Clark's Air NZ comments inappropriate, not illegal

Prime Minister Helen Clark's call on Air New Zealand shareholders to hang on to shares as the airline plunged deeper into crisis was inappropriate but not illegal, an inquiry has found.

A six-month-long Securities Commission investigation released today concluded that comments by Miss Clark and a former Air New Zealand director Greg Terry were within the letter of a "difficult" to interpret law.

"The statements did not breach the law. However they were not appropriate given the status of the people involved and the intense public interest in Air NZ at the time," commission chairwoman Jane Diplock said.

Last September Miss Clark told journalists that shareholders should hang on to their shares as she was confident about the future of the airline in some form.

At the time the Government was considering whether to put Air New Zealand into statutory management or bail out the airline.

It eventually bought more than 80 per cent of Air NZ, the cost of which will eventually rise to more than $1 billion.

The report said the prime minister "was at the time an insider of the company".

"She is an influential figure whose statements are accorded significant weight by the New Zealand public.

"The prime minister's responses should have distinguished questions about shareholding from issues of confidence in the viability of the airline's business."

The commission came to the same conclusion about Mr Terry's comments in September that Air New Zealand shares at "30 cents could bounce to 60 fairly quickly if there was an announcement that it (Air NZ) will continue and it will continue with full support".

The commission said the cases had shown the law concerning tipping -- where an insider tips someone off with information -- raised "difficult questions".

"They highlight the tension between imposing liability only where tipping was intended, with the consequential problems of proof, and attaching liability where the tipping was not intended. We consider the uncertainty created by this to be undesirable," the report said.

The commission also found no evidence that the prime minister's staff approached broking houses about possible steps to be taken by the Government in relation to Air NZ.

The report said a phone conversation between Miss Clark and an Auckland stockbroker may have grown in the telling as word of it spread.

Miss Clark and Finance Minister Michael Cullen said in a statement they "welcomed" the report.

They said a recommendation by the commission on the need for guidelines for ministers when they talked about listed companies was "timely".

Treasury had put protocols in place about the Crown's role in Air New Zealand and wider guidelines were already being worked on.

Miss Clark said she "accepted" that her statements were inappropriate from a securities market perspective, but "welcomed" the commission's acceptance that her motivation was in the national interest and she did not encourage anyone to buy shares.

- NZPA

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