Securitibank collapse ‘a gross scandal'

Press, 2 September 1977, Page 18

Securitibank collapse ‘a gross scandal'

PA Dunedin. The collapse of Securitibank is a gross scandal which is not gouig to lie down or quietly go away, according to the deputy chairman of the management committee of the Securitibank investors consortium, Mr R. Farry, of Dunedin. Mr Farry said that certain facts seemed to have been confirtmed from the recent statements made in Parliament. The Government agencies. the State Insurance Office and the Government Life Insurance Office, knew that their names were being used to solicit funds from the general public, he said. The Government agencies knew long before the collapse that Securitibank was in trouble. Mr Farry added. It was already known that Securitibank continued to use the names of the Government agencies to solicit funds down to the time of the collapse, even though a disclaimer of liability was asserted in the final months. ‘‘The Government agencies collectively held more shares in Securitibank than any other shareholder. It is said that in 1972 the State Insurance Office told Securitibank not to use its name in advertising. If Securitibank ignored that request why did not the State Insurance do something about?" Mr Farry asked. “Why did not the Government agencies do something about Securitibank ignoring the requests of the Govern- 1 menfs own Reserve Bank not to discount com-

merciai bills under §20,000 and not to use the bills market for long-term property development projects? 'The Government is saying that if it had warned the public ‘more people would have lost money.’ Who are these people? Certainly any people ‘in the know’ had the opportunity to get their money out. This is small comfort to the uninformed general public who continued to invest about S26M in the latter months.” The use of the names of the Government agencies was in conflict with the spirit of section 31 (2) of the Companie-- Act, 1955 (which prohibits companies haveing names suggesting the Government’s patronage) unless the Government was going to acknowledge its patronage of Securitibank, Mr Farry said. The Government was now proposing legislation to protect the public. This was small comfort to the thousands of ordinary New Zealanders who stood to lose most of their savings which they had

invested in Securitibank simply because the Government agencies were involved.

“The Government is now talking about ‘commercial morality.’ What sort of example is the Government going to give the business community of New Zealand?” Mr Farry said.

“Mr B. E. Brill, M.P., should refer to section 364 of the Companies Act, 1955, if he thinks shareholders cannot be liable.”

The Government agencies were not the only shareholders whose names were used by Securitibank to solicit funds. Other shareholders whose names were used were: The

South British Insurance Company, Ltd; the New Zealand Insurance Company, Ltd; the Prudential Assurance Company, Ltd; the National Insurance Company of New Zealand, Ltd; the Norwich Union Life Insurance Society; the Provident Life Assurance Company, Ltd; AA Mutual Insurance Company, Ltd; Butland Industries. Ltd; and Rothmans Industries, Ltd.