT-linked property developer David Henderson, well known in the south.
Perhaps SCF’s auditors and credit rating agencies are culpable as well. And did the Reserve Bank look, or have time to look, at SCF’s accounts and what lay behind them when it accepted SCF into the guarantee scheme? You couldn’t expect Government agencies designed to keep the market clean to look thoroughly at every finance company every month but surely they could have monitored the really big ones like SCF and some that have already failed.
Vote:August 30th, 2010 at 11:52 am
I see the issue as being quite simple:
The Government, rightly or wrongly, guaranteed SCF depositers.
Should the Government welch on that arrangement, international creditors would be perfectly justified in considering it a sovereign default.
Yes the deposit guarantee scheme was stupid me-too-ism from an NZ government desperate to appear to be doing something, but dont let annoyance at that blind you to the ramifications of reneging on the agreement.
SCF only got money from a lot of sources because of the guarantee. Money would not have been invested without it. Those people were taking advantage of the stupid rules set up by the government, and they have a right to expect the govt to keep playing by those rules.
Vote:August 30th, 2010 at 12:30 pm
I doubt if there would be many Pasifikan investors in there, so fuck ‘em. Y’all wouldn’t give a shit if it was a Pasifikan loans and investment scheme going belly up.
Of course the dipton dipshit being of good sth island farming stock and Key having blind investments in dairy won’t let the good whitefolk go under….imagine the rural backlash ?
Vote:August 30th, 2010 at 12:39 pm
Then of course their is the other alternative. Sandy maier made his name running the Statury Mangaers role for DFC. This could also be done here. That way losses are minimised and good may return. Who knows, but, listening to what he has said so far it seems he has anticipated that method of overcoming the issue.
Vote:August 30th, 2010 at 12:53 pm
Pollywog – of course it’s race related. After all, it’s the National party.
Vote:August 30th, 2010 at 1:13 pm
Pollywog posted at 12.30:
What the hell has race/ethnic group got to do with SCF?
If a Manukau Polynesian loans and investment scheme was guaranteed to the tune of hundreds of millioins by taxpayers and that scheme was in trouble, people would care all right.
I don’t think you can say NZ doesn’t care about Polynesian people, when we had a Prime Minister on her knees before a Polynesian family whose mother sadly died in a problem with an electricity company after an unpaid bill.
Vote:August 30th, 2010 at 1:20 pm
As someone already said at least Mr Hubbard is still here fronting up and is not lying on a foreign beach like all the rest of them. The ”banker” Mr Hubbard got in to run the place when he was ailing , who subsequently lent millions to Dave Henderson and of course money to himself , is still living in a beautiful part of the SI..he seems to be doing alright. When is Henderson going to get his dues?
Vote:August 30th, 2010 at 1:23 pm
This is the potential cost of letting it fail.
I would say that is the potential benefit of letting these activities fail. These firms are in financial distress because they have been mismanaged and resources are currently misallocated. Interest free loans is a great way to do that: in fact underpriced credit is at the heart of the US housing crisis. The sooner the correction comes, the faster those resources – land, people, capital, infrastructure – can be released to find their highest value use. The later the correction, which is inevitable, the deeper and more painful the correction, and for all the time in between $billions are simply burned. Bailing them out just keeps those assets in the wrong hands doing the wrong things. Having the taxpayer pay the bill just socialises the losses and damages incentives for responsible management.
Vote:August 30th, 2010 at 1:28 pm
What would be really interesting to know is how much money Hubbard was able to raise before and after the government guarantee became available, and how much investment was delayed until the guarantee came online. That is a direct measure of the cost of moral hazzard. Investors unwilling to invest “naked” as Bernard puts it suddenly became willing to enter into a deal in which they get the massive upside of risky investments is they came good and offload costs to taxpayers if it did not.
I wonder how much more the taxpayer is up for.
Vote:August 30th, 2010 at 2:33 pm
What the hell has race/ethnic group got to do with SCF?
If a Manukau Polynesian loans and investment scheme was in trouble, people would care all right.
I don’t think you can say NZ doesn’t care about Polynesian people,
Well going by the judiciarys response to all fraud and perjury claims by even ‘honorable’ Pasifikan businessmen and leaders, that is to say, if Hubbard were a brownie, he’d probably be in jail by now.
And that National can’t afford a rural voter backlash of it’s traditional core base of mostly white farm owners, especially given Bill English’s background and John Key’s blind investments, so of coures they’re gonna bail SCF out. It doesnt matter that people care or not. It’s the National gov’t deciding , like the Tuhoe renegement, to act in its own best interests to get re elected by pandering to whatever redneck issue suits it best.
I’m not saying NZ doesn’t care about Pasifikans, only that the National party and it’s self serving coaltion of minor parties doesn’t, despite the lip service.
Vote:August 30th, 2010 at 2:47 pm
Absolutely no fucking way should my tax dollars go towards bailing out this junk-rated mess.
Time to see what National are made of. I won’t hold my breath
Vote:August 30th, 2010 at 2:55 pm
Time to see what National are made of. I won’t hold my breath
National are hollow…remember ?
They’re made of hot air, held in by a malleable but thin, opaque teflon coating thats showing signs of wear.
i expect their bubble to burst quite soon, but like you, i won’t be holding my breath either.
Vote:August 30th, 2010 at 3:32 pm
“Time to see what National are made of. I won’t hold my breath”
Good. Because National MUST honour the guarantee. The time for you to complain was when the scheme was started. There is no point complaining about the effects in isolation. And demanding that they go back on their promise is about as stupid a thing as anyone can possibly say.
Vote:August 30th, 2010 at 3:57 pm
Pollywog posted at 2.33:
This is racist and wrong.
The SFO and statutory managers are going over Hubbard’s affairs with a microscope, and so far don’t seem to have found evidence he’s committed any crime. They will be trying bloody hard, because they are going to have egg on their face if they find nothing.
As for your reference to:
Do you mean that there should be a separate lower standard for Polynesian businessmen and leaders (presumably politicians)? Are you saying that the courts have got it wrong with these folk from the Polynesian community?
Rightly or wrongly (IMHO rightly) if you want to live and prosper in a Western society you have to adapt your customs and values to Western values and standards. Payments in cash or otherwise that may be seen in some societies as due tribute suddenly in the West become bribes.
It may be true that different waves of people and cultures figure in certain types of crimes – whites in commercial stuff such as fraud, and others in violence, others in drug importation or kidnapping. That doesn’t mean the justice system itself is discriminatory.
Vote:August 30th, 2010 at 4:03 pm
Further in response to Pollywog: weren’t some of the criminal cases you allude to started by complaints from Polynesian Aucklanders?
Vote:August 30th, 2010 at 4:12 pm
As I did, vociferously.
And demanding that I, as the kiwi taxpayer, bail out junk rated securities and naive investors, is about as stupid a thing as anyone can possibly say.
Why should the taxpayer prop up rubbish companies and moronic investors? If I buy a house, and the housing market declines, should I expect the government to pick up my capital loss?
I realise that National has passed the DGS into law, doesn’t mean I have to like it Kimble. There are some of us here with actual free market beliefs, believe it or not. Sanctimonious wanker.
Vote:August 30th, 2010 at 4:17 pm
@nickb SCG presumably paid their fees to the Treasury, they (or rather their depositors) are entitled to the protection. It was unecessary of the government to offer the DGS to finance companies, and as events have shown, extremely unwise, but they did it.
I guess SCF goes into receivership, the receiver makes the guarantee demand and the Crown ends up (by right of subrogation if nothing else) effectively owning all the SCF assets.
Vote:August 30th, 2010 at 4:17 pm
Do you mean that there should be a separate lower standard for Polynesian businessmen and leaders (presumably politicians)? Are you saying that the courts have got it wrong with these folk from the Polynesian community?
No i’m saying the standard of punishment for fraud and perjury should be applied equally to everyone based on the standard to which Pasifikans are held to.
For instance, Bill English lied about his primary place of residence to claim hundreds of thousands of taxpayer money in accomodation supplement for an MP living out of town, then tried to hide his ownership of the house he was paying rent on, and claiming for, behind a family trust he would have us believe he was no longer was a signatory to.
That’s clear cut fraud and perjury and i would have had him up in a court and jailed the prick. If he’d been Taito Phillip Field he woulda gone to jail for it.
Vote:August 30th, 2010 at 4:20 pm
Pollywog, re your 4.17 post attacking Bill English.
Bill English’s wife is half-Samoan. His children are quarter Samoan. It’s a Polynesian family, at least under the “one drop” (of blood or genes) that Ngai Tahu use.
Brush the chip off your shoulder.
Vote:August 30th, 2010 at 4:24 pm
You would think National may have learned from the folly of Bush and Obama, unfortunately, no.
Indeed. By the looks of things SCF are manouevering to try and get Cabinet to agree to quarantine all the rubbish in a “bad bank”. Just what the country’s balance sheet needs.
Vote:August 30th, 2010 at 4:40 pm
Interesting to see such a fuss about something which should be routine.
It’s difficult to find in the gummint accounts to May 2010 and years prior any information as to how much has been received by way of guarantee fees.
However it is possible to see that provisioning has been made in the current financial year for $877 mil losses under the guarantee scheme. These losses are described as ‘net losses’ so presumably the immediate payout would be in the billions with partial recovery from sale of assets. Interesting also to see the total liabilities under the scheme are in the region of $133 billion. Now THAT would make Blenglish’s eyes water.
If that is correct then it would seem the projected net loss of $250 mil from the winding up or winding out of SCF is well and truly provisioned for already.
I just wish they could be left alone to get on with what must be done without all the hype.
Vote:August 30th, 2010 at 5:02 pm
Bill English’s wife is half-Samoan. His children are quarter Samoan. It’s a Polynesian family, at least under the “one drop” (of blood or genes) that Ngai Tahu use.
Brush the chip off your shoulder.
Couldn’t give a shit what ethnicity his wife is, but i thought she was Cook Islander ?
Fact is, he lied and defrauded the taxpayer out of money he wasn’t due and got off scot free with it and when it comes to being equal in the eyes of the law, some are more equal than others.
And the National party will do what’s in it’s own best interst and when it comes right down to it, fuck what the people think…
Vote:August 30th, 2010 at 5:10 pm
This story makes my head spin:
http://tvnz.co.nz/business-news/govt-must-buy-into-scf-greens-3748139
The Greens support crony capitalism? Their anti-corporate shrieks will sound a bit hollow in future
Vote:August 30th, 2010 at 7:58 pm
This isn’t about SCF this is politically, about what they’re doing to Hubbard.
Like it or not, Hubbard has a reputation akin to the late Sir Ron Trotter, in his own way.
I know him only by reputation, but what I’ve seen so far, is the govt leaping in with preconceived ideas that some i’s and t’s weren’t correctly dotted, in triplicate.
Yes, I know it’s not quite like that but that’s the general picture. The point no-one seems capable of asking is: who knows whether anything would have happened if Hubbard had been allowed to continue with some quiet, unspoken, unofficial, unpublicised, oversight. He seems a man who operates not necessarily according to 2010 financial regulations, but that doesn’t make him a cowboy, and it doesn’t make it automatically fraudulent or otherwise financially fraught. You don’t build a South-Island equivalent of Sir Ron Trotter’s reputation without getting significant consistent visible and real results.
I know that right now, Hubbard’s lawyers at Russell McVeigh will be picking over the entrails to discover precisely what was in play at the time Power made his announcement and since he lost control. I personally aren’t interested in understanding only the nether regions of only the govt’s side of this fascinating story.
I’m surprised at some of those above who appear already to have decided.
Vote:August 30th, 2010 at 8:19 pm
“Why should the taxpayer prop up rubbish companies and moronic investors?”
Umm, because they SAID THEY WOULD! And moronic investors? The government was giving away free money, you cant blame people for jumping at the offer. They were getting what was effectively government stock at finance company rates!
“…preconceived ideas that some i’s and t’s weren’t correctly dotted…”
You mean like the i’s and the t’s in “proper accounting procedures”, “accurate valuation”, and “investing in line with investment mandate”?
You are making a fool of yourself on this one, reid.
“who knows whether anything would have happened if Hubbard had been allowed to continue with some quiet, unspoken, unofficial, unpublicised, oversight”
Google: Ponzi scheme.
Can you tell us how people were being paid by Hubbard? Hubbard couldnt.
Can you tell us how much money people had invested with Hubbard? Hubbard couldnt.
Can you tell us whether each investor was being treated equally and fairly, no matter when they invested? Hubbard. Couldn’t.
How about an easy one? How much of the money invested by Hubbard in the scheme in question was invested in other Hubbard ventures?
Or it that a pointless question? Is Hubbard investment mandate whatever Hubbard says it is?
Vote:August 30th, 2010 at 8:27 pm
“You mean like the i’s and the t’s in “proper accounting procedures”, “accurate valuation”, and “investing in line with investment mandate”?”
I wondered who’d be the first to pick up on that one, Kimble.
No seriously. I know from media reports the finance web he’s built isn’t operable. That DOESN’T necessarily mean that it wasn’t operable had things panned out the way I suggested above.
Now I don’t know if that’s true, or not, and neither do you. And if you’ve already made your mind up after knowing about 1/10th of one side of the story, then I suggest you reconsider.
My main point is that this is a potential political shit-storm of biblical proportions, being that it’s in National’s Heartland and all. What Power was thinking, I have no idea, but so far, I’m not impressed with his perspicacity.
Vote:August 30th, 2010 at 8:28 pm
If South Canterbury Finance is taken over by the government might I suggest a new manager.
Vote:What we will need is somebody with a knowledge a cabinet procedures, a knowledge of the Treaty of Waitangi and a good knowledge of running a finance company.
Arise, Sir Douglas Montrose Graham.
Yes, I know it is the worst form of wit.
August 30th, 2010 at 9:06 pm
“What Power was thinking…”
I am just happy that he didnt let political “realities” get in the way of doing the right thing. That was the modus operandi of the last crowd.
Even if nothing is found untoward, it is RIGHT that business was stopped and an investigation launched. Fraudsters can be nice old people too.
Vote:August 30th, 2010 at 9:23 pm
I don’t agree with the guarantee scheme as it is, but how the hell did it get to include not only paying back investors their principal but also the interest.
Surely the scheme should only protect the base investment and if you don’t make any interest then bad luck.
This is creating finance companies into banks. Everything is guaranteed including your return and you get a higher rate.
Vote:August 30th, 2010 at 9:50 pm
“Even if nothing is found untoward, it is RIGHT that business was stopped and an investigation launched. Fraudsters can be nice old people too.”
Crikey Kimble what the hell does any of that have to do with this?
Point is:
Fact one: Hubbard has never put a foot wrong, ever, having been engaged in universally successful business ventures for [google the number if you give a shit] years.
Fact two: Not only has Hubbard put not one foot wrong ever, he’s done what very wealthy people rarely achieve, and that’s become known as a genuine real life go-to person when you need help, and he’s always apparently, delivered.
Fact three: This is NOT a commercial issue it’s a POLITICAL issue. Sorry to shout, but it’s the third time I’ve said it. The real fallout will come when the Nats find the South Island traditionally Nat votes, vote them heavily down in 2011, because of this. That’s the fallout that matters.
Apart from the fact an innocent decent man of honour’s reputation has been destroyed, but who cares about that, these days?
Vote:August 31st, 2010 at 1:20 am
With regard to SCF: It’s a pity that so much (if not all) of the focus has been placed on Alan Hubbard, this has allowed the poor management, ex-CEO’s etc who were largely responsible for most of the poor lending to slink off into the background …
Vote:August 31st, 2010 at 8:02 am
So it appears somebody lied in overstating SCF assets by 25%, and if the gov’t bails them out to the tune of hundreds of millions then there will probably be criminal charges laid and what’s the bet no one goes to jail for it ?
Hah…who am i kidding, there wont be any charges laid. Rich Whitey always look after their own.
Vote:August 31st, 2010 at 8:57 am
@reid
So he did nothing wrong, was a good businessman and the taxpayer could lose 100′s of millions of dollars.
Are you suggesting it’s all a big conspiracy?
Your logic is like saying ‘the flight was perfect expect for the crash at the end’.
Vote:August 31st, 2010 at 9:33 am
Reid..the Nats are already very much on the back foot in the SI over Ecan , support for Parker , the Hendo buildings etc An Ecan staff member says in the press today that the issues surrounding ecan were starting to die down until Key sent out what is basically an electioneering pamphlet..two photos of him etc..calling it a survey..etc This has caused much more outrage , telling Cantabs he wants to hear their views having only so recently totally ignored them. The pamphlet makes some in the party look desperate. It is also very patronising. Desperate at this point is not good look.
Vote:August 31st, 2010 at 9:40 am
looks like we’re paying 700 million bucks, at least, to hubbard and his bunch.
Joy!
I’m really angry. I’ve just paid a bunch of provisional tax.
The lesson for me, let fools and their money be parted. I am the fool, being a NZ taxpayer.
Vote: