No simple answer to fraud-Palmer

Press, 10 September 1988, Page 6

No simple answer to fraud-Palmer

PA Wellington New legislation would be introduced to Parliament to allow a vulnerable company’s affairs to be frozen while being investigated, the Minister of Justice, Mr Palmer, said yesterday.

In a speech to the Bay bf Plenty Criminal Bar Association in Whakatane, Mr Palmer said higher standards of conduct for the business community had to be set. But Mr Palmer also said corporate fraud was a complex area where there were no simple, overnight answers.

“People keep turning to the Government to fix things up,” he said. “The feeling is one of inexplicable hurt to which the Government is going to automatically administer a plaster. “But that is not what government is about. We are not magicians.”

Mr Palmer said there were some areas where people had to take responsiblity for their own actions.

He. said some factions had been trying to turn the Government into a

broking house — “to force upon" it a duty to' advise investors which companies are sound and viable and which are not.”

But that was not the Government’s responsibil-

“Before last year’s crash, nobody suggested that it was the Government’s responsibility to make every investment decision in the country. They would have been laughed off the floor of the Stock Exchange if they had.”

Mr Palmer said he rejected the idea that the Government had to provide a panacea for unfortunate investment decisions.

“But I can and do accept that changes in our financial markets have led to the development of unfair and unacceptable practices which have damaged the integrity and image of those markets.” Fringe futures traders, secret “put and call” options and the incidence of creative accounting were all problems. The quality of professional advice had

also “on occasions been lamentable.” Compliance by listed companies with the Stock Exchange listing requirements had also often been inadequate. “We are also not happy with the standard of stewardship of some public companies,” Mr Palmer said. Minutes of meetings involving substantial transactions were sometimes non-existent. Information available to shareholders was scarce. “Another regrettable feature of our public company sector, particularly among those which have failed in recent months, has been the situation of a dominant chief executive who has been allowed by fellow board members to effectively run amuck with the company’s business.

“Put simply, minority shareholders have been badly let down.”