Labour wanted Matai as Coast showcase—court evidence

Press, 15 August 1978, Page 3

Labour wanted Matai as Coast showcase—court evidence

PA Wellington I The West Coast was to be used as a showcase for the 1972 Labour Government’s regional development policy, the Supreme Court at Wellington was told yesterday. Mr J. Cadenhead, in an opening address on behalf of shareholders of Matai Industries in a SIM claim, said that in November, 1973, Matai was opened in a blaze of publicity by the then Prime Minister, the late Mr Kirk. “In ail the circumstances, the opening, having regard to the financial situation of the company, was ironical to I say the least,” he said. The claim alleges breach [ of agreement in relation to I the setting up of industries on the West Coast. The claim is being heard I by the Chief Justice (Sir! Ronald Davison) sitting as! judge alone, and will continue today. The plaintiffs are Kevin Francis JV'o'- >s, company director of Christchurch; John David Meates, company director, of Auckland; Jean Mary Meates, married of Christchurch; Brian Michael Meates, company director, of Wellington: Roy John Connell, company director, of Greymouth; and three Christchurch companies. Torro International, Ltd, Insulex Plastics, Ltd, and Parker Industries, Ltd. The Attorney-General is fcued on behalf of the Government. The claim says that the Government acted through its agents, including the Treasury, the Department of Trade and Industry;; and the late Eric Norman! Kirk, the then Prime Minister; Warren William Freer, the then Minister of Trade and Industry; and Wallace Edward Rowling, the then Minister of Finance. Mr Cadenhead said that the company was now in receivership. The claim, broadly speaking, could be said to lie in contract, quantam merit and liability for negligent statements. The first phase related toi the inducements and “breach; thereto” that induced thei shareholders to form the; company and invest their capital. The second phase re-i lated to the inducements by way of indemnity that were! given to keep the capital[ that was invested in the I

11 company; or, to put another [way, the inducements that > prevented the shareholders : from taking the normal coms mercial steps to salvage , their capital. Mr Cadenhead said the freight grant referred to — • which was an agreed sum of r $500,000 — would have con- ■ siderably eased the problems of the company in establish- > ing in a remote area. This ! sum would have cushioned 1 and eased the liquidity crisis. “The failure to pay such grant, or even part of it, and [ the dilatoriness of the [defendant to reach final '[financial commitments under [its guarantee with the bank [and to provide the necessary import licences, were dis- | astrous,” Mr Cadenhead [said. I He said that Mr Kevin [ Meates had expressed his [misgivings on August 5, [ 1973 to Mr Kirk. Mr Meates advised that the shareholders wished to retrench the operations of the company and suggested a more low-key approach. On August 19, 1973, Mr Kirk advised Mr Meates that the Government wanted no retrenchment. Mr Kirk wanted the factories to be opened as planned. “He wanted a large, elaborate opening of the factories in November, 1973,” Mr Ca- • denhead said. “He wanted to be able to ' go back to the West Coast to justify his election prorn- ! ises. He assured Mr Meates that the shareholders need not worry, that the Govern- ! ment was standing behind the ’! project, and that the shareholders would not lose one cent of the capital they had , invested in the company. [ “These assurances were [ repeated on various dates in August. Accordingly the t plaintiffs took none of the . usual commercial steps nec- . essary to retrench or comi mercially salvage their ! assets. “On November 9 and 10, 1973, in a blaze of publicity, i [Matai Industries, Ltd, was i! opened by Mr Kirk. > “By then it was apparent ;[that the company was facing •la severe liquidity crisis. The -[company had further sub- ' stantial assets, including a supply of resin and I valuable dyes and plastics si tools. However, in the legal

sense of the word it was barely solvent as it was having great difficulty in meeting its commitments.

“Mr Kirk was approached again, and the fears that had been put forward by Mr Meates in August, 1973, were again ventilated. He reiterated that he wanted the show to go through the roof.”

Mr Cadenhead said that one of the directors of Matai Industries, Ltd, was Mr Muldoon, the present Prime Minister. Mr Muldoon attended the triumphant opening on November 9 and 10. Mr Muldoon was concerned with the financial position of the company and also spoke to Mi Kirk. Mr Cadenhead said that in November, 1972, the Labour Party was elected the Government. Regional development had been one of the major planks of the election platform. It was contended by Mr Kirk that at least 19 seats that he had obtained were regional seats and had been clearly swayed by his proposed regional development policy.

Promises had been made during the campaign. In particular, the evidence would be that specific promises had been made by Mr Kirk to bring industry to Westport and to Greymouth. The establishment of Matai Industries, Ltd, a company having a share capital of SIM, was part of the implementation of such election promises. “At the outset it is very important to understand the relationship of Mr Kirk and Kevin Frances Meates, who acted as agent and principal negotiator for the six shareholders,” Mr Cadenhead said.

Before the incorporation of Matai Industries, Kevin Meates was a substantial shareholder and the managing director of Torro International (NZ), Ltd, Rowe and Co (NZ), tnsulex Plastics, Ltd, and Torro Industries, Ltd. He was well versed in business and industry and, in particular, had considerable experience in the plastics industry.

He was successfully carrying on business in these fields in Auckland and Christchurch, as were his brothers, Jack and Brian, two of the other plaintiffs. The evidence would es-

tablish that Mr Kevin Meates had known Mr Kirk very closely for the previous 15 years. He worked closely with Mr Kirk in 1960 during his first election campaign. Mr Kirk and Mr Meates were close friends. Mr Kirk had used the facilities offered by Mr Meates in respect of his office premises in Kilmore. Street, Christchurch, between 1961 and 1965.

Mr Meates had provided typists for Mr Kirk from time to time in 1960 and worked closely with Mr Kirk in preparing his second bid at becoming Prime Minister. He provided many of Mr Kirk’s speech notes and assisted him in many other ways.

It would be submitted that in 1972 Mr Meates was Mr Kirk’s right-hand man during the election campaign. The close relationship between the two had come from the furtherance of Mr Kirk’s political career. It became apparent during the election campaign of 1972 that industry was sorely needed in Westport, Greymouth and Reefton. These were traditional Labour strongholds. “The West Coast would be the hardest area to satisfy,” Mr Cadenhead said. “But it was to be used as a showcase of the Government’s regional development policy.

“This then sets the scene for the reasons why the Government desired a large industrial company to bring industry to the areas of Westport, Reefton and Greymouth. “Mr Meates and his brothers were running such businesses and as such provided the means of how industrialisation could be brought to the West Coast.”

Mr Cadenhead said that Mr Kevin Meates would give evidence that even before contractual negotiations began he made clear the conditions of industrial viability — freight concessions and appropriate finance allocations.

“The thrust of Mr Meates’s early evidence will be that Mr Kirk desired spectacular, quick action,” Mr Cadenhead said. “He, Mr Kirk, had promised to have some industries on the Coast at the end of March, 1973. i “He will state that Mr 1

Kirk was of a view that quick decisions by the Government were the key to the success of the whole scheme. Such importance did the Labour Party place on regional development that before firm contractual proposals had been concluded, statements by Mr Freer were appearing in the press indicating that industries were ready to move to Whangarei and the West Coast.

“Mr Meates will say that Mr Kirk told him that the industries referred to in the press by Mr Freer were Mr Meates’s own. It is emphasised that in all meetings with Mr Kirk and Mr Freer, before contractual negotiations got under way, it was repeated that conditions to establish industries in an isolated region such as the West Coast would be: sufficient import licence allocation, the necessary financial arrangements for appropriate loan funds, all matters to be dealt with by the Government expeditiously.” Mr Cadenhead said that on January 9, 1973, firm proposals were made by the shareholders for Mr Meates. Such proposals were set out in comprehensive form. They detailed the nature and whereabouts of the operation and the necessary financial, import licensing requirements and freight subsidies that such an undertaking would require. Mr Cadenhead said the company established a plas’ tics factory at Westport, together with woodwork and assembly plants at Reefton and woodwork and metalwork factories at Greymouth. The shareholders bought land, applied for and obtained the necessary planning permission and took all the other steps necessary to get such factories under way. They succeeded in finally providing employment for more than 200 people in the area. “The shareholders fulfilled their part of the bargain,” Mr Cadenhead said. “They established on the West Coast the promised industries and provided the promised jobs. “It will be submitted that the defendant, on the other hand, failed to carry out its obligations and is in breach ‘of its contract.”