Air NZ sees off foreign accuser

By DANIEL RIORDAN

Australia's top securities regulator has grudgingly decided against prosecuting Air New Zealand over last year's collapse of Ansett.

The decision will go some way to placating local market regulators whose noses were put out of joint when the Australian Securities and Investments Commission (Asic) began its investigation in March.

Asic chairman David Knott said he could not rule out the possibility that Air NZ's level of financial disclosure of its forecast losses, and those of its subsidiary Ansett, for the year to June 2001 may have been misleading or deceptive under Australia's Trade Practices Act.

But he said it would be too expensive and risky to prosecute the airline.

Only a minority of investors who bought shares in Air NZ were likely to be able to prove they relied directly on Air NZ's conduct and lost money, the commission said.

Also, the regulator would have had to represent each investor's claim against the airline separately or as several actions on behalf of different groups of claimants.

The commission's decision to investigate stunned many on this side of the Tasman.

The Stock Exchange's Market Surveillance Panel had already cleared Air NZ over its level of disclosure, and the Securities Commission was nearing the end of its own investigation into circumstances surrounding last year's crisis. The commission in April cleared Prime Minister Helen Clark of insider trading in Air NZ shares.

Ansett, Australia's former No. 2 carrier, collapsed in September and was placed in administration, owing its employees A$779 million ($899 million) and unsecured creditors more than A$2 billion ($2.3 billion).

Air NZ spokesmen could not be reached for comment last night.

Stock Exchange chief executive Mark Weldon described Asic's decision to close its investigation as "sensible and welcome".

Act MP and insider trading activist Stephen Franks, whose wife had brought the insider trading case before the Securities Commission, said the outcome was good for Air NZ and the country.

"It was a very bizarre chapter anyway, because if the Australians had brought action against Air NZ they'd have been saying they disagreed with the decisions of the Stock Exchange and the Market Surveillance Panel."

The Securities Commission declined to comment last night but said it was considering responding today.

Finance Minister Michael Cullen also declined to comment.

Asic interviewed more than 350 parties who said they lost money over Ansett's collapse.

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