Fran O'Sullivan writes that it is time New Zealand authorities were given the ability to issue a permanent ban against errant company directors.
How can John Key's Government seriously expect to persuade Kiwi investors to give up their penchant for property investing and invest more widely if they won't make a permanent example of some of the talented but arrogant players.
Players such as Bridgecorp's Rod Petricevic, whose commercial escapades have resulted in far too many New Zealanders being taken to the cleaners. It's time that New Zealand authorities were given the ability to issue a permanent ban against errant company directors to stop them from ever again running bodies that take money from the public.
The Government also needs to vote the Serious Fraud Office extra budget to fund its international investigation into a particular high-profile company so the message is sent that hiding activities and assets overseas will not protect fraudsters.
Eight months ago, Securities Commission chairwoman Jane Diplock announced she was pushing for a crackdown which would result in "life bans" against some errant company directors, and an expansion of jail penalties for various infringements of securities laws.
Typically for New Zealand, nothing has happened. Diplock's recommendation has sat on Commerce Minister Simon Power's desk with the vast array of other recommendations advocating a tougher enforcement regime to try to protect Kiwi investors from being bilked.
This should have been done well in advance of the May 20 Budget which will axe property investment incentives. But instead of doing all it can to create a new atmosphere where obvious miscreants will be prevented from pursuing their craft again, the Government has stood still.
The Commerce Minister did get off his butt and push his department to come up with some rules around KiwiSavers after the fracas over the Huljich funds' shenanigans. But this will not be enough to inspire ordinary folks' trust in the markets. Giving the commercial sheriff "hanging powers" would.
The Bridgecorp boss is a case in point.
Petricevic and his business associate Rob Roest are nearly one year into a temporary prohibition preventing them from either directing or managing a company for five years. The order was imposed after the pair failed to prove they were not at least partially responsible for the demise of Bridgecorp, which went into receivership in July 2007 owing about $460 million to 14,500 investors.
The full facts of Petricevic's role in the Bridgecorp collapse have yet to be played out in front of the courts. A depositions hearing relating to 10 Securities Act charges laid against the former Bridgecorp boss, his chairman Bruce Davidson and other former directors Roest, Gary Urwin and Peter Steigrad is continuing.
The Serious Fraud Office has yet to announce whether it will lay charges in respect of its own investigations.
But there is enough on the public record to suggest this particular commercial hazard should not be given another chance to once again (in the words of former High Court Judge Bruce Robertson in respect of Petricevic's earlier Euro-National failure) rise "phoenix-like from the ashes of his economic disaster".
The banning report issued by the Ministry of Economic Development is telling. It revealed Petricevic was using Bridgecorp like his own bank, authorising payments without board approval including his own IRD tax bill of $576,100; $1.65 million for a launch, remuneration of $4.25 million and another $1.08 million to a firm call "A Bb" run by a woman with whom he was in a "personal relationship" which did little, if any work, for Bridgecorp. A five-year ban is not going to result in this leopard changing his spots.
The Serious Fraud Office's new director Adam Feeley is anxious to draw a line under his office's long-winded investigations into a slew of defunct finance companies and clear the way for inquiries into current suspected frauds.
Feeley's anger over the SFO's tardiness in prosecuting its inquiries into finance companies is justifiable. Despite the wipeout of Kiwis' savings from the finance sector collapse, the SFO has not prioritised its investigations, instead dealing with smaller fry "open and shut" cases first.
The upshot is the office has yet to charge any finance company director. Feeley has talked of an atmosphere where his office did not have sufficient powers to get all the available information, and a climate where the SFO did not want to jeopardise its 90 per cent success rate for prosecutions by moving on less cut-and- dried cases. He has the ability to change things. The public interest will be served if he persuades the Government to ensure that miscreants do not get off scot-free, and that laws are changed to enable his office to penetrate overseas trusts, that the six-year time limit for prosecutions is abandoned and any suspected fraudster who won't play ball is permanently banned from commercial life here. Unless we get real about such behaviour more generations of Kiwis will have their savings wiped out.
