New Zealand should follow in Australia's footsteps by routinely inquiring into major financial failures
Hanover Finance investors will no doubt be reflecting that while multi-millionaire and party boy Eric Watson is holed up in his expensive clinic pumped full of the best drugs other people's money can buy, many of them are struggling to ward off the pain of major financial losses.
The bitter cracks flying around the internet yesterday would have left Watson in no doubt as to Kiwi investors' bitter feelings over the injuries he suffered while skiing.
"Lucky he didn't have a spine to break"; "Which Hanover investor pushed him?"; "He has broken the backs of many old people with the collapse of Hanover" - were just some of the more palatable comments on National Business Review's website.
Many of the "get well" messages Herald readers were invited to "send to Eric" were similarly tart. "Get an honest job, instead of wasting your time skiing. Repay your debts"; "What's Eric Watson doing enjoying a skiing holiday overseas, when he's left such a mess through his dodgy finance company in this country, leaving many honest and hardworking people's lives shattered?"
Others saw it as karmic; "what goes round comes round".
Schadenfreude was displayed in spades. To Watson this will probably just be more water off the duck's back.
But the avalanche of ill-feeling his accident has inspired sends a signal that the $5 billion collapse of NZ's finance company sector produced a boil that still needs to be publicly lanced.
A blood-letting would be expensive. But if New Zealand wants to be taken seriously as an investment destination, what better place than to start with an official inquiry into the lessons that can be learned from the Hanover Finance collapse.
The role of its principals, its directors, its advisers and also the raft of regulators that stood on the sidelines while big money was spent marketing its investment products in the run-up to the point where it was forced to freeze funds because it could not pay investors their promised returns.
In Australia such inquiries into major financial failures are de rigeur.
Former Australian Treasurer Peter Costello ensured a royal commission probe into the collapse of the HIH insurance company found out what led to the failure.
The HIH collapse has been described as a "rather pathetic tale" in which - to the great cost of thousands of ordinary Australians - the unwary followed the inept further and further towards predictable demise.
By the time the group was wound-up on August 27 2001, its deficiency was estimated at between $3.6 billion and $5.3 billion.
In New Zealand, 16,000 Hanover Finance investors were left out of pocket when more than $500 million of assets were frozen in a moratorium.
They ultimately voted in favour of a sale and workout to Allied Farmers. But they are not going to get much of their investment back.
In a Herald interview, the multi-millionaire, speaking from Zurich's exclusive Hirslanden Clinic, was reported to be in good spirits.
"It's just a little fracture," he said. "I'll be fine ... It will take a while but I should be fine in a few weeks, couple of months, it takes a while to recover from these things."
According to the Herald reporters, Watson was "candid" about flak over the fall-out.
"Oh I think Mark's [co-founder Mark Hotchin] taken most of that [flak]," he said.
"Compared with what's come out since Hanover, Hanover's probably done a better job than most finance companies at least giving people the chance to recover their money through the Allied Farmers share price performance, which over time might be quite positive."
Many of Watson's investors will have a different view to journalists as to what constitutes candour.
He has managed to walk away from the collapse of Hanover Finance with plenty of readies to fuel his business endeavours. His investors haven't. Yet he has offered no in-depth explanation to either them - let alone journalists - over what happened.
Nor any sensible words that might constitute even a smidgen of remorse or an apology.
When the company was in dire straits he was partying it up elsewhere, celebrating his 50th birthday in Turkey with the Eurotrash crowd. Meanwhile, Hotchin spent $30 million building a palatial spread on Auckland's Paritai Drive. This behaviour is obscene.
Act MP John Boscawen was instrumental in getting Parliament to hold an inquiry into the finance company failures last year.
But the resultant inquiry - which was chaired by former Labour Commerce Minister Lianne Dalziel, was hopelessly circumscribed.
It looked at measures to ensure investors are well-informed about investment proposals, that they understood the implications of moratoriums, and what advance actions could be taken to reduce the chances of failure and ensure adequate measures or redress exist when failures occur.
What it didn't do is focus incisive attention on all the players on how this national scandal occurred. That's what royal commissions are for.
