Govt attacked for its shielding of collapse

Press, 31 August 1977, Page 6

Govt attacked for its shielding of collapse

PA Wellington A total of SI9M invested in Securitibank would not have been.lost if the Government had sounded a warning three months before the company’s collapse, Mr R. W. Prebble (Lab., Auckland Central) said in Parliament last evening. The State Insurance Office, which had shares in Securiti-i bank, had in 1974 commis-l sioned a firm of accountants to investigate the company,] and its financial position was! found to be sound, he said during the Estimates debate. However, in 1976 the office ihad come to the conclusion [that Securitibank was no] [longer a secure company, [“and had decided to get out.” The office attempted to sell its shares in the company but could sell them only to other shareholders, “and they weren’t interested,’.’ Mr Prebble said. The Deputy Leader of the Opposition (Mr Tizard) said the Minister in Charge of the State Insurance Office (Mr Walker) could have informed the public of Securitibank’s financial position, but did not. “The public lost money it shold not have been induced to invest,” Mr Tizard said.

The Acting Prime Minister (Mr Taiboys) replied that if action had been taken “there would have been nothing more certain than more people would have lost monev.” “If the Prime Minister (Mr Muldoon) had said 'We must get. out’ there would have been nothing more certain that this company would have collapsed.”

In 1972, Securitibank had been told by the State Insur-j ance Office not to use its name in the company’s advertising, he said. However, in 1974, when the Labour Party was the Government, it had begun to do so. Mr Walker, replying to a] question from Mr R. O. Douglas (Lab., Manukau) told Ithe House that Securitibank 'had assured State Insurance officers a week before its colllapse that it had no liquidity [problems. I The company’s chief executive (Mr J. G. Russell) [had furnished the informaition after an inquiry from the [office after a newspaper had thrown doubts on the com-; pany’s future. However, said Mr Walker —answering further ques- ; [tions from Opposition mem-l Ibers — Securitibank’s chairman had told shareholders that the company had liquidity problems but no solvency problems. Mr Walker confirmed that the office had written to Securitibank, asking the com-

Lpany to stop using its name •jin advertising. • He denied though that the; ■ Government had failed to' thoroughly investigate Securi-j i tibank’s situation because Mr! . Russell had been its chief, i financial adviser while in! [Opposition. | Mr Russell had never been a Government adviser, he; j said. To this, Sir Basil Arthur! ; (Lab., Timaru) said that the! ' National Party had looked; ’ on Mr Russell in awe. He quoted a speech in Parliament in 1975 by Mr ’ Muldoon, in which he de- > scribed Mr Russell as an ex- ’ pert in financial affairs. - This man later misled the Sir Basil said. ’[ Mr Douglas said there was a point last year when the, ripublic should have been told! -they were throwing good; -! money after bad into! -[Securitibank, but the Gov-: tiernment had not done so. 1 “The finance companies- > I knew; the big boys knew,”, Ihe said. t| Mr Taiboys said the whole; )[debate was a “hoax and; -Ismear” by the Opposition.