Principal inquiry sought on tender

Press, 20 January 1986, Page 17

Principal inquiry sought on tender

PA Wellington The Reserve Bank should inquire whether Rakiura Holdings’ now-dishonoured $lOO million stock tender was made on behalf of a principal, said the Leader of the Opposition, Mr McLay. The one-man Wellington company headed by Mr Brian Alexander might have been bidding on behalf of an anonymous principal, he said. “If that is the case, the principal is in default as well as Rakiura,” Mr McLay said. The public had a right to know who the principal was if Mr Alexander was bidding on his behalf. “If the Reserve Bank

knows, it should disclose the name,” Mr McLay said.

“If it does not know then the appropriate inquiry mechanism should be put in place, if necessary using the investigative powers of the Commissions of Inquiry Act, to find out who the person was.” He described the default as large, and said that if steps were not taken immediately to ascertain precisely what happened there would be a loss of confidence in the market. Mr McLay said the Government and the Reserve Bank were playing down the seriousness of the matter.

His inquiries had revealed that tenders ranged from

16.69 per cent (from Rakiura Holdings) to 20 per cent.

“In other words this bidder was prepared to pay 3.3 per cent less in interest than some people thought was appropriate for a loan of that duration at that time,” Mr McLay said. Immediately the tender was announced the Minister of Finance, Mr Douglas, issued a press statement in which he particularly referred to the 16.69 per cent bid. In the press statement Mr Douglas said results of the tender confirmed a significant downward trend in interest rates. “A month later that bid proves to be worthless,” Mr McLay said.