Charges in House over Securitibank

Press, 31 May 1977, Page 17

Charges in House over Securitibank

PA Wellington The Prime Minister, (Mr Muldoon) said that the Labour Government had been aware of the liquidity problems confronting Securitibank in November, 1973, but had failed to do anything about it. He was replying to a private member’s notice of motion from Dr A. M. Finlay (Labour, Henderston) criticising the Government’s failure to notify investors of the financial position of the group. Dr Finlay said that he was disturbed that the Government had. used something close to sharp practice in allowing the Securitibank group to continue “trumpeting” its association with Government agencies when the Minister of Finance (Mr Muldoon) knew its position was shaky.' The Government had also encouraged Securitibank to inspire confidence in its operation by spreading the story that a deal to sell the Chateau Commodore hotel chain to the Nauru Government was almost complete, he said. Dr Finlay said that the Government knew this deal was never on as Air Nauru was asking for landing rights in New Zealand as part of the sale and this would never have been contemplated by the Government. Mr Muldoon had been right to raise doubts about the morality of the Government’s action in a recent television interview, Dr Finlay said. Mr Muldoon said that the first time the difficulties of Securitibank were brought to the notice of Government was in November, 1973, when Dr Finlay was Minister of Justice.

many questions to answer The group had approached the Reserve Bank over its liquidity problems and had been in touch with it until the end of 1975. Mr Muldoon said that the managing director of Securitibank, Mr J. G. Russell, had approached him in March, 1976, and had been told that the Government was not operating a security system for finance houses. Mr Muldoon said that the position of Securitibank was marginal early in 1976 when two attempts to obtain finance from overseas failed. Late in the year, the group was again in contact with the Reserve Bank but there was no indication that it would not “finally pull through,” he said. Mr Muldoon said that if the Government had given any indication to the public at this stage that the group was in difficulty then it would certainly have “collapsed” through a lack of public confidence. He said that he had been approached by the Premier of Nauru over the Chateau Commodore sale and he had informed him that the chain could be a good investment. The question of air rights to New Zealand had never been raised. Mr Muldoon said that Dr Finlay should be the last one to criticise the Government’s actions as he had done nothing on legislation for financial advertising in spite of advocating it in Ocotber, 1974. Mr R. O. Douglas (Lab, Manukau) told the House that Securitibank had been a profitable company until 1976. “The Government has

and the Prime Minister’s attempt today to raise some red herrings won’t wash.” Mr Douglas asked why the Government did not set out to protect the interests of small investors when it knew Securitibank was in difficulties and why it did not move to prevent the company from continuing to advertise “in what was a misleading way.” “Does the Government intend to set up an inquiry into the Securitibank collapse and if not, why not?” he asked. the Minister of Justice, (Mr Thomson) than accused the Opposition of trying to build “a screen of mistrust” in the minds of New Zealanders. The fact that the Government was not happy with the type of advertising used by Securitibank had influenced it in its decision to introduce legislation to control financial advertising, he said. Such .legislation would forbid the mentioning of an advertisement of any shareholder unless that shareholder was unconditionally guaranteeing the company. Mr Thomson said that the Government intended to respond actively by bringing in legislation and would not “sit on its chuff” as the Labour Party had done. “We’ll introduce legislation to avoid the type of situation which arose carious” financial state of with Securitibank.” he said. The Minister said that he had discussed the “prethe company with the Prime Minister in March, 1976. “That should have been done by the Labour Government in 1973 when it knew Securitibank was in difficulties.”