$20m discrepancy a mistake says SOE

National grid operator Transpower has admitted that a more than $20 million discrepancy in its accounts appears to be a mistake.

The blunder was revealed after an investigation by The Press and Canterbury University accountancy academic Sue Newberry into Transpower's overseas financing deals.

State-owned Transpower has never issued a correction for the error, which relates to the amounts involved in its December 2002 structured financing deal.

In the agreement, Transpower borrowed millions of dollars from an unknown party and then lent three-quarters of the amount to other unnamed financial institutions.

It said the arrangement had allowed it to secure the smaller, $200 million loan, it wanted at below market interest rates. Experts believe the agreement has all the hallmarks of a tax-driven deal.

Transpower first reported aspects of the deal in its December 2002 half report, when it said it had borrowed $753 million and had then lent $553 million of that.

But in its June 2003 year report, the amounts borrowed and then lent were reported as $732.7 million and $532.7 million respectively, a difference of $20.3 million.

Transpower said this week the later figures were the correct ones but has not explained the discrepancy, other than to say "there would appear to be a mistake in the notes to the December 2002 accounts".

Transpower has not specified where the earlier sums came from and whether there were any repercussions from the bungle.

However, spokesman Chris Roberts denied the $20.3 million had been used to pay for the setting-up of the deal and said the fee was not "anywhere near that range".

"It might have been an exchange rate miscalculation ," he said.

Transpower has been criticised in Parliament this week for the lack of information about the deals and the issue of whether they allowed those involved to avoid tax in New Zealand.

The Press has repeatedly asked Transpower why any organisation would lend it money at below market rates without some incentive.

Transpower has been reluctant to answer, but Roberts said receiving 7 per cent interest on a $700 million loan was obviously a better return for the party that lent the money than 8 per cent on only $200 million.

- NZPA