By DANIEL RIORDAN
The Securities Commission has cleared Prime Minister Helen Clark of insider trading in Air New Zealand shares.
But it ruled that her comments about the airline's future at the height of the company's financial crisis last September were inappropriate.
The commission also found no evidence the Prime Minister's office had sounded out broking houses about actions it might take on Air NZ.
Helen Clark will face no penalty from the investor watchdog.
Yesterday, she said she welcomed the commission's acceptance that her motivation was in the national interest, that her statement at the time did not constitute tipping, and that she did not encourage anyone to buy shares.
Former Air NZ director and BIL International chief executive Greg Terry was also cleared of insider trading over comments he made two days after Helen Clark but, like the Prime Minister, he was also deemed to have acted inappropriately.
The commission began its investigation six months ago after Helen Clark was asked by a reporter for her recommendation to mum and dad shareholders in Air NZ.
The future of the airline was in doubt.
"I'd recommend they hang on to them because I am absolutely convinced that Air NZ has a viable future," the Prime Minister replied.
Air NZ's share price rose on the comments, prompting the Stock Exchange to halt trading for several hours.
The Government later committed $885 million to Air NZ and pledged a further $150 million, if needed, in return for an 82 per cent stake.
Commission chairman Jane Diplock said the commission, after "an exhaustive and painstaking inquiry" gathering evidence from more than 70 people, had found no evidence of insider trading.
"The statements did not breach the law," she said.
"However, they were not appropriate given the status of the people involved and the intense public interest in Air NZ at the time."
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."
Helen Clark's comments came a few hours after a meeting of a ministerial committee charged with resolving the airline's crisis.
The meeting decided on "negotiation parameters" whereby the Crown might take a stake in Air NZ, ensuring its survival.
The meeting agreed to keep the lid on the prospect of a rescue package. Government negotiator Rob Cameron, who was present, told the commission that he believed the information was price-sensitive.
But Helen Clark told the commission she "had no reason to form a view as to whether or not the particular information referred to was price-sensitive at the time I received it, and have not formed any view since".
The commission accepted this, although it agreed with Mr Cameron and brokers it consulted that the information was price-sensitive.
Shares were again suspended after Mr Terry suggested Air NZ's share price could double if there was an announcement that it would continue with full support.
Act MP and insider-trading activist Stephen Franks lambasted the commission's findings.
"The report is a must-read guide to loopholes for every would-be insider trader in New Zealand. If you want to give a buy tip just say, 'Whatever you do, don't sell'.
'If the commission confronts you, simply say you didn't know what you were doing'."
National leader Bill English said the Prime Minister had got off on a technicality.
On its investigation into reports that the Prime Minister's Office tested the market's reaction to a Government bailout, the commission details a conversation between Helen Clark and Don Turkington, of broking firm Forsyth Barr Frater Williams, just before the ministerial meeting, initiated by Dr Turkington.
He urged the Government to consider a rights issue and Helen Clark asked him what the market's reaction would be to the Government putting money into the airline.
Dr Turkington said Helen Clark gave him no indication of what the Government was considering or of the airline's financial health.
Securities Commission
PM cleared of Air NZ insider trading
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