Paul Holmes: Muddled up in financial fog

I hope I am not the only one who found his eyes rolling round in his head trying to understand the ins and outs of what Allied Farmers are proposing for Hanover Finance.

Allied Farmers, a $12 million company that reported a $34 million loss back in June, wants to pay $400 million for Hanover assets. Hanover debenture holders will be able to swap their debentures for Allied shares. These shares will be worth 78 cents. The Hanover people, turned Allied people, will then be able to sell their shares for this heavenly price. Yeah, right! They will be 78 cents for about 12 hours, until the market is flooded with new Allied people cashing up, and the share price takes a sudden dive south.

Actually, to be frank, I have no idea what a debenture is. No idea. It could be a denture with a "b" as far as I'm concerned. And in the same way that one wants secure dentures, one would surely want a secure debenture. Whatever it is, if it is a Hanover one, it is a dud. Even the secure debentures in that Hanover outfit seem singularly insecure. I have never had to learn what a debenture is. I think it is a piece of paper, a certificate that says you've given Hotchin and Watson a hundred grand, and now that hundred grand has disappeared into Hotchin's Paritai Drive house all you've got left is the certificate.

I'm afraid debentures and that kind of stuff bores me witless. If I ever had to concentrate on that stuff, after a few minutes I wanted to stand on a table, pull my pants down and scream. I was always more interested in what was going on in the world and why. I paid people to know about debentures. These are the same kind of people who know what bonds are. Treasury bonds, I understand, are very good because Treasury never goes broke. But what a bond is, I could not tell you.

Anyway, I don't think I have any debentures. If I did, I'm sure my accountant would have told me. I've tried to call him but he's gone to Cap D'Antibes for three days by private jet. Just kidding.

I learnt, at great cost some years back, a golden rule. Never invest in anything you don't understand. And never put your money near someone you don't know. Keep it in the bank. I followed some seriously rich people into a deal a few years ago, and despite them being the kind of people who understood all of that complicated business stuff, the deal still went belly up. It was nothing to do with me. I didn't understand what was going on. The money disappeared into the ether. It ceased to exist.

In any case, why anyone thought there would be money in investing in Hanover, I've no idea. For a mere half a per cent or so, more interest than they would have got at a nice, secure Australian bank, people took their money across to Hanover, or one of all the other dumb ass, belly-up Flash Harry finance boys. It was greed. Greed on the part of the investors, and greed on the part of those taking the money. Those companies always exist for the principals. The principals are always going to be the people who make the money, live in the mansions, drive the Ferraris, sail the gin palaces and order cases of 1959 Cristal champagne at $2000 a bottle.

I have done a few of the above, now that I think about it, but I did it all on wages - not by sucking up honest money. And I never had a Ferrari. Nor a gin palace. And I never bought Cristal. I did have a very expensive and beautiful old bi-plane, however, a historic Boeing Stearman. It was rather tricky on the ground in landing, and led to me trying to get airborne again after a bad landing one New Year's Eve morning.It was flying too slowly to gain height quickly enough, and I crashed into a vineyard next door to the airfield. I finished upside down in a broken aircraft with fuel pouring everywhere, and I elected to quickly unstrap and fall out of the thing. I should have bought the Ferrari. But I digress.

Who knows what will happen with the Allied proposal? Bruce Sheppard, the Hanover Shareholders' Association chairman, is terrified the Hanover investors will clutch at the deal as at a straw. He thinks they are too dumb to resist it, which is a bit harsh of him but, God knows, they must been dumb to get into the outfit in the first place. Then again, if I was a Hanover debenture holder, whatever that is, I would grasp at it too, as a drowning man will do anything for air. But, as I say, I don't understand it. And thank God I don't have to. It may not be fair, of course, to say the investors were dumb. There were plenty of smart-talking financial advisers telling people Hanover was rock solid and the way to go. And probably many investors didn't understand what they were getting into.

But you may be sure that Mark Hotchin and Eric Watson know what all this stuff means, and the Allied blokes will know what it all means, and together they are the ones who will make the dough. And Bruce Sheppard knows this, and he is livid. What the proposed deal does, apparently, for Hotchin and Watson, is very cute. Says Bruce: "They will have all of Hanover's debts taken out of the balance sheet, thus relieving them of any obligations to put the $20 million in."

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Where is the integrity of our academic elites? There has been a deafening silence from the universities over both Hone Harawira's emails and Witi Ihimaera's plagiarism. It took CK Stead, an Auckland professor emeritus, to tell Auckland University to get real about Witi Ihimaera. Stead saw a terrible double standard between the university's attitude to student plagiarism and its attitude to the plagiarism of one of its distinguished professors. If a student plagiarises in an exam or an assignment, they are failed. If a distinguished professor does it, the university thinks it doesn't matter, said Stead. Indeed, I'm still perplexed by what the University of Auckland's Dean of Arts, Jan Crosthwaite, who may be a woman or simply a Dutchman, said of Ihimaera's plagiarism. He or she found that Ihimaera's actions were not deliberate. That kind of denial does my head in. And you may be sure that if Hone Harawira had been a white man denouncing "Maori motherf***ers", academia would have reared up in outrage.

When Hone says it, there is silence, Dr Ranginui Walker actually went on television and defended Hone's comments as not being racist.