KEY POINTS:
The Commerce Commission's decision to investigate its own deputy chairman over disclosure issues raises some very big questions over why the commission did not know what other business interests Donal Curtin had.
The commission announced on Friday it would hold an inquiry into Curtin over whether he provided an appropriate level of disclosure when it came to his involvement with finance and investment companies Vestar, MFS and Mint Asset Management.
Curtin was the head of Vestar's investment committee until July when the firm was effectively sold to Christchurch businessman George Gould's investment company.
It now operates under the name Gould Wealth Management and the shell company Vestar has been placed into receivership by its Australian owners MFS.
During his time on the committee Curtin's name and position as a member of the Commerce Commission's board were used directly as a marketing tool to encourage investors to trust the committee to make good investment decisions.
A simple Google search still reveals Curtin's connection to the Vestar company and his position there.
As to Mint Asset Management, Curtin is listed as a director of the firm with the New Zealand Companies Office - a department of the Government's Ministry of Economic Development.
He has been a director since February 2007, according to its records, three months after the company was incorporated.
His involvement in these companies has been no great secret.
So should we also be asking how Commerce Minister Lianne Dalziel and the Commerce Commission did not know about Curtin's involvement with these companies?
Dalziel promoted Curtin in July saying at the time she was recognising his "valuable contribution" at the commission and his "experience in applying economic and financial analysis to regulatory decision-making".
At the time of his promotion, seven weeks ago, the Business Herald tried to contact the minister for a comment regarding Curtin's involvement in Vestar but despite three calls to her press secretary and promises of a reply nothing was forthcoming.
The minister and the commission should be called to account for their decision.
However, let's not forget Curtin allowed his name to be used to promote Vestar to investors.
Many in the industry believe former Vestar founder Kelvin Syms was the man who actually called the shots on the investment committee.
But Curtin must take some responsibility for the decisions made. He put his name to the committee and to the company. And he took the money they paid for being on their committee.
Vestar investors have lost millions in failed finance companies.
Many were put into the same six finance companies - Bridgecorp, Capital + Merchant, OPI Pacific Finance, MFS Boston, St Laurence and Property Finance.
Two of those - OPI Pacific Finance and MFS Boston - were owned by MFS, the same company that owned Vestar.
Up to $250 million of the $1 billion investors had with the company is thought to be at risk and a court case is being prepared against the former directors and investment committee of Vestar.
But that is likely to be some time off yet as more than 45 investors are involved.
Meanwhile, the Commerce Commission won't say how long its inquiry will take and won't answer any more questions while it is under way.
Wellington lawyer Hugh Rennie has been appointed to look into the situation but it seems likely that whatever he discovers, there will only be more questions left to ask.
DIVERSION GOOD TO GO
The Government has finally moved to amend KiwiSaver legislation widening the number of people able to divert some of their contributions into their mortgage.
Mortgage diversion was due to come in as of July 1 but a clause in the scheme's regulations stopped it from being able to be offered on mortgages that secure obligations under a revolving credit contract which basically includes anyone with a revolving credit mortgage, credit card or overdraft.
This was designed to stop people from diverting funds to their mortgage and then being able to redraw on them but actually meant around 90 per cent were not eligible to sign up to mortgage diversion at all.
Yesterday the Government said it had amended the regulations to allow more types of mortgages to qualify for the diversion facility.
In a joint statement Finance Minister Michael Cullen and Revenue Minister Peter Dunne said discussions with the banking sector had revealed many mortgages of a flexible nature meaning that the current mortgage diversion facility had limited application.
They now say the majority of mortgages will qualify provided the diverted contributions reduce the home loan. This does not prevent a bank from agreeing to lend more against the home but does prevent diverted contributions automatically being offset by an increased home loan.
"The amended regulations will ensure that the mortgage diversion facility works as intended, and is accessible and is just one of the many incentives designed to make it easier, more attractive and more rewarding for people to save through KiwiSaver," Cullen and Dunne said.
A spokesman for the Bankers Association said it was pleased with the outcome of its discussions with officials.
"Individual banks will now make their own decisions about their product offerings in the marketplace."
ASB Bank head of business ventures Peter Hall also welcomed the amendment.
"There has been a lot of discussion with the Government and the IRD about mortgage diversion. This will certainly widen the number of people able to take it up."
The regulations will be published in the New Zealand Gazette and come into force 28 days after their date of notification.
BONUSES DOWN
Fund management teams and their business development colleagues are already feeling the effects of turbulent financial times in their own pockets.
A remuneration survey by Higbee Schaffler has found median bonuses for the sector are down as much as 30 per cent.
Higbee Schaffler market information manager Christine Whelan says while it is no surprise pay packets are down it has happened a lot faster than expected.
"Usually there is a lag before the results flow on to incentive payments, because they are linked to performance in the previous financial year."
However, Whelan says those in fund management still continue to be paid better than other sectors of financial services and overall their base pay has continued to increase in the last year.
Last year over 75 per cent of the pay packets of those in fund management came from their bonuses but this year it has dropped to under 50 per cent of their total package.
NOT ALL BAD NEWS
Not all fund managers have had a bad run in the bear market. Boutique firm Milford Asset Management is reporting an after fees and before tax return of 11.3 per cent on its aggressive fund since it was launched in October.
The fund has $11 million invested in it and has been one of the few non-KiwiSaver products to see new money coming in.
The company, which will be five years old in December, now has $260 million in funds under management across its business and has recorded 17 per cent growth in funds under management across its business in the last six months alone. Milford executive director Anthony Quirk says it is an extremely pleasing result in what has been a very tough market.
