At some stage an inquiry is going to have a look at the government’s actions in the Hubbard group case.
I don’t want to get into too much detail while there are ongoing investigations, and hopefully even new investigations to be opened.
and on Power :-
don’t think he had a real choice. Received advice. Could not ignore it in my opinion. Needed to pass regulation. Then it must be announced and he was Minister responsible. Statutory management can never be a secret.
Bernard Hickey got into the Hubbards yesterday. He asks some fair questions.
But the blogger who has got closest to the core issue is Cactus Kate. She points out :-
Bill English is incorrect (well let us face facts – teling porkies) in this interview. The taxpayer did not have to pay SCF anymore than they would have had to for Hanover or Blue Chip. SCF took deposits for and moved $700m (or 41% of total) of their lending to more risky criteria even into the the hyper-risk of mezzanine lending. They breached the guarantee and their own CEO said so.
It seems that English knew that SCF did not meet the criteria when its guarantee was renewed. If that is the case he is gone.
Hi
Is this NZ’s re-run of the financial collapse in the US and the cascade along the chain of interlocking toxic financial instruments and bad financial practices.
Bill English has bailed out a financial corpse with taxpayers’ money – compare US. Do we stand a chance of getting our money back from over priced financial assets?
But look! For all Bernard Hickey’s ’say sorry Allan Hubbard’ palava, his article gives the game away. What were the financial press doing during Hubbard’s long career of curious business activity (500+ registered companies…). Offering 8%+ when banks were offering far less…
It’s all ‘we didn’t see it coming’ – now where did I hear that before?
And who’s done well out of this? Financial institutions, of course. And who’s paying? The heavily-burdened-low-income tax payer, paying tithes to better off financial speculators (’nice people’ who think they’re investors) who were playing the system and placing risky bets.
Wait for it. It will be the poor that gets the blame. We’ve got an election coming.
Jim
About time someone from Labour brought this up
Regardless of party affiliations there are some questions that need to be asked (and answered!)
All off thread earthquake comments deleted Trevor
See above Trevor
T.M. – how could English be forced out? I’m wary of the NAT’s usual combo of, smile/spin/wave which seems to have the average person on the street properly distracted.
See above Trevor
See above Trevor
See above Trevor
See above Trevor
See above Trevor
Kudos to KC on her posts around here, they’ve been really useful for me crystallizing my unease over all this mess. Heads should roll…
Please Labour don’t drop the ball on this one. And don’t let Winston Peters get there before you. There are many of us who can smell the stench and with the facts starting to emerge, we expect Labour to be on the front foot – RIGHT FROM THE START.
The fallout over the SFC bailout has spanned the political divide; putting the Government under its first real “stress-test”. Labour nevertheless still needs to take care with the one. However it is likely to be a metaphorical “burning coalmine” for the Government; one that will politically smoulder and burn for many months ahead as the facts come rolling out…
Two things go together here: the forensics of the intervention, and its political management by National. Both provide Labour with ammunition to challenge National’s judgement and political positioning.
Thank you Trevor for finally addressing this issue. On what little evidence we have available and given National Ltd™’s mendacity when it comes to numbers there is little doubt that a full and open investigation into this is required. For a start, lets have the names of the foreign investors for whom John Key bent the rules to ensure they received tax payers’ money. We only have the government’s word that it was necessary for this to happen but show me the paperwork.
I will tell you this, there are a lot of myths surrounding SCF at the moment. A lot of half truths, a lot of it caused by the government.
Also Hubbard is not really responsible for the bad debt SCF has incurred. He has been sideline in the company for about 3 years.
It was the previous CEO who was put in charge while hubbard had health problems (cancer and kidney failure). Hubbard let got of the reigns and was out the loop for a while.
The previous CEO was well, dodge and incompetent.
So from what I understand the previous CEO lent a lot of (SCF)money to his “associates” (mates). Alot of his “associates” projects where high risk and the money was lent at low interest rates with easy terms.
I think Hubbard wasn’t to pleased about the whole thing but… the board end up sidelining him when he tried to bring things back under control.
The previous CEO also brought a few of his “associates” from his last job and gave them important jobs at SCF.
It other words SCF ended up, weather Allan liked it or not, like every other finance company in NZ (Hanover etc..)
When SCF got the GG they (Directors and Senior Management) went nuts and lent willy nilly (more dodge lending). Seeing the GG the goverement would fit the bill if the screwed up. So the became complete reckless, they would already bad but it got worse.
Of course during this time Hubbard had recover from his ill health and caught up with what was going on. But the other directors sideline him, so he was a lame duck when it came to the running of SCF. He had no real power or influence.
The previous CEO had all the right “tickets” (qualifications) but very little actual experience in running a finance company. I think Hubbard put him in because he thought he could control him/keep him in line/influence him and would do the right thing! I dunno really why… but in either case it didn’t work the way Hubbard wanted!
Sandy Maier and Bill English aren’t tell the whole story.
There a whole lot more going and in not being said.
aorry but wasn’t Bill just paying out on the guarantee created by Michael Cullen, who I believe was the Treasurer under a Labour govt at the time,
Old story-profits go to the share holders, losses get landed on everybody else. No surprise that a right wing government expects us all to carry the can, but not expect taxes from their mates when the profits are big. National’s handling of the guarantee scheme has been a hugely expensive disgrace.
Yes! One of the simons has made his name different
Bill English just paid NZ’s very own Wall St bail out. The exact same blue print of ordinary wage earning tax payers covering the losses of rich speculators.
Cullen made the rules to protect ordinary citizens, Bill and John ran the rules to benefit high finance capitalists.
English has dumped $1700M into high flying investors’ pockets while saving a couple mill here and there by cutting back Early Childhood Ed, night classes, home help for the elderly and taxes for the rich.
Tories never change.
Yes, and wouldn’t it be interesting if we could find out who these ‘high flying investors’ were, and something about their backgrounds – particularly financial. I think this could be where the bad smell is coming from.
Agreed
@Insider
It was Blinglish that let them in to the scheme when it was already known that there were questions about there dealings. As I understand it, it was a political decision.
I suggest you check out The Standard if you want the low down on the low down pondscum billionaire, one of many, who gained from his mate Bill English.
PS
http://thestandard.org.nz/nzs-biggest-welfare-beneficiary-revealed-in-shock-horror-herald-exclusive-expose/
Yes this is all rather unsettling
http://thestandard.org.nz/scf-bail-out-gets-much-much-murkier/
And the investigating reporter from the main media – where are they
English will survive SCF if Labour let him off the hook.
I’ve had a chat to a few people about the SCF issue, all are very angry about the interest pay out but not about the scheme in general…
So unless something really salacious comes out – no English is very safe…
I also don’t see how Labour can make hay out this issue as Clark and Cullen introduced the initial scheme…
Wibble!
@ JMH
If you read all the material on The Standard, you will find that SCF didn’t actually meet all the criteria laid out in the initial scheme. But Bill English still went ahead with the guarantee. So you can’t lay any of the blame at the feet of the Labour government.
I’ll end up a communist…
I understand the point but there are questions to be asked that the Standard, as biased as they are, aren’t interested in:
- Did English merely tick off an underlings recommendation..?
- Was there any incompetence below English that lead to SCF inclusion..?
- Was there any fabrication from SCF accountants, lawyers and auditors..?
- Was the decision political; i.e. SCF is in because it’s “too big to fail”, rather than the corrupt decision – SCF is in becuase the ill defined “friends of the National Party” are invested..?
I’m not buying the payout was corrpution – just incompetence and given the performance of Nick Smith, Gerry Brownlee and Steven Joyce – hell 75% of the Cabinet so far this term that rings true to me…
because this is about the waste of not just tens, but probably hundreds of millions of dollars, at a time that the Govt is cutting social services, health, education to save a comparative pittance.
And that many of these dollars are going to rich investment interests who should be taking a sharp haircut on their speculative activities but are instead being bailed out 100 cents in the dollar by the tax payer.
It seems the Righties don’t mind nanny state looking after them when they get to keep the folding stuff. Pallet loads of it.
And how much is $1.7B worth?: Approx. 4 Te Papa museums. 45 provincial hospitals able to serve a regional centre like Timaru. 70 F-16 fighter jets. Salaries for 4,000 nurses for ten years.
Thanks Bill, NZ’s very own Wall St Bail Out.
Irrelevant, I daresay.
The Captain is responsible for the conduct and competence of his crew.
The buck stops with English.
Negligence and incompetence causing material loss is punishable in any line of work, yeah?
Well I’m not in favour of any bailouts – not the US one(s) or this one but the government didn’t have much choice – it was legislatively backed into a corner…
Yeah sure and the government will take a few lumps over this at the next election I’m sure but enough for English to lose his portfolio..? Hardly…
Are you really serious?
With $1.7B in tax payers’ funds at stake don’t you think that it would have been worthwhile to seek a second legal opinion? And a third. And a fourth.
But no, English reckons lets pay out 100 cents in the dollar first and ask questions later.
Not interested in the Govt taking a “few lumps” mate this is $1.7B in waste we are talking about here not $170 spent in flowers and porn spent on a Ministerial credit card, it is $1,700 million, all the while they make the frail elderly live and struggle in untidy filth.
Perhaps falling on a blunt sword would be suitable.
Yeah, I hear more home help cuts are on the way!
!
Who cares about Hubbard and English? Balance trolling Warning another ban next time Trevor
You guys are AWARE that George Kerr has made money from the fall of SCF, he invested in SCF cheaply is the first to be payed out and is creaming it. He has strong ties to Brotherway (Sec com) and John Key. That much I do know.
Trevor, I hope you bring this issue up next time your in parliament. It need to be address.
I bet you a few other Key mates are making money out of this to. This isn’t about saving the economy this one about saving nationals mate, making sure the can make money of the TAX payers back.
@Red under the Bed
Its not surprising John Key does know these types of people, after all hes a successful, self-made man
But insinuating corruption is a pretty big leap to take
Yeah, saving National’s mates is right, saving them from having to make do with the V8 S-Class, now they can properly afford the V12 model.
What vain self serving lies.
John Key our PM is a man who grew up with the support of, housed and educated by tax payers. By the proud NZ social welfare system.
And what do you and he do now?
Tell lies about being “self made” while kicking the ladders away for other less fortunate NZ’ers.
One day very soon everyone is going to know about it mate.
@Chris
“Its not surprising John Key does know these types of people, after all hes a successful, self-made man
But insinuating corruption is a pretty big leap to take”
I’m not suggesting HE knows these PEOPLE. From what I know, him and Kerr are a bit more involved than that. They have shared a few directorships and had a few business dealings together, and it the same thing with Simon Brotherway.
Kerr was one to invest $100 million in SCF now hes going paid out plus creaming it, he also the first in line to get paid out. He got a good interest rate and he help invested in SFC bad debt. The government didn’t have to bail SCF they way it has done.
Also I didn’t say KEY was corrupt, Im just saying this issue need to be brought to attention. For all we know it Key wasn’t aware of Kerr involvement in SCF (unlikely give the amount of press when kerr got involved with SCF).
I look to note Key is successful but not a self-made man.
@Loota
That statement below is dam true.
Thumbs up
@Red under the Bed and Loota
How many thousands (tens, hundreds?) of people have been in John Keys position
How many have been in better position?
Yet look at what hes done, where hes gone, what hes achieved
The way you guys make it sound (tall poppy syndrome?) what he did was no big deal…
Having said all that IF there is something dodgy going on then we need to get to the bottom of it
Chris73
Don’t you believe corruption exists in NZ politics.
What is wrong with voicing it.
Remember how “Corrupt” Helen Clark was autographing a painting.
Me thinks your tender spot needs explaining.
“How many thousands (tens, hundreds?) of people have been in John Keys position
How many have been in better position?
Yet look at what hes done, where hes gone, what hes achieved
The way you guys make it sound (tall poppy syndrome?) what he did was no big deal…”
The irony is, what about Mr Hubbard, he was even worse off than Key ever was (didn’t have the welfare states back in his day) and did very well, until this came along.
Also, key wouldn’t be where he was to do with the help of others! He got a scholarship, he and his family had help from the welfare state. Plus it helps NZ is a classless country so nothing hold against you simply because your poorer or from the lower classes.
He makes his up bring sound like the pits, but I envy an up bring like his. It sound pretty good to me. I didn’t have half of that.
Mind you, I would envy most peoples up bring.
Well lets ask Helen if she did…
He actually paid out 108.5 cents on the dollar, it’s the 8.5 cents that have got most people annoyed… The case for corruption doesn’t stand up on the balance of probabilities…
Its not corruption JMH, its judgement. When the ODHB is cutting back home help for the frail elderly to try and save $2-3M p.a., what the hell is this Govt doing spreading largesse around the asset rich? Forget the 8.5 cents, the big investors should be taking sharp haircuts on their speculative high return investments, and they should be willing to wait 5-10 years to get all their monies back.
You think Helen Clark had something to do with this $1.7B bail out from her UN office? This card game is not a Bill and John operation?
And by the way I was only responding to your idea that the Govt was being legislatively forced to pay out $1.7B as if they had their hands up in a bank robbery.
A fitting analogy, except I suspect they also know all the perps.
Labour introduced the scheme – it’s a fact, trying to cloud the issue doesn’t change the fact that they did so when over $10,000,000,000 of mainly wealthy people’s money was at much greater risk than when scheme was rolled over (National dropped all but 8 institutions off, from memory MARAC and SCF were the only finance companies to stay – seen as too big to fail is why I’m gueesing) – the whole Finance sector was looking likely to fall over, nobody could predict how far the economy was going to fall, if it had and Labour had paid out $10,000,000,000 to wealthy people would you calling for Cullen’s head..? I highly doubt it… That the current government is legally required to pay out all monies (sadly including interest) is the law, what happens to economic confidence if they don’t pay out after guaranteeing they would..?
I believe the main reason SCF was included was because it was seen as “too big to fail” and it was believed that the South Island might drop into a deep recession if it was allowed too, I don’t happen to agree but claiming it’s a National Party conspiracy to defraud the public to pay out “rich mates” doesn’t stand scrutiny…
It really is hilarious, the government is damned if they do or don’t:
- People complain there wasn’t enough money being made available for stimulus and wanted the government to spend billions more a year and now it has paid out billions to “mom and pop” investor, elderly people’s saving and wealthy people’s investments – much of which will be used and invested, i.e. stimulus and it’s theft… People are happy for billions of borrowed money to go out as long as it’s to the people and projects they approve of and if not – corrupt theft
- From looking at reports of the loan book it seems at least 50 large SI farms and 25% of a company that held another 100 or so would have gone on the market in a fire sale if it collapsed and then you can be sure the Standard and most likely this blog would be banging on about foreign land sales and how could the government let it fail
- If it’s about protecting National’s rich mates why did they not bring in the Stat Managers in Hotchin’s, Watson’s and Hobb’s (to name a few) finance companies..? Hotchin’s fortune dropped from $400 m to $80 m and Watson’s halved to $250 m, Hobb will lose most of his plus all their wealthy investors lost…
It’s just crazy to suggest this was robbing poor Peter to pay rich Paul…
You’ll notice Labour hasn’t tried to make much hay out of this, Goff is smart he knows any questions asked will be turned back on Labour about the scheme under them and why it was introduced at all, I suggest you take off the red tinted glasses…