Legality of firm’s sale not addressed—Caygill

Press, 6 December 1989, Page 4

Legality of firm’s sale not addressed —Caygill

Wellington reporter The legality of the sale of New Zealand Steel, Ltd, to Equiticorp was “not specifically addressed,” at the time the Minister of Finance, Mr Caygill, told Parliament yesterday. The Government, however, would vigorously defend itself against allegations by Equiticorp’s statutory managers over the deal, which took place between late 1987 and early 1988. The Crown is named as twelfth defendant in an action filed last month by the statutory managers. Answering questions from the Opposition Leader of the House, Mr Bill Birch, Mr Caygill said legal advice obtained at the time had concentrated on making sure the Crown was paid by the Equiticorp subsidiary, Ararimu Investments Four, Ltd.

“While the question of the legality of the transaction was not specifically addressed, it would have been subsumed in the general question of whether what was suggested would have been effective in ensuring that the Crown was paid,” said Mr Gaygill. Mr Birch asked why such inquiries had not been made, given the nature of Ararimu. Mr Caygill replied: “What the Crown did was sufficient to satisfy itself of the legality of the transaction. The proceedings which have been issued against us will be vigorously defehded.” Equiticorp’s statutory managers are alleging either that the Crown knew the deal was illegally structured or that there was negligence in not investigating the structure of the deal more thoroughly.