Call for full audit of Rural Bank

Press, 5 April 1989, Page 2

Call for full audit of Rural Bank

By

PATTRICK SMELLIE

in Wellington The Auditor-General was yesterday asked to do a full “value for money” audit of the Rural Bank by the Opposition spokesman on agriculture, Mr John Falloon. The call came after last week’s sacking of a bank director, Ms Jenny Morel, allegedly over her refusal to accept asset valuations in the bank’s half-yearly accounts. Mr Falloon also suggested yesterday that there might have been conflicts of interest among Government advisers on the valuation and sale of the bank and between other directors who have expressed interest in owning all or part of it. “I am asking the question at this stage, not making the case,” he said. When Ms Morel was fired last week, the chairman of the bank, Mr Ken MacDonald, announced his resignation to join a consortium of farmer interests hoping to buy the bank. The only remaining director of that board, Mr Murray Bolton, confirmed yesterday that the accounts in question would be published tomorrow. This came after their formal approval by the Auditor-General. But Mr Falloon said that approval did not involve a. full investigation of the accounts, but rather an endorsement of the audit performed by the accountants, Coopers and Lybrand. The reason for a fuller inquiry by the independent office of the AuditorGeneral was “to make sure that the Government’s and therefore the taxpayer’s investment in the bank is not being

.eroded to achieve a quick sale.” At the heart of the issue was the write-down of $l.l billion of the bank’s assets by the Government to place it on a commercial footing ready for sale. This raised questions of whether the write-down would drive down the price for the bank, and whether there were conflicts of interest at board level and among advisers. “With Ms Morel the only truly independent member of the board, I feel that her views must carry some weight,” said Mr Falloon. He wanted the investigation to cover whether any of the Government’s advisers had been involved in the valuation process for the bank and its sale. Mr Falloon repeated his call for the Government to suspend the sale of the bank until the South Island drought problem had eased, since potentially many more farmers would face financial difficulties in the meantime. He also favoured the bank’s being sold to the farmer consortium but “not at any price,” he said.