Matai head talks about wait for Govt money

Press, 16 August 1978, Page 3

Matai head talks about wait for Govt money

PA Wellington; The Secetary of the Trea-[ sury (Mr Henry Lang) said; in 1973 that Matai In-1 dustries, Ltd, was “political ■ dynamite” for the then; Labour Government, the Su-j preme Court at Wellington' 'was told yesterday. Kevin Francis Meates, a .company director, of Christ-, church continued evidence; yesterday outlining his negotiations with the Government of the late Prime Minister, Mr N. E. Kirk, to establish a plastics industry on the West Coast. ' The shareholders of Matai iare suing the Government [for SIM for alleged breach I of agreement in establishing 1 the industry. The claim names as Government agents the Trea® sury, the Department of Trade and Industry, Mr Kirk, Mr W. W. Freer (then Minister of Trade and Industry), and Mr W. E. Rowling, (then Minister of Finance). The claim is being heard [by the Chief Justice (Sir ! Ronald Davison) sitting as judge alone. The 'hearing will continue today. Mr Meates said that on July 27, 1973, he had a message that Mr Kirk wanted to talk to him about the opening of the Matai plants on the West Coast. “The guarantee had not [been executed.” he said. [“Earlier in the week the bank had confirmed that it I did not want to open letters! of credit until it had confirmed some conditions of' the guarantee with the Min-; ister. “We had not been able to import any of the goods to make products to sell, and dur workflow was in a very poor shape. The whole operation had been financed on my own personal guarantee to a level of SIM. I believe that the delay in executing the guarantee had virtually crippled the company, and had ruined me.” He said when he spoke to Mr Kirk on July 27, he asked him whether he wanted the firm to open or close, because it was his decision. It had taken five months and the Government had not yet put a pen to paper. The overdraft lie was! guaranteeing was $650,000 [ “They wanted mv wife to join me in the guarantee, | and they wanted our home; as security,” he said. “I told Mr Kirk that nobody would believe that a

five-rronth delay was purely an accident. He told me that I had no fear — we would have no loss. I told him the guarantee terms according to the bank had changed from what we had agreed in Feb* ruary and March. He told me to straighten that out with Messrs Freer and Rowling, and if I could not, he would. “I told him I was unwilling to sign the side agreement, and the bank would da nothing until it was signed. He told me to sign it anyway, and get it amended.” Mr Meates said he told Mr Kirk that the bank manager had said that the guarantee which the Treasury was talking about would not work, and could not work. Mr Kirk told him he would make it work. “By that, he meant the Government,” Mr Meates said. Mr Meates said the official opening of the West Coast factories was set for November 8 and 9, 1973. At the opening there was a carnival atmosphere. Mr Kirk went first to Runanga, a coalmining town, and in the evening to Greymouth. Mr’ Meates and his wife went to meet Mr Kirk at a bridge leading to Greymouth. “My wife had been very worried about the house, which was still mortgaged for Matai,” he said. “She was worried that she might lose it. She told him that. He told her she wouldn’t lose anything.” Mr Meates said that in Westport he spoke to Mr Kirk about the financial position of the company. The board had decided that another director and he should both see Mr Kirk. “Mr Muldoon was quite certain that we were at risk, and should retrench,” he said. “The board directed that Mr Thompson and wait on the Prime Minister at Westport on the Friday afternoon. This we did. He told us there was to be no retrenchment. He wanted the place to ’go through the roof,’ He would send Henry Lang, Secretary of the Treasury to the Coast to find out what we needed.” Mr Meates said he spoke to Mr Kirk privately that night for a long time. Mr Kirk was more than delighted with what they had done. “He was past being era-

barrassed — I think, morti- ; fied — by the problems that had been created by the' delay in executing the guar-I an tee, and the fact that we I had not had at that date an! answer to the submissions! that I had made to Mr Row-' ling, starting on August 8. He told me again that I was not to worry; I should take j a rest, and then give the! place another boost.” Mr Meates said that one of the problems that had arisen was the increase in the price of raw plastic resin. The Development Finance Corporation agreed to buy the resin at a calculated price, and resell it to Matai because the company needed it. The letter on this matter 1 was intercepted by Mr Lang [after his visit to the West Coast, said Mr Meates. “He told me that Matai was political dynamite for the Government, that I was too big an employer, that I could exert too much pressure on the Government,” he said. “In fact, I could bring

down the Government, and that the Government would have to get control of it and take the political power away from me.” He felt that a shareholders liquidation would have to be faced, he said he set out for Mr Kirk a document called “The collapse of Matai.” Mr Kirk had said though that there was to be no retrenchment: debts were to be incurred in the normal way, and they would be paid. Mr Meates said that a re-ceiver-manager was later appointed. The directors agreed. after assurances from Mr Freer, that they would continue to act as directors. The shareholders took individual decisions about appointing the receiver. “I undertook that 1 would continue to work for the company as I had in the past at no pay, and to take no steps to restrict the receiver’s activities in return for Mr Freer’s indemnity," said Mr Meates. The hearing is proceeding.