SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMC NEWS

TMCNET eNEWSLETTER SIGNUP

PETERS FLAYS FAY AND RICHWHITE IN PARLIAMENT
[June 19, 2007]

PETERS FLAYS FAY AND RICHWHITE IN PARLIAMENT


(New Zealand Press Association Via Thomson Dialog NewsEdge) Wellington, June 20 NZPA - NZ First leader Winston Peters yesterday basked in the glory of the record $20 million settlement by Sir Michael Fay and David Richwhite.

A business owned by the men, Midavia Rail Investments, made $63 million selling Tranz Rail shares in 2002. The Securities Commission accused the company of insider trading and said Mr Richwhite, as a Tranz Rail director, tipped off Midavia when to sell because he knew of financial problems not in the public domain.

Commerce Minister Lianne Dalziel congratulated the Securities Commission and said they took the fight with ``guts and gumption''.

Once other defendants were taken into account, the settlement was a record for Australasia at $27.7m.


Mr Peters was allowed a snap debate in Parliament on the subject and used it to flay those who he said failed to act earlier. He also criticised previous National Governments under whose watch the events occurred.

``They (Sir Michael and Mr Richwhite) had an insatiable greed and in satisfying it they corrupted New Zealand politics and New Zealand politicians and there's no way out of it,'' Mr Peters said in Parliament.

Mr Peters has held a long-running crusade against some in the corporate sector including the two businessmen, over actions in the 1980s and 1990s and has expressed anger over what he says is a lack of action.

Mr Peters invested time, money and political capital in pursuit of some of the cases, most notably the Winebox case where he accused Sir Michael, Mr Richwhite and others of an elaborate tax evasion scam.

Mr Peters said in Parliament the businessmen were ``guilty as sin'' and had profited from a string of transactions ranging from their involvement in the BNZ, which subsequently had to be bailed out, to the Winebox inquiry.

He also hit out at Inland Revenue and the Serious Fraud Office saying they chose not to act.

Mr Peters accused National of being influenced by the businessmen and that it ``covered up for their mates''.

National could have prevented the debate but permitted it to go ahead.

National deputy leader Bill English pointed out that allegations Mr Peters made had been subject to legal scrutiny in the past.

``All these activities he referred were subject to the scrutiny of the law. Our legal institutions have always been as independent as they need to be, our regulators haven't always ...'' he said.

Mr English said all that Parliament could expect was for the law to be properly applied.

``In this case the Securities Commission has done so, and every person in business in New Zealand who is subject to our commercial law should be able to expect a fair hearing and in this case they have had to accept a stiff penalty.''

Mr English said regulators as final decision makers had to be backed and he urged colleagues to defend them to constituents.

``The business environment in New Zealand will work well and won't be over regulated if business accepts that regulators are the final decision maker; that if they have provisions for penalising then they'll use them and that on each and every occasion they will be backed by this Parliament.''

Mr English said the case showed no one was immune and regulators had to be taken seriously.

Reaction from securities law experts was positive.

Peter Ratner of Wellington legal firm Crengle, Shreves and Ratner said the settlement would deter insider trading.

Some commentators have criticised the settlement for failing to get an admission of liability in a precedent-setting case, saying that the pain was still less than the gain.

The risks of prosecution in inside trading were slim, therefore punishment should be heavy when transgressors were caught, they said.

But Mr Ratner described the settlement as extraordinarily sensible.

``Do the maths. No one out there is going to believe that these people are innocent. You don't settle for $20m if you don't believe you have a significant exposure.''

He noted the commission had already been precluded from claiming the $100m pecuniary penalties it had originally sought because of a (now amended) two-year statute of limitations.

As a result, the regulator was only seeking around $25m from Mr Richwhite and Midavia and, given the uncertainty of insider cases, there was a high risk they would get nothing, he said.

Former commission member Stephen Franks said insider trading cases were notoriously difficult to prosecute because judgements had to be made on what was in people's minds.

Lawyer for Midavia and Mr Richwhite, Bell Gully partner Roger Partridge, said the final amount was at a level at which it was more attractive to settle than continue fighting litigation. The case was not scheduled to go to trial until June 2008.

``It is also at a proportionally lower level than the settlements the commission reached with all the other defendants,'' Mr Partridge said.

``The fact that the commission was prepared to settle for substantially less than the full claim and without any admission of liability no doubt reflects the commission's recognition that it faced a risk of losing if the claim went to trial.''

NZPA PAR mt sml ob

Copyright 2007 New Zealand Press Association, Source: The Financial Times Limited

[ Back To TMCnet.com's Homepage ]






Technology Marketing Corporation

35 Nutmeg Drive Suite 340, Trumbull, Connecticut 06611 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2017 Technology Marketing Corporation. All rights reserved | Privacy Policy