$600M loan money probably laundered’

Press, 19 December 1986, Page 1

$600M loan money probably laundered’

By

PATRICIA HERBERT

and MARTIN FREETH in Wellington

Laundered funds were probably behind the $6OO million loan offered the Maori Affairs Department — either that or it was a fraud, according to advice given the Treasury by New Zealand’s Washington embassy.

The Deputy Prime Minister, Mr Palmer, tabled the telex in Parliament yesterday. It was sent on November 26 and warned against the loan proposal, saying the likelihood that a United States-based group could seriously offer the Maori Resource Development Corporation $6OO million at 4 per cent over 25 years was “remote.” The interest rate quoted was “unrealistic” in view of prevailing United States rates, it said. Loans raised on the New York market in United States dollars and for a similar term now cost a prime Government borrower almost 9 per cent and any aggressive American corporation with a top credit rating, only slightly less than that. “We do not see how a commercial entity could

offer funds to the Maori Resource Development Corporation at the quoted rate,” the embassy said. "In our view the proposal is at best based on the use of laundered funds, at worst fraudulent or non-existent.” Mr Palmer used the telex to support his argument that not only had the loan not gone through but that it could not have gone through as the Government could not have agreed to it even if it had been given the opportunity to consider it. “What is the case they (the Opposition) are trying to make?” he said. “What illegality are they suggesting took place? What impropriety?” Their allegations, Mr Palmer said, could not be substantiated, as when the Treasury had started investigating the matter it had found the deal

could not be entered into. Neither could either the Minister of Maori Affairs, Mr Wetere, or the Minister of Finance, Mr Douglas, be implicated as they had never consented to the money’s being raised. Rather, Mr Wetere had “knocked the idea on the head” before any features of the negotiations had been made public at all. “I think it is essential to recognise that stubborn fact,” Mr Palmer said. He also said inquiries made by New Zealand’s posts overseas could not establish the bona fides of those people the Secretary for Maori Affairs, Dr Tamati Reedy, had dealt with.

They were “not well known in financial markets,” he said. The reference must have been

to the middle-men involved — an Hawaiianbased businessman, Mr Michael Gisondi, and a German financier, Mr Max Raepple — although Mr Palmer did not name them. He emphasised that his defence of Mr Wetere did not pretend that all was well in the Maori Affairs Department, saying one had only to look at the Auditor-General’s latest report criticising the Maori Trustee’s investment policies; the lack of business experience on the part of some borrowers; and the sometimes inadequate appraisal of projects before lending on them. “But it is going a long way to say that because there have been some strange things happening, Ministerial heads must roll,” he said.