Insider trading charge despicable—Sir George

Press, 22 July 1986, Page 8

Insider trading charge despicable—Sir George

By

SIMON LOUISSON

in Wellington

The former National party president, Sir George Chapman, said he was shocked and angered by allegations of insider trading made against him by the Under-Secretary of Finance, Mr de Cleene. Sir George, who was overseas when the allegations were made last week, called a press conference at Parliament to respond to what he called “cowardly and despicable” allegations. Mr de Cleene alleged that just two months before the Perry Dines Corporation, which Sir George chaired, went into receivership, he sold his 25,000 shares knowing the company was in deep financial strife.

Sir George said the attack was doubly despicable because he was out of the country at the time and in no position to respond, and that It was launched under the cloak of privilege.

He said the attack was not really related to the “ill-fated” Perry Dines, but was more a matter of politics.

He had been the most harshly treated of all Government appointments, having been removed from the boards of Liquigas, Offshore Mining, Ltd, Maui Developments, and the Bank of New Zealand, he said. “I have made no comment and no complaint,” he said.

Sir George sold the shares on July 10, 1985, two weeks after he resigned, and seven weeks before it was announced the company was in receivership. He received 60c a share compared with the purchase price of $l.

Under intense questioning from journalists, Sir George repeatedly denied that he had any inkling the company was in financial trouble.

In April, 1985, the Justice Department had been called in to investigate the

company because of doubts about its viability and the department reported to directors on June 20 that they had serious doubts about its solvency. The collapse of the company was investigated by the Securities Commission and in the commission’s report the minutes of the company board meetings reveal the company was in severe trouble well before June 25.

Sir George told the conference that the first knowledge he had that the Companies Office was investigating the company was when the registrar reported to the directors on June 20.

Mr Kevin McCormack, the registrar, confirmed that this was his first formal correspondence and that he had no reason to disbelieve Sir George. Sir George acknowledged that the company was in financial trouble in April but between April and June 25, when he

resigned, a recovery plan was put in place which gave him reason to believe the company would continue as a going concern.

“At the time I retired I had every reason to believe that the recovery programme put in place with the disposal of assets, plus the $2 million cash issue, would result in the company carrying on as a going concern.”

Sir George retired as chairman because of his appointments to at least three boards and the pressure of work. As he was no longer on the boards of the “think big” companies he found it inconvenient to travel to New Plymouth where Perry Dines was based.

The attack by Mr de Cleene had not damaged his career, but it “certainly can’t do my personal integrity any good,” said Sir George. "An attack by a Parliamentary Under-Secretary is very hurtful indeed.”